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Senate Study Bill 3202 - IntroducedA Bill ForAn Act 1relating to state and local taxation and regulation, the
2Iowa reinvestment Act, innovation fund, hunting and fees,
3and providing for properly related matters, and including
4effective date and retroactive applicability provisions.
5BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
1DIVISION I
2DEPARTMENT OF revenue ADMINISTRATION AND PENALTY PROVISIONS
3 Section 1. Section 421.6, Code 2020, is amended to read as
4follows:
5421.6 Definition of return.
6For purposes of this title, unless the context otherwise
7requires, “return” means any tax or information return, amended
8return, declaration of estimated tax, or claim for refund
9that is required by, provided for, or permitted under, the
10provisions of this title or section 533.329, and which is filed
11with the department by, on behalf of, or with respect to any
12person. “Return” includes any amendment or supplement to these
13items, including supporting schedules, attachments, or lists
14which are supplemental to or part of the filed return.
15 Sec. 2. Section 421.17, Code 2020, is amended by adding the
16following new subsection:
17 NEW SUBSECTION. 36. To enter into an agreement pursuant
18to chapter 28E with the state fair organized under chapter 173
19or with a fair defined in section 174.1, to collect and remit
20taxes and fees from sellers making sales at retail on property
21owned, controlled, or operated by a fair or through events
22conducted by a fair.
23 Sec. 3. Section 421.27, subsections 1, 4, and 6, Code 2020,
24are amended to read as follows:
251. Failure to timely file a return or deposit form. a. If
26a person fails to file with the department on or before the due
27date a return or deposit form there shall be added to the tax
28shown due or required to be shown due a penalty of ten percent
29of the tax shown due or required to be shown due.
30b. In the case of a specified business with no tax shown
31due or required to be shown due that fails to timely file an
32income return, the specified business shall pay the greater of
33the following penalty amounts:
34(1) Two hundred dollars.
35(2) An amount equal to ten percent of the imputed Iowa
-1-1liability of the specified business, not to exceed twenty-five
2thousand dollars.
3c. The penalty, if assessed pursuant to paragraph “a” or
4“b”, shall be waived by the department upon a showing of any of
5the following conditions:
6a. (1) At An amount of tax greater than zero is required to
7be shown due and at least ninety percent of the tax required to
8be shown due has been paid by the due date of the tax.
9b. (2) Those taxpayers who are required to file quarterly
10returns, or monthly or semimonthly deposit forms may have one
11late return or deposit form within a three-year period. The
12use of any other penalty exception will not count as a late
13return or deposit form for purposes of this exception.
14c. (3) The death of a taxpayer, death of a member of
15the immediate family of the taxpayer, or death of the person
16directly responsible for filing the return and paying the tax,
17when the death interferes with timely filing.
18d. (4) The onset of serious, long-term illness or
19hospitalization of the taxpayer, of a member of the immediate
20family of the taxpayer, or of the person directly responsible
21for filing the return and paying the tax.
22e. (5) Destruction of records by fire, flood, or other act
23of God.
24f. (6) The taxpayer presents proof that the taxpayer
25relied upon applicable, documented, written advice specifically
26made to the taxpayer, to the taxpayer’s preparer, or to an
27association representative of the taxpayer from the department,
28state department of transportation, county treasurer, or
29federal internal revenue service, whichever is appropriate,
30that has not been superseded by a court decision, ruling by a
31quasi-judicial body, or the adoption, amendment, or repeal of
32a rule or law.
33g. (7) Reliance upon results in a previous audit was a
34direct cause for the failure to file where the previous audit
35expressly and clearly addressed the issue and the previous
-2-1audit results have not been superseded by a court decision, or
2the adoption, amendment, or repeal of a rule or law.
3h. (8) Under rules prescribed by the director, the taxpayer
4presents documented proof of substantial authority to rely
5upon a particular position or upon proof that all facts and
6circumstances are disclosed on a return or deposit form.
7i. (9) The return, deposit form, or payment is timely,
8but erroneously, mailed with adequate postage to the internal
9revenue service, another state agency, or a local government
10agency and the taxpayer provides proof of timely mailing with
11adequate postage.
12j. (10) The tax has been paid by the wrong licensee and the
13payments were timely remitted to the department for one or more
14tax periods prior to notification by the department.
15k. (11) The failure to file was discovered through a
16sanctioned self-audit program conducted by the department.
17l. (12) If the availability of funds in payment of tax
18required to be made through electronic funds transfer is
19delayed and the delay of availability is due to reasons beyond
20the control of the taxpayer. “Electronic funds transfer” means
21any transfer of funds, other than a transaction originated
22by check, draft, or similar paper instrument, that is
23initiated through an electronic terminal telephone, computer,
24magnetic tape, or similar device for the purpose of ordering,
25instructing, or authorizing a financial institution to debit or
26credit an account.
27m. (13) The failure to file a timely inheritance tax return
28resulting solely from a disclaimer that required the personal
29representative to file an inheritance tax return. The penalty
30shall be waived if such return is filed and any tax due is paid
31within the later of nine months from the date of death or sixty
32days from the delivery or filing of the disclaimer pursuant to
33section 633E.12.
34n. (14) That an Iowa inheritance tax return is filed for
35an estate within the later of nine months from the date of
-3-1death or sixty days from the filing of a disclaimer by the
2beneficiary of the estate refusing to take the property or
3right or interest in the property.
44. Willful failure to file or deposit.
5a. (1) In case of willful failure to file a return
6or deposit form with the intent to evade tax or a filing
7requirement, or in case of willfully filing a false return
8or deposit form with the intent to evade tax, in lieu of the
9penalties otherwise provided in this section, a penalty of
10seventy-five percent shall be added to the amount shown due or
11required to be shown as tax on the return or deposit form.
12(2) In case of a willful failure by a specified business to
13file an income return with no tax shown due or required to be
14shown due with intent to evade a filing requirement, or in case
15of willfully filing a false income return with no tax shown due
16or required to be shown due with the intent to evade reporting
17of Iowa-source income, the penalty imposed shall be the greater
18of the following amounts:
19(a) One thousand five hundred dollars.
20(b) An amount equal to seventy-five percent of the imputed
21Iowa liability of the specified business.
22(3) If penalties are applicable for failure to file a
23return or deposit form and failure to pay the tax shown due or
24required to be shown due on the return or deposit form, the
25penalty provision for failure to file shall be in lieu of the
26penalty provisions for failure to pay the tax shown due or
27required to be shown due on the return or deposit form, except
28in the case of willful failure to file a return or deposit form
29or willfully filing a false return or deposit form with intent
30to evade tax.
31b. The penalties imposed under this subsection are not
32subject to waiver.
336. Improper receipt of payments Liability — fraudulent
34practice. A person who makes an erroneous application for
35refund, credit, reimbursement, rebate, or other payment shall
-4-1be liable for any overpayment received or tax liability reduced
2plus interest at the rate in effect under section 421.7.
3a. In addition, a person who willfully commits a fraudulent
4practice and is liable for a penalty equal to seventy-five
5percent of the refund, credit, exemption, reimbursement,
6rebate, or other payment or benefit being claimed if the person
7does any of the following:
8(1) Willfullymakes a false or frivolous application for
9refund, credit, reimbursement, rebate, or other payment or
10benefit with intent to evade tax or with intent to receive
11a refund, credit, reimbursement, rebate, or other payment or
12benefit, to which the person is not entitled is guilty of
13a fraudulent practice and is liable for a penalty equal to
14seventy-five percent of the refund, credit, reimbursement,
15rebate, or other payment being claimed.
16(2) Willfully submits any false information, document,
17or document containing false information in support of an
18application for refund, credit, exemption, reimbursement,
19rebate, or other payment or benefit with the intent to evade
20tax.
21(3) Willfully submits with any false information, document,
22or document containing false information in support of an
23application for refund with the intent to receive a refund,
24credit, exemption, reimbursement, rebate, or other payment
25benefit, to which the person is not entitled.
26b. Payments, penalties, and interest due under this
27subsection may be collected and enforced in the same manner as
28the tax imposed.
29 Sec. 4. Section 421.27, Code 2020, is amended by adding the
30following new subsections:
31 NEW SUBSECTION. 8. Definitions. As used in this section:
32a. “Imputed Iowa liability” means any of the following:
33(1) In the case of corporations other than corporations
34described in section 422.34 or section 422.36, subsection 5,
35the corporation’s Iowa net income after the application of the
-5-1Iowa business activity ratio, if applicable, multiplied by the
2top income tax rate imposed under section 422.33 for the tax
3year.
4(2) In the case of financial institutions as defined in
5section 422.61, the financial institution’s Iowa net income
6after the application of the Iowa business activity ratio, if
7applicable, multiplied by the franchise tax rate imposed under
8section 422.63 for the tax year.
9(3) In the case of all other entities, including
10corporations described in section 422.36, subsection 5, and all
11other entities required to file an information return under
12section 422.15, subsection 2, the entity’s Iowa net income
13after the application of the Iowa business activity ratio, if
14applicable, multiplied by the top income tax rate imposed under
15section 422.5A for the tax year.
16b. “Income return” means an income tax return or information
17return required under section 422.15, subsection 2, or section
18422.36, 422.37, or 422.62.
19c. “Specified business” means a partnership or other entity
20required to file an information return under section 422.15,
21subsection 2, a corporation required to file a return under
22section 422.36 or 422.37, or a financial institution required
23to file a return under section 422.62.
24 NEW SUBSECTION. 9. Additional penalty. In addition to the
25penalties imposed by this section, if a taxpayer fails to file
26a return within ninety days of written notice by the department
27that the taxpayer is required to do so, there shall be added to
28the amount shown due or required to be shown due a penalty in
29the amount of one thousand dollars.
30 Sec. 5. NEW SECTION. 421.27A Perjury.
311. For purposes of this title, a form, application, or any
32other documentation required or requested by the department
33shall be required to be certified under penalty of perjury that
34the information contained in the form, application, or other
35documentation is true and correct.
-6- 12. A person commits a class “D” felony under any of the
2following circumstances:
3a. The person makes a form, application, or other document
4containing false information in support of an application for
5refund, credit, exemption, reimbursement, rebate, or other
6payment or benefit with intent to evade tax.
7b. The person makes a form, application, or other document
8containing false information with intent to unlawfully receive
9a refund, credit, exemption, reimbursement, rebate, or other
10payment or benefit, to which the person is not entitled.
11c. The person knowingly makes any false affidavit.
12d. The person knowingly swears or affirms falsely to any
13matter or thing required by the terms of this title to be sworn
14to or affirmed.
15 Sec. 6. NEW SECTION. 421.59 Power of attorney — authority
16to act on behalf of taxpayer.
171. a. A taxpayer may authorize an individual to act on
18behalf of the taxpayer by filing a power of attorney with the
19department, on a form prescribed by the department.
20b. A taxpayer may at any time revoke a power of attorney
21filed with the department pursuant to subsection 1. Upon
22processing of the taxpayer’s revocation of a power of attorney,
23the department shall cease honoring the power of attorney.
242. The department may authorize the following persons to act
25and receive information on behalf of and exercise all of the
26rights of a taxpayer, regardless of whether a power of attorney
27has been filed pursuant to subsection 1:
28a. A guardian, conservator, or custodian appointed by a
29court, if a taxpayer has been deemed legally incompetent by a
30court. The authority of the appointee to act on behalf of the
31taxpayer shall be limited to the extent specifically stated in
32the order of appointment.
33(1) Upon request, a guardian, conservator, or custodian of
34a taxpayer shall submit to the department a copy of the court
35order appointing the guardian, conservator, or custodian.
-7- 1(2) The department may petition the court that appointed the
2guardian, conservator, or custodian to verify the appointment
3or to determine the scope of the appointment.
4b. A receiver appointed pursuant to chapter 680. An
5appointed receiver shall be limited to act on behalf of the
6taxpayer by the authority stated in the order of appointment.
7(1) Upon the request of the department, a receiver shall
8submit to the department a copy of the court order appointing
9the receiver.
10(2) The department may petition the court that appointed the
11receiver to verify the appointment or to determine the scope
12of the appointment.
13c. An individual who has been named as an authorized
14representative on a fiduciary return of income filed under
15section 422.14 or a tax return filed under chapter 450.
16d. (1) An individual holding the following title or
17position within a corporation, association, partnership, or
18other business entity:
19(a) A president or chief executive officer, or any other
20officer of the corporation or association if the president or
21chief executive officer certifies that the officer has the
22authority to legally bind the corporation or association.
23(b) A designated partner duly authorized to act on behalf
24of the partnership.
25(c) A person authorized to act on behalf of a limited
26liability company in tax matters pursuant to a valid statement
27of authority.
28(2) An individual seeking to act on behalf of a taxpayer
29pursuant to this paragraph shall file an affidavit with the
30department attesting to the identity and qualifications of the
31individual and any necessary certifications required under this
32paragraph. The department may require any documents or other
33evidence to demonstrate the individual has authority to act on
34behalf of the taxpayer before the department.
35e. A licensed attorney who has appeared on behalf of the
-8-1taxpayer or the taxpayer’s estate in a court proceeding.
2Authorization under this paragraph is limited to those matters
3within the scope of the representation.
4f. A parent or guardian of a taxpayer who has not reached
5the age of majority where the parent or guardian has signed the
6taxpayer’s return on behalf of the taxpayer. Authorization
7under this paragraph is limited to those matters relating to
8the return signed by the parent or guardian. Authorization
9under this paragraph automatically terminates when the taxpayer
10reaches the age of majority pursuant to section 599.1.
113. a. In lieu of executing a power of attorney pursuant
12to subsection 1, the department may enter into a memorandum of
13understanding with the taxpayer for each employee, officer,
14or member of a third-party entity engaged with or otherwise
15hired by a taxpayer to manage the tax matters of the taxpayer,
16to permit the disclosure of confidential tax information to
17the third-party entity and the authority to act on behalf of
18the taxpayer. The memorandum of understanding shall adhere to
19requirements as established by the director.
20b. The memorandum of understanding shall be signed by
21the director, the taxpayer, and the third-party entity or an
22authorized representative of the third-party entity.
23c. At any time, a taxpayer may unilaterally revoke
24a memorandum of understanding entered into pursuant to
25this subsection by filing a notice of revocation with the
26department. Upon the filing of such a revocation by the
27taxpayer, the department shall cease honoring the memorandum
28of understanding.
294. The department shall adopt rules pursuant to chapter 17A
30to administer this section.
31 Sec. 7. Section 421.60, subsection 2, paragraph a,
32subparagraph (2), Code 2020, is amended to read as follows:
33(2) The statement prepared in accordance with this
34paragraph shall be available on the department’s internet site.
35The internet site for this information shall be distributed by
-9-1the department to all taxpayers at the first contact by the
2department with respect to the determination or collection of
3any tax, except in the case of simply providing tax forms.
4 Sec. 8. Section 421.60, Code 2020, is amended by adding the
5following new subsection:
6 NEW SUBSECTION. 11. Electronic communication.
7Notwithstanding any provision of the law to the contrary, for
8purposes of this title and sections 321.105A and 533.329, a
9taxpayer may elect to receive any notices, correspondence,
10or other communication electronically that the department is
11required to send by regular mail. The director may establish
12procedures and limitations for obtaining this election from the
13taxpayer.
14 Sec. 9. Section 421.62, subsection 1, Code 2020, is amended
15by adding the following new paragraph:
16 NEW PARAGRAPH. 0b. “Income tax return or claim for refund”
17means any tax return or claim for refund under chapter 422,
18excluding withholding returns under section 422.16.
19 Sec. 10. Section 421.62, subsection 1, paragraph c,
20subparagraph (1), Code 2020, is amended to read as follows:
21(1) “Tax return preparer” means any individual who, for
22a fee or other consideration, prepares ten or more income
23 tax returns or claims for refund under chapter 422 during
24a calendar year, or who assumes final responsibility for
25completed work on such income tax returns or claims for refund
26under chapter 422 on which preliminary work has been done by
27another individual.
28 Sec. 11. Section 421.62, subsection 2, paragraph a, Code
292020, is amended to read as follows:
30a. On or after January 1, 2020, a tax return preparer
31is required to include the tax return preparer’s PTIN on
32any income tax return or claim for refund prepared by the
33tax return preparer and filed under chapter 422 with the
34department.
35 Sec. 12. Section 421.64, subsection 1, Code 2020, is amended
-10-1to read as follows:
21. For purposes of this section, “tax return preparer” means
3the same as defined in section 421.61 421.62.
4 Sec. 13. Section 422.20, subsections 1 and 2, Code 2020, are
5amended to read as follows:
61. It shall be unlawful for any present or former officer
7or employee of the state to willfully or recklessly divulge or
8to make known in any manner whatever not provided by law to
9any person the amount or source of income, profits, losses,
10expenditures, or any particular thereof, set forth or disclosed
11in any income return, or to permit any income return or copy
12thereof or any book containing any abstract or particulars
13thereof to be seen or examined by any person except as provided
14by law; and it shall be unlawful for any person to willfully or
15recklessly print or publish in any manner whatever not provided
16by law any income return, or any part thereof or source of
17income, profits, losses, or expenditures appearing in any
18income return; and any person committing an offense against the
19foregoing provision shall be guilty of a serious misdemeanor.
20If the offender is an officer or employee of the state, such
21person shall also be dismissed from office or discharged from
22employment. Nothing herein shall prohibit turning over to duly
23authorized officers of the United States or tax officials of
24other states state information and income returns pursuant
25to agreement between the director and the secretary of the
26treasury of the United States or the secretary’s delegate or
27pursuant to a reciprocal agreement with another state.
282. It is unlawful for an officer, employee, or agent, or
29former officer, employee, or agent of the state to willfully
30or recklessly disclose to any person, except as authorized
31in subsection 1 of this section, any federal tax return
32or return information as defined in section 6103(b) of the
33Internal Revenue Code. It is unlawful for a person to whom
34any federal tax return or return information, as defined in
35section 6103(b) of the Internal Revenue Code, is disclosed
-11-1in a manner unauthorized by subsection 1 of this section
2to thereafter willfully or recklessly print or publish in
3any manner not provided by law any such return or return
4information. A person violating this provision is guilty of
5a serious misdemeanor.
6 Sec. 14. Section 422.20, subsection 3, paragraph a, Code
72020, is amended to read as follows:
8a. Unless otherwise expressly permitted by section 8A.504,
9section 8G.4, section 11.41, section 96.11, subsection 6,
10section 421.17, subsections 22, 23, and 26, section 421.17,
11subsection 27, paragraph “k”, section 421.17, subsection 31,
12section 252B.9, section 321.40, subsection 6, sections 321.120,
13421.19, 421.28, 421.59, 422.72, and 452A.63, this section, or
14another provision of law, a tax return, return information, or
15investigative or audit information shall not be divulged to any
16person or entity, other than the taxpayer, the department, or
17internal revenue service for use in a matter unrelated to tax
18administration.
19 Sec. 15. Section 422.20, Code 2020, is amended by adding the
20following new subsections:
21 NEW SUBSECTION. 3A. The director may disclose the tax
22return of a partnership, limited liability company, or S
23corporation, any such return information, or any investigative
24information related to the return, to any person who was a
25partner, shareholder, or member of such an entity during any
26part of the period covered by the return.
27 NEW SUBSECTION. 3B. a. Prior to being made available for
28public inspection, the department shall redact from the record
29in an appeal or contested case the following information from
30any pleading, exhibit, attachment, motion, written evidence,
31final order, decision, or opinion:
32(1) A financial account number.
33(2) An account number generated by the department to
34identify an audit or examination.
35(3) A social security number.
-12- 1(4) A federal employer identification number.
2(5) The name of a minor.
3(6) A medical record or other medical information.
4b. Upon a motion filed by the taxpayer, the department
5may redact from the record in an appeal or contested case any
6other information from a pleading, exhibit, attachment, motion,
7or written evidence, if the taxpayer proves by clear and
8convincing evidence that the release of such information would
9disclose a trade secret or be a clear, unwarranted invasion of
10personal privacy.
11c. Notwithstanding paragraph “a”, when making final orders,
12decisions, or opinions available for public inspection, the
13department may disclose the items in paragraph “a” if the
14department determines such information is necessary to the
15resolution or decision of the appeal or case.
16d. Except as described in paragraphs “a” and “b”, all
17information contained in a pleading, exhibit, attachment,
18motion, written evidence, final order, decision, opinion,
19and the record in an appeal or contested case is subject to
20examination to the extent provided by chapter 22.
21 Sec. 16. Section 422.25, subsection 1, Code 2020, is amended
22by adding the following new paragraph:
23 NEW PARAGRAPH. c. The period of examination and
24determination is unlimited under this title in the case of
25any action by the department to recover or rescind any tax
26expenditure as defined by section 2.48, subsection 1, or any
27other incentive or assistance, due to a failure to meet or
28maintain the requirements of a program administered by the
29economic development authority.
30 Sec. 17. Section 422.69, subsection 1, Code 2020, is amended
31to read as follows:
321. All fees, taxes, interest, and penalties imposed under
33this chapter shall be paid to the department in the form of
34remittances payable to the state treasurer department and the
35department shall transmit each payment daily to the state
-13-1treasurer.
2 Sec. 18. Section 422.72, subsection 1, paragraph a,
3subparagraph (1), Code 2020, is amended to read as follows:
4(1) It is unlawful for the director, or any person having
5an administrative duty under this chapter, or any present or
6former officer or other employee of the state authorized by the
7director to examine returns, to willfully or recklessly divulge
8in any manner whatever, the business affairs, operations, or
9information obtained by an investigation under this chapter of
10records and equipment of any person visited or examined in the
11discharge of official duty, or the amount or source of income,
12profits, losses, expenditures or any particular thereof, set
13forth or disclosed in any return, or to willfully or recklessly
14 permit any return or copy of a return or any book containing
15any abstract or particulars thereof to be seen or examined by
16any person except as provided by law.
17 Sec. 19. Section 422.72, Code 2020, is amended by adding the
18following new subsection:
19 NEW SUBSECTION. 7A. a. Prior to being made available for
20public inspection, the department shall redact from the record
21in an appeal or contested case the following information from
22any pleading, exhibit, attachment, motion, written evidence,
23final order, decision, or opinion:
24(1) A financial account number.
25(2) An account number generated by the department to
26identify an audit or examination.
27(3) A social security number.
28(4) A federal employer identification number.
29(5) The name of a minor.
30(6) A medical record or other medical information.
31b. Upon a motion filed by the taxpayer, the department
32may redact from the record in an appeal or contested case any
33other information from a pleading, exhibit, attachment, motion,
34or written evidence, if the taxpayer proves by clear and
35convincing evidence that the release of such information would
-14-1disclose a trade secret or be a clear, unwarranted invasion of
2personal privacy.
3c. Notwithstanding paragraph “a”, when making final orders,
4decisions, or opinions available for public inspection, the
5department may disclose the items in paragraph “a” if the
6department determines such information is necessary to the
7resolution or decision of the appeal or case.
8d. Except as described in paragraphs “a” and “b”, all
9information contained in a pleading, exhibit, attachment,
10motion, written evidence, final order, decision, opinion,
11and the record in an appeal or contested case is subject to
12examination to the extent provided by chapter 22.
13 Sec. 20. Section 423.37, Code 2020, is amended by adding the
14following new subsection:
15 NEW SUBSECTION. 4. The period of limitation on examination
16and determination is unlimited under this title in the case
17of any action by the department to recover or rescind any tax
18expenditure as defined by section 2.48, subsection 1, or any
19other incentive or assistance, due to a failure to meet or
20maintain the requirements of a program administered by the
21economic development authority.
22 Sec. 21. Section 428A.1, subsection 3, Code 2020, is amended
23to read as follows:
243. The declaration of value shall state the full
25consideration paid for the real property transferred. If
26agricultural land, as defined in section 9H.1, is purchased by
27a corporation, limited partnership, trust, alien or nonresident
28alien, the declaration of value shall include the name and
29address of the buyer, the name and address of the seller, a
30legal description of the agricultural land, and identify the
31buyer as a corporation, limited partnership, trust, alien, or
32nonresident alien. The county recorder shall not record the
33declaration of value, but shall enter on the declaration of
34value information the director of revenue requires for the
35production of the sales/assessment ratio study and transmit
-15-1all declarations of value to the city or county assessor in
2whose jurisdiction the property is located. The city or county
3assessor shall enter on the declaration of value provide the
4information the director of revenue requires for the production
5of the sales/assessment ratio study and transmit one copy of
6each declaration of value to the director of revenue, at times
7as directed by the director of revenue. The assessor shall
8retain one copy of each declaration of value for three years
9from December 31 of the year in which the transfer of realty
10for which the declaration was filed took place. The director
11of revenue shall, upon receipt of the information required to
12be filed under this chapter by the city or county assessor,
13send to the office of the secretary of state that part of the
14declaration of value which identifies a corporation, limited
15partnership, trust, alien, or nonresident alien as a purchaser
16of agricultural land as defined in section 9H.1.
17 Sec. 22. Section 441.48, Code 2020, is amended to read as
18follows:
19441.48 Notice of adjustment.
201. Before the department of revenue shall adjust the
21valuation of any class of property any such percentage, the
22department shall first serve ten days’ notice by mail, on the
23county auditor of the county whose valuation is proposed to be
24adjusted. The department shall hold an adjourned meeting after
25such
262. If the county or assessing jurisdiction intends to
27protest the proposed adjustment, the board of supervisors or
28city council, as applicable, shall provide the department with
29notice of intent to protest prior to expiration of the ten
30days’ notice.
313. After expiration of theten days’ notice, at which time
32 the county or assessing jurisdiction may appear by its city
33council or board of supervisors, city or county attorney, and
34other assessing jurisdiction, or city or county officials, and
35make written or oral protest against such proposed adjustment.
-16- 14. The protest shall consist simply of a statement of the
2error, or errors, complained of with such facts as may lead to
3their correction. At the adjourned meeting
45. After written protest is received, or an oral protest
5is heard, thefinal action may be taken in reference to the
6proposed adjustment.
7 Sec. 23. Section 489.706, subsection 2, Code 2020, is
8amended to read as follows:
92. The secretary of state shall refer the federal tax
10identification number contained in the application for
11reinstatement to the departments department of revenue and
12 workforce development. The departments department of revenue
13and workforce development shall report to the secretary of
14state the tax status of the limited liability company. If
15either the department reports to the secretary of state that
16a filing delinquency or liability exists against the limited
17liability company, the secretary of state shall not cancel the
18declaration of dissolution until the filing delinquency or
19liability is satisfied.
20 Sec. 24. Section 490.1422, subsection 2, paragraph a, Code
212020, is amended to read as follows:
22a. The secretary of state shall refer the federal tax
23identification number contained in the application for
24reinstatement to the departments department of revenue and
25 workforce development. The departments department of revenue
26and workforce development shall report to the secretary
27of state the tax status of the corporation. If either the
28 department reports to the secretary of state that a filing
29delinquency or liability exists against the corporation,
30the secretary of state shall not cancel the certificate of
31dissolution until the filing delinquency or liability is
32satisfied.
33 Sec. 25. Section 501.813, subsection 2, paragraph a, Code
342020, is amended to read as follows:
35a. The secretary of state shall refer the federal tax
-17-1identification number contained in the application for
2reinstatement to the departments department of revenue and
3 workforce development. The departments department of revenue
4and workforce development shall report to the secretary
5of state the tax status of the cooperative. If either the
6 department reports to the secretary of state that a filing
7delinquency or liability exists against the cooperative,
8the secretary of state shall not cancel the certificate of
9dissolution until the filing delinquency or liability is
10satisfied.
11 Sec. 26. Section 504.1423, subsection 2, paragraph a, Code
122020, is amended to read as follows:
13a. The secretary of state shall refer the federal tax
14identification number contained in the application for
15reinstatement to the departments department of revenue and
16 workforce development. The departments department of revenue
17and workforce development shall report to the secretary
18of state the tax status of the corporation. If either the
19 department reports to the secretary of state that a filing
20delinquency or liability exists against the corporation,
21the secretary of state shall not cancel the certificate of
22dissolution until the filing delinquency or liability is
23satisfied.
24 Sec. 27. Section 533.329, Code 2020, is amended by adding
25the following new subsection:
26 NEW SUBSECTION. 03. Returns shall be in the form the
27director of revenue prescribes, and shall be filed with the
28department of revenue on or before the last day of the fourth
29month after the expiration of the tax year. The moneys and
30credits tax is due and payable on the last day of the fourth
31month after the expiration of the tax year.
32 Sec. 28. Section 533.329, subsection 3, Code 2020, is
33amended to read as follows:
343. The department of revenue shall administer and enforce
35the provisions of this section, and except as explicitly
-18-1provided in this section or another provision of law, shall
2apply all applicable penalty, interest, and administrative
3provisions of chapters 421 and 422 as nearly as possible in
4administering and enforcing the moneys and credits tax imposed
5by this section.
6 Sec. 29. LEGISLATIVE INTENT. It is the intent of the
7general assembly that the sections of this division amending
8Code sections 422.25 and 423.37 are conforming amendments
9consistent with current state law, and that the amendments
10do not change the application of current law but instead
11reflect current law both before and after the enactment of this
12division of this Act.
13 Sec. 30. EFFECTIVE DATE. The following, being deemed of
14immediate importance, take effect upon enactment:
151. The section of this division of this Act amending section
16422.25.
172. The section of this division of this Act amending section
18423.37.
19 Sec. 31. APPLICABILITY. The following applies to any
20return for which a written notice that the taxpayer is required
21to file such return is issued by the department on or after
22January 1, 2022:
23The portion of the section of this division of this Act
24enacting section 421.27, subsection 9.
25 Sec. 32. APPLICABILITY. The following apply to tax years
26beginning on or after January 1, 2022:
271. The section of this division of this Act amending section
28421.27, subsection 1.
292. The portion of the section of this division of this Act
30amending section 421.27, subsection 4.
313. The portion of the section of this division of this Act
32enacting section 421.27, subsection 8.
33DIVISION II
34SALES AND USE TAX
35 Sec. 33. Section 321G.4, subsection 2, Code 2020, is amended
-19-1to 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
-20-1321I.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:
-21- 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, subsection 80, paragraphs b and c,
24Code 2020, are amended to read as follows:
25b. Subject to the limitations in paragraph “c”, if a
26contractor, subcontractor, or builder is to use building
27materials, supplies, and equipment, or services in the
28performance of a written construction contract with a
29designated exempt entity, the person shall purchase such
30items of tangible personal property or services without
31liability for the tax if such property or services will be
32used in the performance of the written construction contract
33and a purchasing agent authorization letter and an exemption
34certificate, issued by the designated exempt entity, are
35presented to the retailer.
-22- 1c. (1) With regard to a written construction contract
2with a designated exempt entity described in paragraph “a”,
3subparagraph (1), the sales price of building materials,
4supplies, or equipment, or services is exempt from tax by this
5subsection only to the extent the building materials, supplies,
6or equipment, or services are completely consumed in the
7performance of the construction contract with the designated
8exempt entity, and only if the property that is the subject
9of the construction project becomes public property or the
10property of the designated exempt entity.
11(2) With regard to a written construction contract with
12a designated exempt entity described in paragraph “a”,
13subparagraph (2), the sales price of building materials,
14supplies, or equipment, or services is exempt from tax by this
15subsection only to the extent the building materials, supplies,
16or equipment, or services are completely consumed in the
17performance of a construction contract to construct a project,
18as defined in section 15J.2, subsection 10, which project has
19been approved by the economic development authority board in
20accordance with chapter 15J.
21 Sec. 40. Section 423.4, subsection 1, Code 2020, is amended
22to read as follows:
231. a. For purposes of this subsection, a “designated exempt
24entity” means any of the following:
25(1) A private nonprofit educational institution in this
26state,.
27(2) Anonprofit Iowa affiliate of a nonprofit international
28organization whose primary activity is the promotion of the
29construction, remodeling, or rehabilitation of one-family or
30two-family dwellings for low-income families,.
31(3) Anonprofit private museum in this state,.
32(4) Atax-certifying or tax-levying body or governmental
33subdivision of the state, including the state board of regents,
34state department of human services, state department of
35transportation, a.
-23- 1(5) Amunicipally owned solid waste facility which sells all
2or part of its processed waste as fuel to a municipally owned
3public utility, and all.
4(6) The state of Iowa.
5(7) Any political subdivision of the state.
6(8) Alldivisions, boards, commissions, agencies, or
7instrumentalities of state, federal, county, or municipal
8government which do not have earnings going to the benefit of
9an equity investor or stockholder,.
10(9) A tribal government as defined in section 216A.161,
11and any instrumentalities of the tribal government which do
12not have earnings going to the benefit of an equity investor
13or stockholder.
14b. A designated exempt entitymay make application apply
15 to the department for the refund of the sales or use tax upon
16the sales price of all sales of goods, wares, or merchandise
17 building materials, supplies, equipment, or from services
18furnished to a contractor, used in the fulfillment performance
19 of a written contract with the state of Iowa, any political
20subdivision of the state, or a division, board, commission,
21agency, or instrumentality of the state or a political
22subdivision, a private nonprofit educational institution in
23this state, a nonprofit Iowa affiliate described in this
24subsection, or a nonprofit private museum in this state if the
25property becomes an integral part of the project under contract
26and at the completion of the project becomes public property,
27is devoted to educational uses, becomes part of a low-income
28one-family or two-family dwelling in the state, or becomes a
29nonprofit private museum; except goods, wares, or merchandise,
30 designated exempt entity if all of the following apply:
31(1) The building materials, supplies, equipment, or
32services are completely consumed in the performance of a
33construction project with the designated entity.
34(2) The property that is subject of the construction project
35becomes public property or the property of an exempt entity.
-24- 1(3) The building materials, supplies, equipment,or
2services furnished which are not used in the performance of
3any contract in connection with the operation of any municipal
4utility engaged in selling gas, electricity, or heat to
5the general public or in connection with the operation of a
6municipal pay television system; and except goods, wares, and
7merchandise are not used in the performance of a contract for a
8“project” under chapter 419 as defined in that chapter other
9than goods, wares, or merchandise used in the performance of
10a contract for a “project” under chapter 419 for which a bond
11issue was approved by a municipality prior to July 1, 1968, or
12for which the goods, wares, or merchandise becomes an integral
13part of the project under contract and at the completion of the
14project becomes public property or is devoted to educational
15uses.
16a. c. Such A contractor shall state under oath, on forms
17provided by the department, the amount of such sales of goods,
18wares, or merchandise, or services furnished and used in the
19performance of such contract, and upon which sales or use tax
20has been paid, and shall file such forms with the governmental
21unit, private nonprofit educational institution, nonprofit Iowa
22affiliate, or nonprofit private museum designated exempt entity
23 which has made any written contract for performance by the
24contractor. The forms shall be filed by the contractor with
25the governmental unit, educational institution, nonprofit Iowa
26affiliate, or nonprofit private museum designated exempt entity
27 before final settlement is made.
28b. d. Such governmental unit, educational institution,
29nonprofit Iowa affiliate, or nonprofit private museum A
30designated exempt entity shall, not more than one year after
31the final settlement has been made, make application apply
32 to the department for any refund of the amount of the sales
33or use tax which shall have been paid upon any goods, wares,
34or merchandise building materials, supplies, equipment,
35or services furnished, the application to be made in the
-25-1manner and upon forms to be provided by the department,
2and the department shall forthwith audit the claim and, if
3approved, issue a warrant to the governmental unit, educational
4institution, nonprofit Iowa affiliate, or nonprofit private
5museum designated exempt entity in the amount of the sales or
6use tax which has been paid to the state of Iowa under the
7contract.
8c. e. Refunds authorized under this subsection shall accrue
9interest in accordance with section 421.60, subsection 2,
10paragraph “e”.
11d. f. Any contractor who willfully makes a false report of
12tax paid under the provisions of this subsection is guilty of
13a simple misdemeanor and in addition shall be liable for the
14payment of the tax and any applicable penalty and interest.
15 Sec. 41. Section 423.4, subsection 2, paragraphs a and b,
16Code 2020, are amended to read as follows:
17a. A contractor awarded a contract for a transportation
18construction project is considered the consumer of all building
19materials, building supplies, and equipment, and services and
20shall pay sales tax to the supplier or remit consumer use tax
21directly to the department.
22b. The contractor is not required to file information with
23the state department of transportation stating the amount of
24goods, wares, or merchandise, or services rendered, furnished,
25or performed and building materials, supplies, equipment, or
26services used in the performance of the contract or the amount
27of sales or use tax paid.
28 Sec. 42. Section 423.4, subsection 6, paragraph a,
29subparagraph (1), Code 2020, is amended to read as follows:
30(1) The owner of a collaborative educational facility
31in this state may make application to the department for the
32refund of the sales or use tax upon the sales price of all sales
33of goods, wares, or merchandise building materials, supplies,
34equipment, or from services furnished to a contractor, used
35in the fulfillment of a written construction contract with
-26-1the owner of the collaborative educational facility for the
2original construction, or additions or modifications to, a
3building or structure to be used as part of the collaborative
4educational facility.
5 Sec. 43. Section 423.4, subsection 6, paragraphs b and c,
6Code 2020, are amended to read as follows:
7b. Such A contractor shall state under oath, on forms
8provided by the department, the amount of such sales of goods,
9wares, or merchandise building materials, supplies, equipment,
10or services furnished and used in the performance of such
11contract, and upon which sales or use tax has been paid, and
12shall file such forms with the owner of the collaborative
13educational facility which has made any written contract for
14performance by the contractor.
15c. (1) The owner of the collaborative educational facility
16shall, not more than one year after the final settlement has
17been made, make application to the department for any refund
18of the amount of the sales or use tax which shall have been
19paid upon any goods, wares, or merchandise building materials,
20supplies, equipment, or services furnished, the application
21to be made in the manner and upon forms to be provided by
22the department, and the department shall forthwith audit the
23claim and, if approved, issue a warrant to the owner of the
24collaborative educational facility in the amount of the sales
25or use tax which has been paid to the state of Iowa under the
26contract.
27(2) Refunds authorized under this subsection shall accrue
28interest in accordance with section 421.60, subsection 2,
29paragraph “e”.
30 Sec. 44. Section 423.5, subsection 1, paragraph b, Code
312020, is amended by striking the paragraph.
32 Sec. 45. Section 423.29, subsection 1, Code 2020, is amended
33to read as follows:
341. Every seller who is a retailer and who is making taxable
35sales of tangible personal property or specified digital
-27-1products in Iowa or who is a retailer maintaining a place
2of business in this state making taxable sales of tangible
3personal property or specified digital products shall, at
4the time of making the sale, collect the sales tax. Every
5seller who is a retailer that is not otherwise required to
6collect sales tax under the provisions of this chapter and who
7is selling tangible personal property or specified digital
8products for use in Iowa shall, at the time of making the sale,
9whether within or without the state, collect the use tax.
10 Sellers required to collect sales or use tax shall give to any
11purchaser a receipt for the tax collected in the manner and
12form prescribed by the director.
13 Sec. 46. Section 423.33, subsection 1, Code 2020, is amended
14to read as follows:
151. Liability of purchaser for sales tax and retailer.
16a. If a purchaser fails to pay sales tax to the retailer
17required to collect the tax, then in addition to all of the
18rights, obligations, and remedies provided, the a use tax
19is payable by the purchaser directly to the department, and
20sections 423.31, 423.32, 423.37, 423.38, 423.39, 423.40,
21423.41, and 423.42 apply to the purchaser.
22b. For failure to pay the sales or use tax as described
23in paragraph “a”, the retailer and purchaser are jointly
24 liable, unless the circumstances described in section 29C.24,
25subsection 3, paragraph “a”, subparagraph (2), section 421.60,
26subsection 2, paragraph “m”, section 423.34A, or section
27423.45, subsection 4, paragraph “b” or “e”, or subsection 5,
28paragraph “c” or “e”, are applicable.
29c. If the retailer fails to collect sales tax at the time
30of the transaction, the retailer shall thereafter remit the
31applicable sales tax, or the purchaser thereafter shall remit
32the applicable use tax. If the purchaser remits all applicable
33use tax, the retailer remains liable for any local sales and
34services tax under chapter 423B that the retailer failed to
35collect.
-28-1 Sec. 47. REFUNDS RELATED TO PRESERVE WHITETAIL DEER
2HUNTING. Refunds of taxes, interest, or penalties that arise
3from claims resulting from the amendment of section 423.3,
4subsection 3A, for sales occurring between July 1, 2005,
5and the effective date of the amendment to section 423.3,
6subsection 3A, shall not be allowed, notwithstanding any other
7law to the contrary.
8 Sec. 48. LEGISLATIVE INTENT.
91. It is the intent of the general assembly that the section
10of this division of this Act amending section 423.29 is a
11conforming amendment consistent with current state law, and
12that the amendment does not change the application of current
13law but instead reflects current law both before and after the
14enactment of this division of this Act.
152. It is the intent of the general assembly that the
16addition of “jointly” in the section of this division of
17this Act amending section 423.33 is a conforming amendment
18consistent with current state law, and that the amendment
19does not change the application of current law but instead
20reflects current law both before and after the enactment of
21this division of this Act.
22 Sec. 49. EFFECTIVE DATE. The following, being deemed of
23immediate importance, take effect upon enactment:
241. The section of this division of this Act amending section
25423.3A.
262. The section of this division of this Act relating
27to refunds for commercial recreation services offering an
28opportunity to hunt preserve whitetail deer.
29 Sec. 50. RETROACTIVE APPLICABILITY. The following applies
30retroactively to July 1, 2005:
31The section of this division of this Act amending section
32423.3A.
33DIVISION III
34INCOME TAX
35 Sec. 51. Section 422.9, subsection 3, paragraph c, Code
-29-12020, is amended by striking the paragraph and inserting in
2lieu thereof the following:
3c. A taxpayer may elect to waive the entire carryback period
4with respect to an Iowa net operating loss for any taxable year
5beginning on or after January 1, 2020. The election shall be
6made in the manner and form prescribed by the department, and
7shall be made by the due date for filing the taxpayer’s Iowa
8return, including extensions of time. After the election is
9made for any taxable year, the election shall be irrevocable
10for such taxable year. When an election has been properly
11made, the Iowa net operating loss shall be carried forward
12twenty taxable years.
13 Sec. 52. Section 422.9, subsection 3, paragraph d, Code
142020, is amended to read as follows:
15d. Notwithstanding paragraph “a”, for a taxpayer who is
16engaged in the trade or business of farming, which means the
17same as a “farming business” as defined in section 263A(e)(4) of
18the Internal Revenue Code, and has a farming loss from farming
19 as defined in section 172(b)(1)(B) of the Internal Revenue Code
20including modifications prescribed by rule by the director,
21the Iowa farming loss from the trade or business of farming is
22a net operating loss which may, at the time of the election of
23the taxpayer, be carried back five taxable years prior to the
24taxable year of the loss. The election shall be made in the
25manner and form prescribed by the department, and shall be made
26by the due date for filing the taxpayer’s return, including
27extensions of time. After the election is made for any taxable
28year, the election shall be irrevocable for such taxable year.
29 Sec. 53. APPLICABILITY. This division of this Act applies
30to tax years beginning on or after January 1, 2020.
31DIVISION IV
32RESEARCH ACTIVITIES CREDIT
33 Sec. 54. Section 15.335, subsection 4, paragraph a, Code
342020, is amended to read as follows:
35a. In lieu of the credit amount computed in subsection 2, an
-30-1eligible business may elect to compute the credit amount for
2qualified research expenses incurred in this state in a manner
3consistent with the alternative simplified credit described in
4section 41(c)(5) 41(c)(4) of the Internal Revenue Code. The
5taxpayer may make this election regardless of the method used
6for the taxpayer’s federal income tax. The election made under
7this paragraph is for the tax year and the taxpayer may use
8another or the same method for any subsequent year.
9 Sec. 55. Section 15.335, subsection 4, paragraph b,
10unnumbered paragraph 1, Code 2020, is amended to read as
11follows:
12For purposes of the alternate credit computation method in
13paragraph “a”, the credit percentages applicable to qualified
14research expenses described in section 41(c)(5)(A) 41(c)(4)(A)
15 and clause (ii) of section 41(c)(5)(B) 41(c)(4)(B) of the
16Internal Revenue Code are as follows:
17 Sec. 56. Section 422.10, subsection 1, paragraphs c and d,
18Code 2020, are amended to read as follows:
19c. In lieu of the credit amount computed in paragraph “b”,
20subparagraph (1), subparagraph division (a), a taxpayer may
21elect to compute the credit amount for qualified research
22expenses incurred in this state in a manner consistent with the
23alternative simplified credit described in section 41(c)(5)
24 41(c)(4) of the Internal Revenue Code. The taxpayer may make
25this election regardless of the method used for the taxpayer’s
26federal income tax. The election made under this paragraph is
27for the tax year and the taxpayer may use another or the same
28method for any subsequent year.
29d. For purposes of the alternate credit computation
30method in paragraph “c”, the credit percentages applicable to
31qualified research expenses described in section 41(c)(5)(A)
32 41(c)(4)(A) and clause (ii) of section 41(c)(5)(B) 41(c)(4)(B)
33 of the Internal Revenue Code are four and fifty-five
34hundredths percent and one and ninety-five hundredths percent,
35respectively.
-31-1 Sec. 57. Section 422.33, subsection 5, paragraphs c and d,
2Code 2020, are amended to read as follows:
3c. In lieu of the credit amount computed in paragraph
4“a”, subparagraph (1), a corporation may elect to compute the
5credit amount for qualified research expenses incurred in this
6state in a manner consistent with the alternative simplified
7credit described in section 41(c)(5) 41(c)(4) of the Internal
8Revenue Code. The taxpayer may make this election regardless
9of the method used for the taxpayer’s federal income tax. The
10election made under this paragraph is for the tax year and the
11taxpayer may use another or the same method for any subsequent
12year.
13d. For purposes of the alternate credit computation
14method in paragraph “c”, the credit percentages applicable to
15qualified research expenses described in section 41(c)(5)(A)
16 41(c)(4)(A) and clause (ii) of section 41(c)(5)(B) 41(c)(4)(B)
17 of the Internal Revenue Code are four and fifty-five
18hundredths percent and one and ninety-five hundredths percent,
19respectively.
20 Sec. 58. EFFECTIVE DATE. This division of this Act, being
21deemed of immediate importance, takes effect upon enactment.
22 Sec. 59. RETROACTIVE APPLICABILITY. This division of this
23Act applies retroactively to January 1, 2019, for tax years
24beginning on or after that date.
25DIVISION V
26PARTNERSHIP AND PASS-THROUGH ENTITY AUDITS AND REPORTING OF
27FEDERAL ADJUSTMENTS
28 Sec. 60. Section 421.27, subsection 2, paragraph c, Code
292020, is amended to read as follows:
30c. (1) The taxpayer provides written notification to the
31department of a federal audit while it is in progress and
32 voluntarily files an amended return which includes a copy of
33the federal document showing the final disposition or final
34federal adjustments and pays any additional Iowa tax due
35 within sixty one hundred eighty days of the final disposition
-32-1 determination date of the federal government’s audit. For
2purposes of this subparagraph, “final determination date” means
3the same as defined in section 422.25.
4(2) (a) In the case of a final federal partnership
5adjustment arising from a partnership level audit, with respect
6to the audited partnership or a direct partner or indirect
7partner of the audited partnership, the audited partnership,
8direct partner, or indirect partner voluntarily and timely
9complies with its reporting and payment requirements under
10section 422.25A, subsection 4 or 5.
11(b) As used in this subparagraph, all words and phrases
12defined in section 422.25A shall have the same meaning given
13them by that section.
14 Sec. 61. Section 422.7, Code 2020, is amended by adding the
15following new subsection:
16 NEW SUBSECTION. 59. Any income subtracted from federal
17taxable income for an adjustment year pursuant to section 6225
18of the Internal Revenue Code and the regulations thereunder
19shall be added back in computing net income for state tax
20purposes for the adjustment year.
21 Sec. 62. Section 422.25, subsections 1 and 2, Code 2020,
22are amended by striking the subsections and inserting in lieu
23thereof the following:
241. a. For purposes of this subsection:
25(1) “Federal adjustment” means a change to an item or amount
26required to be determined under the Internal Revenue Code and
27the regulations thereunder that is used by the taxpayer to
28compute state tax owed whether such change results from action
29by the internal revenue service, or the filing of a timely
30amended federal return or timely federal refund claim. A
31federal adjustment is positive to the extent that it increases
32Iowa taxable income as determined under this title and is
33negative to the extent that it decreases Iowa taxable income
34as determined under this title.
35(2) “Federal adjustments report” means the method or form
-33-1required by the department by rule to report final federal
2adjustments or final federal partnership adjustments as defined
3in section 422.25A, and in the case of any entity taxed as a
4partnership or S corporation for federal income tax purposes,
5identifies all owners that hold an interest directly in such
6entity and provides the effect of the final federal adjustments
7on such owner’s Iowa income.
8(3) “Final determination date” means the following:
9(a) Except as provided in subparagraph divisions (b) and
10(c), for federal adjustments arising from an internal revenue
11service audit or other action by the internal revenue service,
12the final determination date is the first day on which no
13federal adjustments arising from that audit or other action
14remain to be finally determined, whether by internal revenue
15service decision with respect to which all rights of appeal
16have been waived or exhausted, by agreement, or, if appealed
17or contested, by a final decision with respect to which all
18rights of appeal have been waived or exhausted. For agreements
19required to be signed by the internal revenue service and the
20taxpayer, the final determination date is the date on which the
21last party signed the agreement.
22(b) For federal adjustments arising from an internal
23revenue service audit or other action by the internal revenue
24service, if the taxpayer filed as a member of a consolidated
25return under section 422.37, the final determination date
26is the first day on which no related federal adjustments
27arising from that audit or other action remain to be finally
28determined, as described in subparagraph division (a), for the
29entire group.
30(c) For federal adjustments arising from a timely filed
31amended federal return or a timely filed federal refund
32claim, or if it is a federal adjustment reported on a timely
33amended federal return or other similar report filed pursuant
34to section 6225(c) of the Internal Revenue Code, the final
35determination date is the day on which the amended return,
-34-1refund claim, or other similar report was filed.
2(4) “Final federal adjustment” means a federal adjustment
3after the final determination date for that federal adjustment
4has passed.
5b. Within three years after the return is filed or within
6three years after the return became due, including any
7extensions of time for filing, whichever time is the later,
8the department shall examine the return and determine the tax.
9However, if the taxpayer omits from income an amount which
10will, under the Internal Revenue Code, extend the statute of
11limitations for assessment of federal tax to six years under
12the federal law, the period for examination and determination
13is six years.
14c. The period for examination and determination of the
15correct amount of tax is unlimited in the case of a false or
16fraudulent return made with the intent to evade tax or in the
17case of a failure to file a return.
18d. In lieu of the period of limitation for any prior year
19for which an overpayment of tax or an elimination or reduction
20of an underpayment of tax due for that prior year results from
21the carryback to that prior year of a net operating loss or
22net capital loss, the period is the period of limitation for
23the taxable year of the net operating loss or net capital loss
24which results in the carryback.
25e. (1) In addition to the applicable period of limitation
26for examination and determination in paragraph “b”, “c”, or “d”,
27the department may make an examination and determination at any
28time within one year from the date of receipt by the department
29of a federal adjustments report with respect to a final
30federal adjustment or final federal partnership adjustment
31as defined in section 422.25A for a particular tax year. In
32order to begin the running of the one-year period, the federal
33adjustments report related to the final federal adjustment or
34final federal partnership adjustment shall be transmitted to
35the department by the taxpayer in the form and manner specified
-35-1by the department by rule.
2(2) The department in its discretion may adopt rules to
3establish a de minimis amount for which subparagraph (1) shall
4not apply and the taxpayer shall not be required to file a
5federal adjustments report.
6(3) The department may in its discretion and when
7administratively feasible adopt a process through rule by
8which a taxpayer may make estimated payments of tax expected
9to result from a pending internal revenue service audit
10prior to the filing of a federal adjustments report with the
11department. The process shall provide that the estimated
12tax payments shall be credited against any tax liability
13ultimately found to be due to the state from the internal
14revenue service audit and will limit the accrual of further
15statutory interest on that liability. The process shall also
16provide that if the estimated tax payments exceed the final
17tax liability and statutory interest ultimately determined to
18be due, the taxpayer is entitled to a refund or credit for
19the excess, without interest, provided the taxpayer files a
20federal adjustments report, or a claim for refund or credit of
21tax under section 422.73, no later than one year following the
22final determination date.
232. a. If the tax found due under subsection 1 is greater
24than the amount paid, the department shall compute the amount
25due, together with interest and penalties as provided in
26paragraph “b”, and shall mail a notice of assessment to the
27taxpayer and, if applicable, to the taxpayer’s authorized
28representative of the total, which shall be computed as a sum
29certain, with interest computed to the last day of the month
30in which the notice is dated.
31b. In addition to the tax or additional tax determined
32by the department under subsection 1, the taxpayer shall pay
33interest on the tax or additional tax at the rate in effect
34under section 421.7 for each month counting each fraction of
35a month as an entire month, computed from the date the return
-36-1was required to be filed. In addition to the tax or additional
2tax, the taxpayer shall pay a penalty as provided in section
3421.27.
4 Sec. 63. NEW SECTION. 422.25A Reporting and treatment of
5certain partnership adjustments.
61. Definitions. As used in this section and sections
7422.25B and 422.25C, unless the context otherwise requires:
8a. “Administrative adjustment request” means the same as
9provided in section 6227 of the Internal Revenue Code.
10b. “Audited partnership” means a partnership subject
11to a final federal partnership adjustment resulting from a
12partnership level audit.
13c. “C corporation” means an entity that elects or is
14required to be taxed as a corporation under title 26, chapter
151, subchapter A, part 2, of the Internal Revenue Code.
16d. “Corporate partner” means a C corporation partner that is
17subject to tax pursuant to section 422.33.
18e. “Direct partner” means a person that holds an interest
19directly in a partnership or pass-through entity.
20f. “Exempt partner” means a partner that is exempt from
21taxation pursuant to section 422.34.
22g. “Federal adjustments report” means the same as defined
23in section 422.25.
24h. “Federal partnership adjustment” means a change to an
25item or amount required to be determined under the Internal
26Revenue Code and the regulations thereunder that is used by a
27partnership and its direct and indirect partners to compute
28state tax owed for the reviewed year where such change results
29from a partnership level audit or an administrative adjustment
30request. A federal partnership adjustment is positive to the
31extent that it increases Iowa taxable income as determined
32under this title and is negative to the extent that it
33decreases Iowa taxable income as determined under this title.
34A federal adjustment reported on an amended federal return
35or other similar report filed pursuant to section 6225(c) of
-37-1the Internal Revenue Code shall not be considered a federal
2partnership adjustment for purposes of this section.
3i. “Federal partnership representative” means the person
4the partnership designates for the taxable year as the
5partnership’s representative, or the person the internal
6revenue service has appointed to act as the federal partnership
7representative, pursuant to section 6223(a) of the Internal
8Revenue Code and the regulations thereunder.
9j. “Fiduciary partner” means a partner that is a fiduciary
10that is subject to tax pursuant to sections 422.5 and 422.6.
11k. “Final determination date” means any one of the following
12dates:
13(1) In the case of a federal partnership adjustment that
14arises from a partnership level audit, the first day on which
15no federal adjustments arising from that audit remain to be
16finally determined, whether by agreement, or, if appealed
17or contested, by a final decision with respect to which all
18rights of appeal have been waived or exhausted. For agreements
19required to be signed by the internal revenue service and the
20audited partnership, the final determination date is the date
21on which the last party signed the agreement.
22(2) In the case of a federal partnership adjustment that
23results from a timely filed administrative adjustment request,
24the day on which the administrative adjustment request was
25filed with the internal revenue service.
26l. “Final federal partnership adjustment” means a federal
27partnership adjustment after the final determination date for
28that federal partnership adjustment has passed.
29m. “Indirect partner” means a partner in a partnership or
30pass-through entity where such partnership or pass-through
31entity itself holds an interest directly, or through another
32indirect partner, in a partnership or pass-through entity.
33n. “Individual partner” means a partner who is a natural
34person that is subject to tax pursuant to section 422.5.
35o. “Nonresident partner” means a partner that is not a
-38-1resident partner as defined in this subsection.
2p. “Partner” means a person that holds an interest, directly
3or indirectly, in a partnership or pass-through entity.
4q. “Partnership” means an entity subject to taxation
5under subchapter K of the Internal Revenue Code and the
6regulations thereunder and includes but is not limited to a
7syndicate, group, pool, joint venture, or other unincorporated
8organization through or by means of which any business,
9financial operation, or venture is carried on and which is
10not, within the meaning of this chapter, a trust, estate, or
11corporation.
12r. “Partnership level audit” means an examination by the
13internal revenue service at the partnership level pursuant to
14subchapter C, title 26, subtitle F, chapter 63, of the Internal
15Revenue Code, as enacted by the Bipartisan Budget Act of 2015,
16Pub.L. No.114-74, and as amended, which results in final
17federal partnership adjustments initiated and made by the
18internal revenue service.
19s. “Pass-through entity” means an entity, other than
20a partnership, that is not subject to tax under section
21422.33 for C corporations but excluding an exempt partner.
22“Pass-through entity” includes but is not limited to S
23corporations, estates, and trusts other than grantor trusts.
24t. “Reallocation adjustment” means a final federal
25partnership adjustment that changes the shares of items of
26partnership income, gain, loss, expense, or credit allocated
27to a partner that holds an interest directly in a partnership
28or pass-through entity. A positive reallocation adjustment
29means the portion of a reallocation adjustment that would
30increase Iowa taxable income for such partners, and a negative
31reallocation adjustment means the portion of a reallocation
32adjustment that would decrease Iowa taxable income for such
33partners.
34u. “Resident partner” means any of the following:
35(1) For an individual partner, a “resident” as defined in
-39-1section 422.4.
2(2) For a fiduciary partner, one with situs in Iowa.
3(3) For all other partners, a partner whose headquarters or
4principal place of business is located in Iowa.
5v. “Reviewed year” means the taxable year of a partnership
6that is subject to a partnership level audit from which final
7federal partnership adjustments arise, or otherwise means the
8taxable year of the partnership or pass-through entity that is
9the subject of a state partnership audit.
10w. “State partnership audit” means an examination by the
11director at the partnership or pass-through entity level which
12results in adjustments to partnership or pass-through entity
13related items or reallocations of income, gains, losses,
14expenses, credits, and other attributes among such partners for
15the reviewed year.
16x. “Tiered partner” means any partner that is a partnership
17or pass-through entity.
18y. “Unrelated business income” means the income which is
19defined in section 512 of the Internal Revenue Code and the
20regulations thereunder.
212. Application. Partnerships and their direct partners
22and indirect partners shall report final federal partnership
23adjustments as provided in this section.
243. State partnership representative. Notwithstanding any
25other law to the contrary, the state partnership representative
26for the reviewed year shall have the sole authority to act on
27behalf of the partnership or pass-through entity with respect
28to an action required or permitted to be taken by a partnership
29or pass-through entity under this section or section 422.28 or
30422.29 with respect to final federal partnership adjustments
31arising from a partnership level audit or an administrative
32adjustment request, and its direct partners and indirect
33partners shall be bound by those actions.
344. Reporting and payment requirements for audited
35partnerships and their partners subject to final federal
-40-1partnership adjustments.
2a. Unless an audited partnership makes the election in
3subsection 5, the audited partnership shall do all of the
4following for all final federal partnership adjustments no
5later than ninety days after the final determination date of
6the audited partnership:
7(1) File a completed federal adjustments report.
8(2) Notify each direct partner of such partner’s
9distributive share of the adjustments in the manner and form
10prescribed by the department by rule.
11(3) File an amended composite return under section 422.13
12if one was originally filed, and if applicable for withholding
13from partners, file an amended withholding report under
14section 422.16, and pay the additional amount under this title
15that would have been due had the final federal partnership
16adjustments been reported properly as required, including any
17applicable interest and penalties.
18b. Unless an audited partnership paid an amount on behalf
19of the direct partners of the audited partnership pursuant to
20subsection 5, all direct partners of the audited partnership
21shall do all of the following no later than one hundred
22eighty days after the final determination date of the audited
23partnership:
24(1) File a completed federal adjustments report reporting
25the direct partner’s distributive share of the adjustments
26required to be reported to such partners under paragraph “a”.
27(2) If the direct partner is a tiered partner, notify all
28partners that hold an interest directly in the tiered partner
29of such partner’s distributive share of the adjustments in the
30manner and form prescribed by the department by rule.
31(3) If the direct partner is a tiered partner and subject to
32section 422.13, file an amended composite return under section
33422.13 if such return was originally filed, and if applicable
34for withholding from partners file an amended withholding
35report under section 422.16 if one was originally required to
-41-1be filed.
2(4) Pay any additional amount under this title that would
3have been due had the final federal partnership adjustments
4been reported properly as required, including any applicable
5penalty and interest.
6c. Unless a partnership or tiered partner paid an amount on
7behalf of the partners pursuant to subsection 5, each indirect
8partner shall do all of the following:
9(1) Within ninety days after the time for filing and
10furnishing statements to tiered partners and their partners
11as established by section 6226 of the Internal Revenue Code
12and the regulations thereunder, file a completed federal
13adjustments report.
14(2) If the indirect partner is a tiered partner, within
15ninety days after the time for filing and furnishing statements
16to tiered partners and their partners as established by
17section 6226 of the Internal Revenue Code and the regulations
18thereunder but within sufficient time for all indirect partners
19to also complete the requirements of this subsection, notify
20all of the partners that hold an interest directly in the
21tiered partner of such partner’s distributive share of the
22adjustments in the manner and form prescribed by the department
23by rule.
24(3) Within ninety days after the time for filing and
25furnishing statements to tiered partners and their partners
26as established by section 6226 of the Internal Revenue Code
27and the regulations thereunder, if the indirect partner
28is a tiered partner and subject to section 422.13, file an
29amended composite return under section 422.13 if such return
30was originally filed, and if applicable for withholding from
31partners, file an amended withholding report under section
32422.16 if one was originally required to be filed.
33(4) Within ninety days after the time for filing and
34furnishing statements to tiered partners and the partners of
35the tiered partners as established by section 6226 of the
-42-1Internal Revenue Code and the regulations thereunder, pay any
2additional amount due under this title, including any penalty
3and interest that would have been due had the final federal
4partnership adjustments been reported properly as required.
55. Election for partnership or tiered partners to pay.
6a. An audited partnership, or a tiered partner that receives
7a notification of a final federal partnership adjustment under
8subsection 4, may make an election to pay as provided under
9this subsection.
10b. An audited partnership or tiered partner makes an
11election to pay under this subsection by filing a completed
12federal adjustments report, notifying the department in the
13manner and form prescribed by the department that it is making
14the election under this subsection, notifying each of the
15direct partners of such partner’s distributive share of the
16adjustments, and paying on behalf of its partners an amount
17calculated in paragraph “c”, including any applicable penalty
18and interest. These requirements shall all be fulfilled within
19one of the following time periods:
20(1) For the audited partnership, no later than ninety days
21after the final determination date of the audited partnership.
22(2) For a direct tiered partner, no later than one hundred
23eighty days after the final determination date of the audited
24partnership.
25(3) For an indirect tiered partner, within ninety days
26after the time for filing and furnishing statements to a
27tiered partner and the partner of the tiered partner, as
28established by section 6226 of the Internal Revenue Code and
29the regulations thereunder.
30c. The amount due under this subsection from an audited
31partnership or tiered partner shall be calculated as follows:
32(1) Exclude from final federal partnership adjustments and
33any positive reallocation adjustments the distributive share
34of such adjustments reported to an exempt partner that holds
35an interest directly in the audited partnership if the audited
-43-1partnership is making the election or that holds an interest
2directly in the tiered partner if the tiered partner is making
3the election, but only to the extent the distributive share is
4not unrelated business income.
5(2) Determine the total distributive share of all final
6federal partnership adjustments and positive reallocation
7adjustments as modified by this title that are reported to
8corporate partners, and to exempt partners to the extent the
9distributive share is unrelated business income, and allocate
10and apportion such adjustments as provided in section 422.33
11at the partnership or tiered partner level, and multiply the
12resulting amount by the maximum state corporate income tax rate
13pursuant to section 422.33 for the reviewed year.
14(3) Determine the total distributive share of all final
15federal partnership adjustments and positive reallocation
16adjustments as modified by this title that are reported to
17nonresident individual partners and nonresident fiduciary
18partners and allocate and apportion such adjustments as
19provided in section 422.33 at the partnership or tiered
20partner level, and multiply the resulting amount by the maximum
21individual income tax rate pursuant to section 422.5A for the
22reviewed year.
23(4) For the total distributive share of all final federal
24partnership adjustments and positive reallocation adjustments
25as modified by this title that are reported to tiered partners:
26(a) Determine the amount of such adjustments which are of a
27type that would be subject to sourcing to Iowa under section
28422.8, subsection 2, paragraph “a”, as a nonresident, and then
29determine the portion of this amount that would be sourced to
30Iowa under those provisions as if the tiered partner were a
31nonresident.
32(b) Determine the amount of such adjustments which are of
33a type that would not be subject to sourcing to Iowa under
34section 422.8, subsection 2, paragraph “a”, as a nonresident.
35(c) Determine the portion of the amount in subparagraph
-44-1division (b) that can be established, as prescribed by the
2department by rule, to be properly allocable to indirect
3partners that are nonresident partners or other partners not
4subject to tax on the adjustments.
5(d) Multiply the total of the amounts determined in
6subparagraph divisions (a) and (b), reduced by any amount
7determined in subparagraph division (c), by the highest
8individual income tax rate pursuant to section 422.5A for the
9reviewed year.
10(5) For the total distributive share of all final federal
11partnership adjustments and positive reallocation adjustments
12as modified by this title that are reported to resident
13individual partners and resident fiduciary partners, multiply
14that amount by the highest individual income tax rate pursuant
15to section 422.5A for the reviewed year.
16(6) Total the amounts computed pursuant to subparagraphs
17(2) through (5) and calculate any interest and penalty as
18provided under this title. Notwithstanding any provision of
19law to the contrary, interest and penalties on the amount due
20by the audited partnership or tiered partner shall be computed
21from the day after the due date of the reviewed year return
22without extension, and shall be imposed as if the audited
23partnership or tiered partner was required to pay tax or show
24tax due on the original return for the reviewed year.
25d. Adjustments subject to the election in this subsection
26do not include any adjustments arising from an administrative
27adjustment request.
28e. An audited partnership or tiered partner not otherwise
29subject to any reporting or payment obligation to Iowa that
30makes an election under this subsection consents to be subject
31to the Iowa laws related to reporting, assessment, collection,
32and payment of Iowa tax, interest, and penalties calculated
33under the election.
346. Modified reporting and payment method. The department may
35adopt procedures for an audited partnership or tiered partner
-45-1to enter into an agreement with the department to use an
2alternative reporting and payment method, including applicable
3time requirements or any other provision of this section. The
4audited partnership or tiered partner must demonstrate that
5the requested method will reasonably provide for the reporting
6and payment of taxes, penalties, and interest due under the
7provisions of this section. Application for approval of an
8alternative reporting and payment method must be made by the
9audited partnership or tiered partner within the time for
10making an election to pay under subsection 5 and in the manner
11prescribed by the department. Approval of such an alternative
12reporting and payment method shall be at the discretion of the
13department.
147. Effect of election by partnership or tiered partner and
15payment of amount due.
16a. The election made under subsection 5 is irrevocable,
17unless in the discretion of the director, the director
18determines otherwise.
19b. The amount determined in subsection 5, when properly
20reported and paid by the audited partnership or tiered partner,
21shall be treated as paid on behalf of the partners of such
22audited partnership or tiered partner on the same final federal
23partnership adjustments, provided, however, that no partner may
24take any deduction or credit for the amount, claim a refund of
25the amount, or include the amount on such partner’s Iowa return
26in any manner.
27c. In the event another state offers to an audited
28partnership or tiered partner a similar election to pay state
29tax resulting from final federal partnership adjustments,
30nothing in this subsection shall prohibit a resident who holds
31an interest directly in that audited partnership or tiered
32partner, as the case may be, from claiming a credit for taxes
33paid by the resident to another state under section 422.8,
34subsection 1, for any amounts paid by the audited partnership
35or tiered partner on such resident partner’s behalf to another
-46-1state, provided such payment otherwise meets the requirements
2of section 422.8, subsection 1.
3d. Nothing in this section shall prohibit the department
4from assessing direct partners and indirect partners for taxes
5they owe in the event that an audited partnership or tiered
6partner fails to timely make any report or payment required by
7this section for any reason.
88. Assessments of additional Iowa income tax, interest, and
9penalties, and claims for refund, arising from final federal
10partnership adjustments.
11a. The department shall assess additional Iowa income
12tax, interest, and penalties arising from final federal
13partnership adjustments in the same manner as provided in
14this title unless a different treatment is provided by this
15subsection. Since final federal partnership adjustments are
16determined at the audited partnership level, any assessment
17issued to partners shall not be appealable by the partner.
18The department may assess any taxes, including on-behalf-of
19amounts, interest, and penalties arising from the final federal
20partnership adjustments if it issues a notice of assessment to
21the audited partnership, tiered partner, or other direct or
22indirect partner on or before the expiration of the applicable
23limitations period specified in section 422.25.
24b. In addition to the period for claiming a refund or credit
25provided in section 422.73, subsection 1, paragraph “a”, and
26notwithstanding section 422.73, subsection 1, paragraph “b”,
27a partnership, tiered partner, or other direct or indirect
28partner, as the case may be, may file a claim for refund of
29Iowa income tax arising directly or indirectly from a final
30federal partnership adjustment arising from a partnership level
31audit on or before the date which is one year from the date the
32federal adjustments report for that final federal partnership
33adjustment was required to be filed by such person under this
34section.
359. Rules. The department may adopt any rules pursuant to
-47-1chapter 17A to implement this section.
2 Sec. 64. NEW SECTION. 422.25B State partnership
3representative.
41. As used in this section, all words and phrases defined
5in section 422.25A shall have the same meaning given them by
6that section.
72. The state partnership representative for the reviewed
8year for a partnership shall be the partnership’s federal
9partnership representative with respect to an action required
10or permitted to be taken by a state partnership representative
11under this chapter for a reviewed year, unless the partnership
12designates in writing another person as the state partnership
13representative as provided in subsection 3. The state
14partnership representative for the reviewed year for a
15pass-through entity is the person designated in subsection 3.
163. The department may establish reasonable qualifications
17for a person to be a state partnership representative. If
18a partnership desires to designate a person other than the
19federal partnership representative, the partnership shall
20designate such person in the manner and form prescribed by the
21department. A pass-through entity shall designate a person as
22the state partnership representative in the manner and form
23prescribed by the department. A partnership or pass-through
24entity shall be allowed to change such designation by notifying
25the department at the time the change occurs in the manner and
26form prescribed by the department.
274. The department may adopt any rules pursuant to chapter
2817A to implement this section.
29 Sec. 65. NEW SECTION. 422.25C Partnership and pass-through
30entity audits and examinations — consistent treatment of
31entity-level items — binding actions — amended returns.
321. As used in this section, all words and phrases defined
33in section 422.25A shall have the same meaning given them by
34that section.
352. For tax years beginning on or after January 1, 2020, any
-48-1adjustments to a partnership’s or pass-through entity’s items
2of income, gain, loss, expense, or credit, or an adjustment
3to such items allocated to a partner that holds an interest
4in a partnership or pass-through entity for the reviewed year
5by the department as a result of a state partnership audit,
6shall be determined at the partnership level or pass-through
7entity level in the same manner as provided by section 6221(a)
8of the Internal Revenue Code and the regulations thereunder
9unless a different treatment is specifically provided in this
10title. The provisions of sections 6222, 6223, and 6227 of the
11Internal Revenue Code and the regulations thereunder shall also
12apply to a partnership or pass-through entity and its direct
13or indirect partners in the same manner as provided in such
14sections unless a different treatment is specifically provided
15in this title. For purposes of applying such sections, due
16account shall be made for differences in federal and Iowa
17terminology. The adjustment provided by section 6221(a) of
18the Internal Revenue Code shall be determined as provided in
19such section but shall be based on Iowa taxable income or
20other tax attributes of the partnership as determined pursuant
21to this chapter for the reviewed year. The department shall
22issue a notice of adjustment to the partnership or pass-through
23entity. Such notice shall be treated as an assessment for
24the purposes of section 422.25, and the notice shall be
25appealable by the partnership or pass-through entity pursuant
26to sections 422.28 and 422.29 and shall be issued within the
27time period provided by section 422.25. Once the adjustments
28to partnership-related or pass-through entity-related items or
29reallocations of income, gains, losses, expenses, credits, and
30other attributes among such partners for the reviewed year are
31finally determined, the partnership or pass-through entity and
32any direct partners or indirect partners shall then be subject
33to the provisions of section 422.25, subsection 1, paragraph
34“e”, and section 422.25A in the same manner as if the state
35partnership audit were a federal partnership level audit, and
-49-1as if the final state partnership audit adjustment were a final
2federal partnership adjustment. The penalty exceptions in
3section 421.27, subsection 2, paragraphs “b” and “c”, shall not
4apply to a state partnership audit.
53. The state partnership representative for the reviewed
6year as determined under section 422.25B shall have the sole
7authority to act on behalf of the partnership or pass-through
8entity with respect to an action required or permitted to
9be taken by a partnership or pass-through entity under this
10section, including proceedings under section 422.28 or 422.29,
11and the partnership’s or pass-through entity’s direct partners
12and indirect partners shall be bound by those actions.
134. If the department, the partnership or pass-through
14entity, and the partnership or pass-through entity owners
15agree, the provisions of this section may be applied to tax
16years beginning before January 1, 2020.
175. The department may adopt rules pursuant to chapter 17A to
18implement this section.
19 Sec. 66. Section 422.35, Code 2020, is amended by adding the
20following new subsection:
21 NEW SUBSECTION. 26. Any income subtracted from federal
22taxable income for an adjustment year pursuant to section 6225
23of the Internal Revenue Code and the regulations thereunder
24shall be added back in computing net income for state tax
25purposes for the adjustment year.
26 Sec. 67. Section 422.39, Code 2020, is amended by striking
27the section and inserting in lieu thereof the following:
28422.39 Statutes applicable to corporations and corporation
29tax.
30All the provisions of sections 422.24 through 422.27
31of division II, respecting payment, collection, reporting,
32examination, and assessment, shall apply in respect to a
33corporation subject to the provisions of this division and to
34the tax due and payable by a corporation taxable under this
35division. This includes but is not limited to a corporation
-50-1that is a pass-through entity as defined in section 422.25A.
2 Sec. 68. Section 422.73, Code 2020, is amended by adding the
3following new subsection:
4 NEW SUBSECTION. 01. For purposes of this section, “federal
5adjustment”, “final determination date”, and “final federal
6adjustment” all mean the same as defined in section 422.25.
7 Sec. 69. Section 422.73, subsections 1 and 3, Code 2020, are
8amended to read as follows:
91. a. If it appears that an amount of tax, penalty, or
10interest has been paid which was not due under division II,
11III or V of this chapter, then that amount shall be credited
12against any tax due on the books of the department by the
13person who made the excessive payment, or that amount shall be
14refunded to the person or with the person’s approval, credited
15to tax to become due. A claim for refund or credit that has
16not been filed with the department within three years after
17the return upon which a refund or credit claimed became due,
18or within one year after the payment of the tax upon which a
19refund or credit is claimed was made, whichever time is the
20later, shall not be allowed by the director. If, as a result of
21a carryback of a net operating loss or a net capital loss, the
22amount of tax in a prior period is reduced and an overpayment
23results, the claim for refund or credit of the overpayment
24shall be filed with the department within the three years after
25the return for the taxable year of the net operating loss or
26net capital loss became due.
27b. Notwithstanding the period of limitation specified in
28paragraph “a”, the taxpayer shall have six months one year from
29the day of final disposition final determination date of any
30income tax matter between the taxpayer and the internal revenue
31service final federal adjustment arising from an internal
32revenue service audit or other similar action by the internal
33revenue service with respect to the particular tax year to
34claim an income tax refund or credit arising from that final
35federal adjustment.
-51- 13. The department shall enter into an agreement with the
2internal revenue service for the transmission of federal income
3tax reports on individuals required to file an Iowa income tax
4return who have been involved in an income tax matter with the
5internal revenue service. After final disposition the final
6determination date of the income tax matter that involves a
7final federal adjustment between the taxpayer and the internal
8revenue service, the department shall determine whether the
9individual is due a state income tax refund as a result of that
10 final disposition of federal adjustment from such income tax
11matter. If the individual is due a state income tax refund,
12the department shall notify the individual within thirty days
13and request the individual to file a claim for refund or credit
14with the department.
15 Sec. 70. APPLICABILITY. This division of this Act applies
16to federal adjustments and federal partnership adjustments that
17have a final determination date after the effective date of
18this division of this Act.
19DIVISION VI
20SETOFF PROCEDURES — RULEMAKING — EFFECTIVE DATE
21 Sec. 71. RULES.The following applies to 2020 Iowa Acts,
22Senate File 2328 or House File 2565, if enacted:
23The department of revenue shall adopt rules governing
24setoffs that occur during the transition from the department of
25administrative services to the department of revenue.
26 Sec. 72. 2020 Iowa Acts, Senate File 2328, if enacted, is
27amended by adding the following new section:
28 NEW SECTION. Sec. ___. EFFECTIVE DATE. This Act takes
29effect on the later of January 1, 2021, or the effective date
30of the rules adopted by the department of revenue pursuant
31to chapter 17A implementing this Act other than transitional
32rules.
33 Sec. 73. 2020 Iowa Acts, House File 2565, section 28, if
34enacted, is amended to read as follows:
35SEC. 28. EFFECTIVE DATE. This Act takes effect on the
-52-1later of January 1, 2021, or the effective date of the rules
2adopted by the department of revenue pursuant to chapter 17A
3implementing this Act other than transitional rules.
4 Sec. 74. EFFECTIVE DATE. This division of this Act, being
5deemed of immediate importance, takes effect upon enactment.
6 Sec. 75. RETROACTIVE APPLICABILITY. This division of this
7Act applies retroactively to the effective date of 2020 Iowa
8Acts, Senate File 2328 or House File 2565, if enacted.
9DIVISION VII
10PRO RATA SHARE OF ENTITY-LEVEL INCOME TAX PAID BY SHAREHOLDERS
11OR BENEFICIARIES
12 Sec. 76. Section 422.8, subsection 1, Code 2020, is amended
13to read as follows:
141. a. The amount of income tax paid to another state or
15foreign country by a resident taxpayer of this state on income
16derived from sources outside of Iowa shall be allowed as a
17credit against the tax computed under this chapter, except that
18the credit shall not exceed what the amount of the Iowa tax
19would have been on the same income which was taxed by the other
20state or foreign country. The limitation on this credit shall
21be computed according to the following formula: Income earned
22outside of Iowa and taxed by another state or foreign country
23shall be divided by the total income of the resident taxpayer
24of Iowa. This quotient multiplied times by the net Iowa tax as
25determined on the total income of the taxpayer as if entirely
26earned in Iowa shall be the maximum tax credit against the Iowa
27net tax.
28b. (1) For purposes of paragraph “a”, a resident partner
29of an entity taxed as a partnership for federal tax purposes,
30a resident shareholder of an S corporation, or a resident
31beneficiary of an estate or trust shall be deemed to have paid
32the resident partner’s, resident shareholder’s, or resident
33beneficiary’s pro rata share of entity-level income tax paid
34by the partnership, S corporation, estate, or trust to another
35state or foreign country on income that is also subject to
-53-1tax under this division, but only if the entity provides the
2resident partner, resident shareholder, or resident beneficiary
3a statement that documents the resident partner’s, resident
4shareholder’s, or resident beneficiary’s share of the income
5derived in the other state or foreign country, the income tax
6liability of the entity in that state or foreign country, and
7the income tax paid by the entity to that state or foreign
8country.
9(2) For purposes of paragraph “a”, a resident shareholder of
10a regulated investment company shall be deemed to have paid the
11shareholder’s pro rata share of entity-level income tax paid by
12the regulated investment company to another state or foreign
13country and treated as paid by its shareholders pursuant to
14section 853 of the Internal Revenue Code, but only if the
15regulated investment company provides the resident shareholder
16a statement that documents the resident shareholder’s share of
17the income derived in the other state or foreign country, the
18income tax liability of the regulated investment company in
19that state or foreign country, and the income tax paid by the
20regulated investment company to that state or foreign country.
21 Sec. 77. EFFECTIVE DATE. This division of this Act, being
22deemed of immediate importance, takes effect upon enactment.
23 Sec. 78. RETROACTIVE APPLICABILITY. This division of this
24Act applies retroactively to January 1, 2020, for tax years
25beginning on or after that date.
26DIVISION VIII
27BONUS DEPRECIATION
28 Sec. 79. Section 422.7, subsections 51 and 52, Code 2020,
29are amended by striking the subsections.
30 Sec. 80. Section 422.9, subsection 2, paragraph h, Code
312020, is amended to read as follows:
32h. For purposes of calculating the deductions in this
33subsection that are authorized under the Internal Revenue Code,
34and to the extent that any of such deductions is determined by
35an individual’s federal adjusted gross income, the individual’s
-54-1federal adjusted gross income is computed in accordance with
2section 422.7, subsections 39, 39A, 39B, 51, 52, and 53.
3 Sec. 81. Section 422.35, subsections 14 and 15, Code 2020,
4are amended by striking the subsections.
5 Sec. 82. PRESERVATION OF EXISTING RIGHTS. The sections of
6this division striking section 422.7, subsections 51 and 52,
7and section 422.35, subsections 14 and 15, respectively, shall
8not limit, modify, or otherwise adversely affect a taxpayer’s
9right to deduct for a tax year beginning on or after January 1,
102020, any amount determined under section 422.7, subsection 52,
11paragraph “b”, subparagraph (3), Code 2020, or under section
12422.35, subsection 15, paragraph “b”, subparagraph (3), Code
132020, for a tax year beginning prior to January 1, 2020.
14 Sec. 83. RETROACTIVE APPLICABILITY. This division of this
15Act applies retroactively to January 1, 2020, for tax years
16beginning on or after that date.
17DIVISION IX
18MARRIED TAXPAYERS — JOINT LIABILITY
19 Sec. 84. Section 422.21, subsection 7, Code 2020, is amended
20to read as follows:
217. If married taxpayers file a joint return or file
22separately on a combined return in accordance with rules
23prescribed by the director, both spouses are jointly and
24severally liable for the total tax due on the return, except
25when one spouse is considered to be an innocent spouse eligible
26for relief under criteria established pursuant to section 6015
27of the Internal Revenue Code. The department may notify the
28nonrequesting spouse or former spouse and permit, by rule, the
29intervention of a nonrequesting spouse or former spouse when
30relief from joint and several liability is requested.
31 Sec. 85. EFFECTIVE DATE. This division of this Act, being
32deemed of immediate importance, takes effect upon enactment.
33DIVISION X
34SALES TAX PAID BY THIRD-PARTY DEVELOPERS
35 Sec. 86. Section 15.331C, subsection 2, Code 2020, is
-55-1amended to read as follows:
22. A third-party developer shall state under oath, on
3forms provided by the department of revenue, the amount of
4taxes paid as described in subsection 1 and shall submit such
5forms to the department of revenue. The taxes paid shall be
6itemized to allow identification of the taxes attributable
7to racks, shelving, and conveyor equipment to be used in a
8warehouse or distribution center. After receiving the form
9from the third-party developer, the department of revenue shall
10issue a tax credit certificate to the eligible business equal
11to the sales and use taxes paid by a third-party developer
12under chapter 423 for gas, electricity, water, or sewer
13utility services, goods, wares, or merchandise, or on services
14rendered, furnished, or performed to or for a contractor or
15subcontractor and used in the fulfillment of a written contract
16relating to the construction or equipping of a facility.
17The department of revenue shall also issue a tax credit
18certificate to the eligible business equal to the taxes paid
19and attributable to racks, shelving, and conveyor equipment to
20be used in a warehouse or distribution center. The aggregate
21combined total amount of tax refunds under section 15.331A for
22taxes attributable to racks, shelving, and conveyor equipment
23to be used in a warehouse or distribution center and of tax
24credit certificates issued by the department of revenue for the
25taxes paid and attributable to racks, shelving, and conveyor
26equipment to be used in a warehouse or distribution center
27shall not exceed five hundred thousand dollars in a fiscal
28year. If an applicant for a tax credit certificate does not
29receive a certificate for the taxes paid and attributable
30to racks, shelving, and conveyor equipment to be used in a
31warehouse or distribution center, the application shall be
32considered in succeeding fiscal years. The eligible business
33shall not claim a tax credit under this section unless a tax
34credit certificate issued by the department of revenue is
35included with the taxpayer’s tax return for the tax year for
-56-1which the tax credit is claimed. A tax credit certificate
2shall contain the eligible business’s name, address, tax
3identification number, the amount of the tax credit, and other
4information deemed necessary by the department of revenue.
5An individual under this section may claim a tax credit of
6a partnership, limited liability company, S corporation,
7estate, or trust electing to have income taxed directly to
8the individual. The amount claimed by the individual shall
9be based upon the pro rata share of the individual’s earnings
10from the partnership, limited liability company, S corporation,
11estate, or trust.
12 Sec. 87. NEW SECTION. 422.12O Corporate tax credit for
13certain sales taxes paid by third-party developer.
14The taxes imposed under this division, less the credits
15allowed under section 422.12, shall be reduced by a corporate
16tax credit authorized pursuant to section 15.331C for certain
17sales taxes paid by a third-party developer.
18 Sec. 88. EFFECTIVE DATE. This division of this Act, being
19deemed of immediate importance, takes effect upon enactment.
20 Sec. 89. RETROACTIVE APPLICABILITY. This division of this
21Act applies retroactively to January 1, 2020, for tax years
22beginning on or after that date.
23DIVISION XI
24IOWA EDUCATIONAL SAVINGS PLAN TRUST (529 PLANS)
25 Sec. 90. Section 12D.1, subsection 2, paragraph k, Code
262020, is amended to read as follows:
27k. “Qualified education expenses” means the same as
28“qualified higher education expenses” as defined in section
29529(e)(3) of the Internal Revenue Code, as amended by Pub.L.
30No.115-97, and shall include elementary and secondary school
31expenses for tuition described in section 529(c)(7) of the
32Internal Revenue Code, subject to the limitations imposed by
33section 529(e)(3)(A) of the Internal Revenue Code. “Qualified
34education expenses” includes expenses for the participation
35in an apprenticeship program registered and certified with
-57-1the United States secretary of labor under section 1 of the
2National Apprenticeship Act, 29 U.S.C. §50, and amounts paid as
3principal or interest on any qualified education loan on behalf
4of a beneficiary or a sibling of the beneficiary, subject to
5the limitations imposed by section 529(c)(9)(B) and (C) of the
6Internal Revenue Code.
7 Sec. 91. Section 12D.1, subsection 2, Code 2020, is amended
8by adding the following new paragraphs:
9 NEW PARAGRAPH. 0l. “Qualified education loan” means the
10same as “qualified education loan” as defined in section 221(d)
11of the Internal Revenue Code.
12 NEW PARAGRAPH. 0m. “Sibling” means a brother, sister,
13stepbrother, or stepsister of the beneficiary.
14 Sec. 92. Section 422.7, subsection 32, paragraph c,
15subparagraph (1), Code 2020, is amended by adding the following
16new subparagraph divisions:
17 NEW SUBPARAGRAPH DIVISION. (d) The payment of expenses
18for fees, books, supplies, and equipment required for the
19participation of a beneficiary in an apprenticeship program.
20 NEW SUBPARAGRAPH DIVISION. (e) The payment of qualified
21education loan repayments.
22 Sec. 93. Section 422.7, subsection 32, paragraph c,
23subparagraph (2), Code 2020, is amended by adding the following
24new subparagraph divisions:
25 NEW SUBPARAGRAPH DIVISION. (0a) “Apprenticeship program”
26means a program registered and certified with the United
27States secretary of labor under section 1 of the National
28Apprenticeship Act, 29 U.S.C. §50.
29 NEW SUBPARAGRAPH DIVISION. (0c) “Qualified education loan”
30means the same as defined in section 12D.1, subsection 2.
31 NEW SUBPARAGRAPH DIVISION. (00c) “Qualified education loan
32repayments” means amounts paid as principal or interest on any
33qualified education loan of the beneficiary or a sibling of
34the beneficiary. The repayment amounts shall not exceed ten
35thousand dollars in the aggregate for the beneficiary or the
-58-1sibling, respectively.
2 NEW SUBPARAGRAPH DIVISION. (d) “Sibling” means the same as
3defined in section 12D.1, subsection 2.
4 Sec. 94. EFFECTIVE DATE. This division of this Act, being
5deemed of immediate importance, takes effect upon enactment.
6 Sec. 95. RETROACTIVE APPLICABILITY. This division of this
7Act applies retroactively to January 1, 2019, for tax years
8beginning on or after that date.
9DIVISION XII
10IOWA EDUCATIONAL SAVINGS ACCOUNT AND FIRST-TIME HOMEBUYER
11ACCOUNT — EXTENSIONS
12 Sec. 96. EXTENSION OF IOWA EDUCATIONAL SAVINGS ACCOUNT
13CONTRIBUTION DEDUCTION FOR TAX YEAR 2019. Notwithstanding any
14provision of law to the contrary, in determining the deduction
15provided under section 422.7, subsection 32, paragraph “a”,
16for tax years beginning during the 2019 calendar year, a
17participant who makes a contribution to the Iowa educational
18savings plan trust pursuant to section 12D.3, subsection 1, on
19or after January 1, 2020, but on or before July 31, 2020, may
20elect to be deemed to have made the contribution on the last
21day of calendar year 2019.
22 Sec. 97. EXTENSION OF IOWA FIRST-TIME HOMEBUYER ACCOUNT AND
23BENEFICIARY DESIGNATION FOR ACCOUNTS OPENED IN 2019.
241. Notwithstanding section 541B.3, subsection 1, paragraph
25“a”, or any other provision of law to the contrary, an
26individual who opened a first-time homebuyer account during
27calendar year 2019 and who wishes to participate in the Iowa
28first-time homebuyer savings account program shall designate
29the account as a first-time homebuyer account on or before July
3031, 2020, on forms provided by the department of revenue.
312. Notwithstanding section 541B.3, subsection 2, paragraph
32“a”, or any other provision of law to the contrary, an
33individual who opened a first-time homebuyer account during
34calendar year 2019 and who wishes to participate in the Iowa
35first-time homebuyer savings account program shall designate an
-59-1individual as beneficiary of the first-time homebuyer savings
2account on or before July 31, 2020, on forms provided by the
3department of revenue.
4 Sec. 98. EFFECTIVE DATE. This division of this Act, being
5deemed of immediate importance, takes effect upon enactment.
6DIVISION XIII
7QUALIFYING PERSONAL PROTECTION EQUIPMENT — DONATION
8 Sec. 99. Section 423.6, Code 2020, is amended by adding the
9following new subsection:
10 NEW SUBSECTION. 18. Qualifying personal protective
11equipment and materials which are assembled to become
12qualifying personal protective equipment. For purposes of this
13subsection, “qualifying personal protective equipment” means
14personal protective equipment that is assembled and donated by
15a person during the period beginning with a state of disaster
16emergency proclamation by the governor under section 29C.6 and
17ending one hundred eighty days after the expiration of such
18proclamation.
19 Sec. 100. REFUNDS. Refunds of taxes, interest, or penalties
20that arise from claims resulting from the enactment of this
21division of this Act, for donations occurring prior to the
22effective date of this division of this Act, shall not be
23allowed unless claims are filed prior to October 1, 2020,
24notwithstanding any other provision of the law to the contrary.
25 Sec. 101. EFFECTIVE DATE. This division of this Act, being
26deemed of immediate importance, takes effect upon enactment.
27 Sec. 102. RETROACTIVE APPLICABILITY. This division of this
28Act applies retroactively to January 1, 2020, for qualifying
29personal protective equipment and materials assembled and
30donated on or after that date.
31DIVISION XIV
32SHORT-TERM RENTAL PROPERTIES
33 Sec. 103. Section 331.301, Code 2020, is amended by adding
34the following new subsection:
35 NEW SUBSECTION. 18. a. For purposes of this subsection,
-60-1“short-term rental property” means any individually or
2collectively owned single-family house or dwelling unit;
3any unit or group of units in a condominium, cooperative,
4or timeshare; or an owner-occupied residential home that is
5offered for a fee for thirty days or less. “Short-term rental
6property” does not include a unit that is used for any retail,
7restaurant, banquet space, event center, or other similar use.
8b. A county shall not adopt or enforce any ordinance
9prohibiting short-term rental properties within the county. A
10short-term rental property shall be classified as a residential
11land use for zoning purposes.
12c. Notwithstanding paragraph “b”, a county may enact or
13enforce an ordinance that regulates, prohibits, or otherwise
14limits short-term rental properties for the following primary
15purposes if enforcement is performed in the same manner as
16enforcement applicable to similar properties that are not
17short-term rental properties:
18(1) Protection of public health and safety related to fire
19and building safety, sanitation, or traffic control.
20(2) Residential use and zoning purposes related to noise,
21property maintenance, or nuisance issues.
22(3) Limitation or prohibition of use of property to house
23sex offenders; to manufacture, exhibit, distribute, or sell
24illegal drugs, liquor, pornography, or obscenity; or to operate
25an adult-oriented entertainment establishment as described in
26section 239B.5, subsection 4, paragraph “a”.
27(4) To provide the county with an emergency contact for a
28short-term rental property.
29 Sec. 104. Section 414.1, subsection 1, Code 2020, is amended
30by adding the following new paragraphs:
31 NEW PARAGRAPH. e. A city shall not adopt or enforce any
32regulation, restriction, or other ordinance related to distance
33separation requirements for single-family homes or duplexes.
34 NEW PARAGRAPH. f. (1) For purposes of this paragraph,
35“short-term rental property” means any individually or
-61-1collectively owned single-family house or dwelling unit;
2any unit or group of units in a condominium, cooperative,
3or timeshare; or an owner-occupied residential home that is
4offered for a fee for thirty days or less. “Short-term rental
5property” does not include a unit that is used for any retail,
6restaurant, banquet space, event center, or other similar use.
7(2) A city shall not adopt or enforce any ordinance
8prohibiting short-term rental properties within the city. A
9short-term rental property shall be classified as a residential
10land use for zoning purposes.
11(3) Notwithstanding subparagraph (2), a city may enact or
12enforce an ordinance that regulates, prohibits, or otherwise
13limits short-term rental properties for the following primary
14purposes if enforcement is performed in the same manner as
15enforcement applicable to similar properties that are not
16short-term rental properties:
17(a) Protection of public health and safety related to fire
18and building safety, sanitation, or traffic control.
19(b) Residential use and zoning purposes related to noise,
20property maintenance, or nuisance issues.
21(c) Limitation or prohibition of use of property to house
22sex offenders; to manufacture, exhibit, distribute, or sell
23illegal drugs, liquor, pornography, or obscenity; or to operate
24an adult-oriented entertainment establishment as described in
25section 239B.5, subsection 4, paragraph “a”.
26(d) To provide the city with an emergency contact for a
27short-term rental property.
28DIVISION XV
29FUTURE TAX CHANGES
30 Sec. 105. 2018 Iowa Acts, chapter 1161, section 133, is
31amended by striking the section and inserting in lieu thereof
32the following:
33SEC. 133. This division of this Act takes effect January 1,
342023.
35DIVISION XVI
-62-1BUSINESS INTEREST EXPENSE DEDUCTION AND GLOBAL INTANGIBLE
2LOW-TAXED INCOME
3 Sec. 106. Section 422.7, Code 2020, is amended by adding the
4following new subsection:
5 NEW SUBSECTION. 59. a. Section 163(j) of the Internal
6Revenue Code does not apply in computing net income for state
7tax purposes. If the taxpayer’s federal adjusted gross income
8for the tax year was increased or decreased by reason of the
9application of section 163(j) of the Internal Revenue Code,
10the taxpayer shall recompute net income for state tax purposes
11under rules prescribed by the director.
12b. Paragraph “a” shall not apply during any tax year
13in which the additional first-year depreciation allowance
14authorized in section 168(k) of the Internal Revenue Code
15applies in computing net income for state tax purposes.
16c. For any tax year in which paragraph “a” does not apply,
17a taxpayer shall not be permitted to deduct any amount of
18interest expense paid or accrued in a previous taxable year
19that is allowed as a deduction in the current taxable year by
20reason of the carryforward of disallowed business interest
21provisions of section 163(j)(2) of the Internal Revenue Code,
22if either of the following apply:
23(1) The interest expense was originally paid or accrued
24during a tax year in which paragraph “a” applied.
25(2) The interest expense was originally paid or accrued
26during a tax year in which the taxpayer was not required to
27file an Iowa return.
28 Sec. 107. Section 422.35, Code 2020, is amended by adding
29the following new subsections:
30 NEW SUBSECTION. 26. a. Section 163(j) of the Internal
31Revenue Code does not apply in computing net income for state
32tax purposes. If the taxpayer’s federal taxable income for
33the tax year was increased or decreased by reason of the
34application of section 163(j) of the Internal Revenue Code,
35the taxpayer shall recompute net income for state tax purposes
-63-1under rules prescribed by the director.
2b. Paragraph “a” shall not apply during any tax year
3in which the additional first-year depreciation allowance
4authorized in section 168(k) of the Internal Revenue Code
5applies in computing net income for state tax purposes.
6c. For any tax year in which paragraph “a” does not apply,
7a taxpayer shall not be permitted to deduct any amount of
8interest expense paid or accrued in a previous taxable year
9that is allowed as a deduction in the current taxable year by
10reason of the carryforward of disallowed business interest
11provisions of section 163(j)(2) of the Internal Revenue Code,
12if either of the following apply:
13(1) The interest expense was originally paid or accrued
14during a tax year in which paragraph “a” applied.
15(2) The interest expense was originally paid or accrued
16during a tax year in which the taxpayer was not required to
17file an Iowa return.
18 NEW SUBSECTION. 27. Subtract, to the extent included,
19global intangible low-taxed income under section 951A of the
20Internal Revenue Code.
21 Sec. 108. RESCISSION OF ADMINISTRATIVE RULES.
221. Contingent upon the enactment of the section of this
23Act amending section 422.35, subsection 27, the following Iowa
24administrative rules are rescinded:
25a. 701 Iowa administrative code, rule 54.2, subrule 3,
26paragraph “i”.
27b. 701 Iowa administrative code, rule 59.28, subrule 2,
28paragraph “p”.
292. As soon as practicable, the Iowa administrative code
30editor shall remove the language of the Iowa administrative
31rules referenced in subsection 1 of this section from the Iowa
32administrative code.
33 Sec. 109. EFFECTIVE DATE. This Act, being deemed of
34immediate importance, takes effect upon enactment.
35 Sec. 110. RETROACTIVE APPLICABILITY. The following applies
-64-1retroactively to January 1, 2019, for tax years beginning on
2or after that date:
3The portion of the section of this division of this Act
4enacting section 422.35, subsection 27.
5 Sec. 111. RETROACTIVE APPLICABILITY. The following apply
6retroactively to January 1, 2020 for tax years beginning on or
7after that date:
81. The section of this division of this Act enacting section
9422.7, subsection 59.
102. The portion of the section of this division of this Act
11enacting section 422.35, subsection 26.
12DIVISION XVII
13REINVESTMENT ACT
14 Sec. 112. Section 15J.2, subsections 4, 7, 8, and 9, Code
152020, are amended to read as follows:
164. “District” means the area within a municipality that is
17designated a reinvestment district pursuant to section 15J.4.
187. “Municipality” means a county or an incorporated city.
19 any of the following:
20a. A county.
21b. An incorporated city.
22c. A joint board or other legal entity established or
23designated in an agreement between two or more contiguous
24municipalities identified in paragraph “a” or “b” pursuant to
25chapter 28E.
268. a. “New lessor” means a lessor, as defined in section
27423A.2, operating a business in the district that was not in
28operation in the area of the district before the effective
29date of the ordinance or resolution establishing the district,
30regardless of ownership.
31b. “New lessor” also includes any lessor, defined in section
32423A.2, operating a business in the district if the place of
33business for that business is the subject of a project that was
34approved by the board.
359. a. “New retail establishment” means a business operated
-65-1in the district by a retailer, as defined in section 423.1,
2that was not in operation in the area of the district before
3the effective date of the ordinance or resolution establishing
4the district, regardless of ownership.
5b. “New retail establishment” also includes any business
6operated in the district by a retailer, as defined in section
7423.1, if the place of business for that retail establishment
8is the subject of a project that was approved by the board.
9 Sec. 113. Section 15J.4, subsection 1, unnumbered paragraph
101, Code 2020, is amended to read as follows:
11A municipality that has an area suitable for development
12within the boundaries of the municipality or within the
13combined boundaries of a municipality under section 15J.2,
14subsection 7, paragraph “c”, is eligible to seek approval from
15the board to establish a reinvestment district under this
16section consisting of the area suitable for development. To
17be designated a reinvestment district, an area shall meet the
18following requirements:
19 Sec. 114. Section 15J.4, subsection 1, paragraphs c and d,
20Code 2020, are amended to read as follows:
21c. The For districts approved before July 1, 2018, the area
22consists of contiguous parcels and does not exceed twenty-five
23acres in total. For districts approved on or after July 1,
242020, the area consists of contiguous parcels and does not
25exceed seventy-five acres in total.
26d. For a municipality that is a city or for a city that
27is party to an agreement under section 15J.2, subsection 7,
28paragraph “c”, the area does not include the entire incorporated
29area of the city.
30 Sec. 115. Section 15J.4, subsection 3, paragraph a, Code
312020, is amended to read as follows:
32a. The municipality shall submit a copy of the resolution,
33the proposed district plan, and all accompanying materials
34adopted pursuant to this section to the board for evaluation.
35The board shall not approve a proposed district plan on or
-66-1after July 1, 2018 2025.
2 Sec. 116. Section 15J.4, subsection 3, paragraph b,
3subparagraph (6), Code 2020, is amended to read as follows:
4(6) The amount of proposed capital investment within the
5proposed district related to retail businesses in the proposed
6district does not exceed fifty percent of the total capital
7investment for all proposed projects in the proposed district
8plan. For the purposes of this subparagraph, “retail business”
9means any business engaged in the business of selling tangible
10personal property or taxable services at retail in this state
11that is obligated to collect state sales or use tax under
12chapter 423. However, for the purposes of this subparagraph,
13“retail business” does not include a new lessor or a business
14engaged in an activity subject to tax under section 423.2,
15subsection 3.
16 Sec. 117. Section 15J.4, subsection 3, paragraph f, Code
172020, is amended to read as follows:
18f. (1) The total aggregate amount of state sales tax
19revenues and state hotel and motel tax revenues that may be
20approved by the board for remittance to all municipalities and
21that may be transferred to the state reinvestment district
22fund under section 423.2A or 423A.6, and remitted to all
23municipalities having a reinvestment district under this
24chapter for districts approved by the board before July 1,
252018, shall not exceed one hundred million dollars.
26(2) The total aggregate amount of state sales tax revenues
27and state hotel and motel tax revenues that may be approved by
28the board for remittance to all municipalities and that may
29be transferred to the state reinvestment district fund under
30section 423.2A or 423A.6, and remitted to all municipalities
31having a reinvestment district under this chapter for districts
32approved on or after July 1, 2020, but before July 1, 2025,
33shall not exceed one hundred million dollars.
34 Sec. 118. Section 15J.4, subsections 4 and 5, Code 2020, are
35amended to read as follows:
-67- 14. a. Upon receiving the approval of the board, the
2municipality may shall adopt an ordinance, or in the case of
3a municipality under section 15J.2, subsection 7, paragraph
4“c”, a resolution, establishing the district and shall notify
5the director of revenue of the district’s commencement date
6established by the board and the information required under
7paragraph “b” no later than thirty days after adoption of the
8ordinance or resolution.
9b. For each district approved by the board on or after July
101, 2020, the municipality shall include in the notification
11under paragraph “a” and in the statement required under
12paragraph “c” all of the following:
13(1) For each new retail establishment under section 15J.2,
14subsection 9, paragraph “b”, that was in operation before
15the establishment of the district, the monthly amount of
16sales subject to the state sales tax from the most recently
17available twelve-month period preceding the establishment of
18the district.
19(2) For each new lessor under section 15J.2, subsection 8,
20paragraph “b”, that was in operation before the establishment
21of the district, the monthly amount of sales subject to the
22state hotel and motel tax from the most recently available
23twelve-month period preceding the establishment of the
24district.
25c. The ordinance or resolution adopted by the municipality
26shall include the district’s commencement date and a detailed
27statement of the manner in which the approved projects to be
28undertaken in the district will be financed, including but not
29limited to the financial information included in the project
30plan under subsection 2, paragraph “d”.
31d. Following establishment of the district, a municipality
32may use the moneys deposited in the municipality’s reinvestment
33project fund created pursuant to section 15J.7 to fund the
34development of those projects included within the district
35plan.
-68- 15. A municipality may amend the district plan to add
2or modify projects. However, a proposed modification to a
3project and each project proposed to be added shall first be
4approved by the board in the same manner as provided for the
5original plan. In no case, however, shall an amendment to the
6district plan result in the extension of the commencement date
7established by the board. If a district plan is amended to
8add or modify a project, the municipality shall, if necessary,
9 amend the ordinance or resolution, as applicable, if necessary,
10 to reflect any changes to the financial information required to
11be included under subsection 4.
12 Sec. 119. Section 15J.5, subsection 1, paragraph b, Code
132020, is amended to read as follows:
14b. (1) The For districts established before July 1,
152020, the amount of new state sales tax revenue for purposes
16of paragraph “a” shall be the product of the amount of sales
17subject to the state sales tax in the district during the
18quarter from new retail establishments times four percent.
19(2) For districts established on or after July 1, 2020, the
20amount of new state sales tax revenue for purposes of paragraph
21“a” shall be the product of four percent times the remainder of
22amount of sales subject to the state sales tax in the district
23during the quarter from new retail establishments minus the sum
24of the sales from the corresponding quarter of the twelve-month
25period determined under section 15J.4, subsection 4, paragraph
26“b”, subparagraph (1), for new retail establishments identified
27under section 15J.4, subsection 4, paragraph “b”, subparagraph
28(1), that were in operation at the end of the quarter.
29 Sec. 120. Section 15J.5, subsection 2, paragraph b, Code
302020, is amended to read as follows:
31b. (1) The For districts established before July 1,
322020, the amount of new state hotel and motel tax revenue for
33purposes of paragraph “a” shall be the product of the amount of
34sales subject to the state hotel and motel tax in the district
35during the quarter from new lessors times the state hotel and
-69-1motel tax rate imposed under section 423A.3.
2(2) For districts established on or after July 1, 2020, the
3amount of new state hotel and motel tax revenue for purposes of
4paragraph “a” shall be the product of the state hotel and motel
5tax rate imposed under section 423A.3 times the remainder of
6amount of sales subject to the state hotel and motel tax in the
7district during the quarter from new lessors minus the sum of
8the sales from the corresponding quarter of the twelve month
9period determined under section 15J.4, subsection 4, paragraph
10“b”, subparagraph (2), for new lessors identified under section
1115J.4, subsection 4, paragraph “b”, subparagraph (2), that were
12in operation at the end of the quarter.
13 Sec. 121. Section 15J.7, subsection 4, paragraph b, Code
142020, is amended to read as follows:
15b. For the purposes of this subsection, “relocation”
16means the closure or substantial reduction of an enterprise’s
17existing operations in one area of the state and the initiation
18of substantially the same operation in the same county or a
19contiguous county in the state. However, if the initiation
20of operations includes an expanded scope or nature of the
21enterprise’s existing operations, the new operation shall
22not be considered to be substantially the same operation.
23 “Relocation” does not include an enterprise expanding its
24operations in another area of the state provided that existing
25operations of a similar nature are not closed or substantially
26reduced.
27 Sec. 122. Section 15J.7, subsection 6, Code 2020, is amended
28to read as follows:
296. Upon dissolution of a district pursuant to section 15J.8,
30moneys remaining in the reinvestment project fund that were
31deposited pursuant to subsection 2 and all interest remaining
32in the fund that was earned on such amounts shall be deposited
33in the general fund of the municipality or, for a municipality
34under section 15J.2, subsection 7, paragraph “c”, the governing
35body shall allocate such amounts to the participating cities
-70-1and counties for deposit in each city or county general fund
2according to the chapter 28E agreement.
3 Sec. 123. Section 15J.8, Code 2020, is amended to read as
4follows:
515J.8 End of deposits — district dissolution.
61. As of the date twenty years after the district’s
7commencement date, the department shall cease to deposit state
8sales tax revenues and state hotel and motel tax revenues into
9the district’s account within the fund, unless the municipality
10dissolves the district by ordinance or resolution prior to that
11date. Following the expiration of the twenty-year period, the
12district shall be dissolved by ordinance or resolution of the
13municipality adopted within twelve months of the conclusion of
14the twenty-year period.
152. If the municipality dissolves the district by ordinance
16or resolution prior to the expiration of the twenty-year
17period specified in subsection 1, the municipality shall
18notify the director of revenue of the dissolution as soon as
19practicable after adoption of the ordinance or resolution, and
20the department shall, as of the effective date of dissolution,
21cease to deposit state sales tax revenues and state hotel and
22motel tax revenues into the district’s account within the fund.
233. Upon request of the municipality prior to the dissolution
24of the district, and following a determination by the board
25that the amounts of new state sales tax revenue and new state
26hotel and motel tax revenue deposited in the municipality’s
27reinvestment project fund under section 15J.7 are substantially
28lower than the amounts established by the board under section
2915J.4, subsection 3, paragraph “e”, the board may extend
30the district’s twenty-year period of time for depositing and
31receiving revenues under this chapter by up to five additional
32years if such an extension is in the best interest of the
33public.
34DIVISION XVIII
35INNOVATION FUNDS
-71-1 Sec. 124. Section 15.119, subsection 2, paragraphs d and e,
2Code 2020, are amended to read as follows:
3d. The tax credits for investments in qualifying businesses
4issued pursuant to section 15E.43. In allocating tax credits
5pursuant to this subsection, the authority shall allocate at
6least two million and not more than four million dollars for
7purposes of this paragraph, unless the authority determines
8that the tax credits awarded will be less than that amount.
9e. The tax credits for investments in an innovation fund
10pursuant to section 15E.52. In allocating tax credits pursuant
11to this subsection, the authority shall allocate at least six
12million and not more than eight million dollars for purposes of
13this paragraph, unless the authority determines that the tax
14credits awarded will be less than that amount.
15 Sec. 125. Section 15.119, Code 2020, is amended by adding
16the following new subsection:
17 NEW SUBSECTION. 2A. On or before June 30 of each year,
18the authority shall determine the amount of tax credits that
19shall be issued pursuant to sections 15E.43 and 15E.52 for
20the following fiscal year. In allocating the amount of tax
21credits authorized pursuant to subsection 1 among the programs
22specified in subsection 2, the aggregate amount allocated by
23the authority for purposes of subsection 2, paragraphs “d” and
24“e”, shall not exceed ten million dollars.
25 Sec. 126. Section 15E.43, subsection 2, paragraphs b and c,
26Code 2020, are amended to read as follows:
27b. The maximum amount of a tax credit that may be issued
28per calendar fiscal year to a natural person and the person’s
29spouse or dependent shall not exceed one hundred thousand
30dollars combined. For purposes of this paragraph, a tax
31credit issued to a partnership, limited liability company, S
32corporation, estate, or trust electing to have income taxed
33directly to the individual shall be deemed to be issued to
34the individual owners based upon the pro rata share of the
35individual’s earnings from the entity. For purposes of this
-72-1paragraph, “dependent” has the same meaning as provided by the
2Internal Revenue Code.
3c. The maximum amount of tax credits that may be issued
4per calendar fiscal year for equity investments in any one
5qualifying business shall not exceed five hundred thousand
6dollars.
7 Sec. 127. EFFECTIVE DATE. This division of this Act, being
8deemed of immediate importance, takes effect upon enactment.
9DIVISION XIX
10CAPITAL GAINS
11 Sec. 128. Section 422.7, Code 2020, is amended by adding the
12following new subsection:
13 NEW SUBSECTION. 21A. Subtract, to the extent included,
14for tax years beginning on or after the 2020 calendar year and
15not already deducted under another provision of this section,
16fifteen percent of the taxpayer’s net capital gain as defined
17in section 1222 of the Internal Revenue Code.
18 Sec. 129. EFFECTIVE DATE. This division of this Act, being
19deemed of immediate importance, takes effect upon enactment.
20 Sec. 130. RETROACTIVE APPLICABILITY. This division of this
21Act applies retroactively to January 1, 2020, for tax years
22beginning on or after that date.
23DIVISION XX
24LOCAL ASSESSORS
25 Sec. 131. Section 441.6, subsection 2, Code 2020, is amended
26to read as follows:
272. Upon receipt of the report of the examining board, the
28chairperson of the conference board shall by written notice
29call a meeting of the conference board to appoint an assessor.
30The meeting shall be held not later than seven days after the
31receipt of the report of the examining board by the conference
32board. At the meeting, the conference board shall appoint an
33assessor from the register of eligible candidates. However,
34if a special examination has not been conducted previously for
35the same vacancy, the conference board may request the director
-73-1of revenue to hold a special examination pursuant to section
2441.7. The chairperson of the conference board shall give
3written notice to the director of revenue of the appointment
4and its effective date within ten days of the decision of the
5board.
6 Sec. 132. Section 441.6, Code 2020, is amended by adding the
7following new subsection:
8 NEW SUBSECTION. 3. The appointee selected by the conference
9board under subsection 2 shall not assume the office of city
10or county assessor until such appointment is confirmed by
11the director of revenue. If the director of revenue rejects
12the appointment, the examining board shall conduct a new
13examination and submit a new report to the conference board
14under subsection 1. The director of revenue shall adopt rules
15pursuant to chapter 17A to implement and administer this
16subsection.
17 Sec. 133. Section 441.17, subsection 2, Code 2020, is
18amended to read as follows:
192. Cause to be assessed, in accordance with section 441.21,
20all the property in the assessor’s county or city, except
21property exempt from taxation, or the assessment of which is
22otherwise provided for by law. However, an assessor or deputy
23assessor shall not personally assess a property if the person
24or a member of the person’s immediate family owns the property,
25has a financial interest in the property, or has a financial
26interest in the entity that owns the property. The director of
27revenue shall adopt rules pursuant to chapter 17A to implement
28and administer this subsection.
29 Sec. 134. Section 441.41, Code 2020, is amended to read as
30follows:
31441.41 Legal counsel.
32In the case of cities having an assessor, the city legal
33department shall represent the assessor and board of review
34in all litigation dealing with assessments. In the case of
35counties, the county attorney shall represent the assessor and
-74-1board of review in all litigation dealing with assessments.
2Any taxing district interested in the taxes received from such
3assessments may be represented by an attorney and shall be
4required to appear by attorney upon written request of the
5assessor to the presiding officer of any such taxing district.
6The Subject to review and prior approval by either the city
7legal department in the case of a city or the county attorney
8in the case of a county, the conference board may employ
9special counsel to assist the city legal department or county
10attorney as the case may be.
11DIVISION XXI
12RURAL IMPROVEMENT ZONES
13 Sec. 135. Section 357H.1, subsection 1, Code 2020, is
14amended to read as follows:
151. The board of supervisors of a county with less than
16twenty thousand residents, not counting persons admitted or
17committed to an institution enumerated in section 218.1 or
18904.102, based upon the most recent certified federal census,
19and with a private lake real estate development adjacent to or
20abutting in part a lake may designate an area surrounding the
21lake, if it is an unincorporated area of the county, a rural
22improvement zone upon receipt of a petition pursuant to section
23357H.2, and upon the board’s determination that the area is in
24need of improvements.
25 Sec. 136. EFFECTIVE DATE. This division of this Act, being
26deemed of immediate importance, takes effect upon enactment.
27 Sec. 137. APPLICABILITY. This division of this Act applies
28to rural improvement zones in existence on or established on or
29after the effective date of this division of this Act.
30DIVISION XXII
31SCHOOL TUITION ORGANIZATION TAX CREDIT
32 Sec. 138. Section 422.11S, subsection 8, paragraph a,
33subparagraph (2), Code 2020, is amended to read as follows:
34(2) (a) “Total approved tax credits” means for the 2006
35calendar year, two million five hundred thousand dollars, for
-75-1the 2007 calendar year, five million dollars, for calendar
2years beginning on or after January 1, 2008, but before January
31, 2012, seven million five hundred thousand dollars, for
4calendar years beginning on or after January 1, 2012, but
5before January 1, 2014, eight million seven hundred fifty
6thousand dollars, for calendar years beginning on or after
7January 1, 2014, but before January 1, 2019, twelve million
8dollars, and for calendar years beginning on or after January
91, 2019, but before January 1, 2020, thirteen million dollars,
10and for calendar years beginning on or after January 1, 2020,
11fifteen million dollars.
12(b) (i) During any calendar year beginning on or after
13January 1, 2022, if the amount of awarded tax credits from the
14preceding calendar year are equal to or greater than ninety
15percent of the total approved tax credits for the current
16calendar year, the total approved tax credits for the current
17calendar year shall equal the product of ten percent multiplied
18by the total approved tax credits for the current calendar year
19plus the total approved tax credits for the current calendar
20year.
21(ii) If total approved tax credits are recomputed pursuant
22to subparagraph subdivision (i), the total approved tax credits
23shall equal the previous total approved tax credits recomputed
24pursuant to subparagraph subdivision (i) for purposes of future
25recomputations under subparagraph subdivision (i), provided
26that the maximum total approved tax credits recomputed pursuant
27to this subparagraph division (b) shall not exceed twenty
28million dollars in a calendar year.
29 Sec. 139. Section 422.33, subsection 28, Code 2020, is
30amended to read as follows:
3128. The taxes imposed under this division shall be reduced
32by a school tuition organization tax credit allowed under
33section 422.11S. The maximum amount of tax credits that
34may be approved under this subsection for a tax year equals
35twenty-five percent of the school tuition organization’s tax
-76-1credits that may be approved pursuant to section 422.11S,
2subsection 8, for a tax year.
3DIVISION XXIII
4PAYCHECK PROTECTION PROGRAM
5 Sec. 140. IOWA NET INCOME EXCLUSION FOR FEDERAL PAYCHECK
6PROTECTION PROGRAM LOAN FORGIVENESS FOR CERTAIN FISCAL-YEAR
7FILERS IN TAX YEAR 2019. Notwithstanding any other provision
8of law to the contrary, for any tax year beginning on or after
9January 1, 2019, and ending after March 27, 2020, Pub.L. No.
10116-136, §1106(i), applies in computing net income for state
11tax purposes under section 422.7 or 422.35.
12 Sec. 141. EFFECTIVE DATE. This division of this Act, being
13deemed of immediate importance, takes effect upon enactment.
14DIVISION XXIV
15INCOME TAX EXCLUSION — EMERGENCY STUDENT GRANT MONEY
16 Sec. 142. Section 422.7, Code 2020, is amended by adding the
17following new subsection:
18 NEW SUBSECTION. 59. Notwithstanding any other provision of
19law to the contrary, any funds received by a student through a
20higher education institution to support the student’s financial
21needs as a result of the COVID-19 pandemic pursuant to §§3504,
2218004, or 18008 of Pub.L. No.116-136 shall not be included
23in the student’s Iowa net income for any tax year ending after
24March 27, 2020.
25 Sec. 143. EFFECTIVE DATE. This division of this Act, being
26deemed of immediate importance, takes effect upon enactment.
27 Sec. 144. RETROACTIVE APPLICABILITY. This division of this
28Act applies retroactively to March 27, 2020, for tax years
29ending on or after that date.
30DIVISION XXV
31IOWA INCOME EXCLUSION — STIMULUS CHECKS
32 Sec. 145. IOWA INCOME TAX EXCLUSION FOR ECONOMIC IMPACT
33PAYMENTS. In determining the amount of deduction for federal
34income tax under section 422.9 for tax years beginning in
35the 2020 calendar year, the amount of the deduction for the
-77-1tax year shall not be adjusted by the amount received during
2the tax year of the income tax rebate provided pursuant to
3the federal Recovery Rebates and Coronavirus Aid, Relief,
4and Economic Security Act, Pub.L. No.116-136, §2201, and
5the amount of such income tax rebate shall not be subject to
6taxation under chapter 422, division II.
7DIVISION XXVI
8HUNTING DEER AND TURKEY ON A FARM UNIT
9 Sec. 146. Section 483A.24, subsection 2, paragraphs b and c,
10Code 2019, are amended to read as follows:
11b. Upon written application on forms furnished by the
12department, the department shall issue annually without fee one
13wild turkey license to the owner of a farm unit or to a member
14of the owner’s family, but not to both, and to the tenant or
15to a member of the tenant’s family, but not to both. The wild
16turkey hunting licenses issued shall be valid only on the
17farm unit for which an applicant qualifies pursuant to this
18subsection and shall be equivalent to the least restrictive
19license issued under section 481A.38. The owner or the tenant
20need not reside on the farm unit to qualify for a free license
21to hunt on that farm unit. The free turkey hunting licenses
22issued pursuant to this paragraph shall be valid and may be
23used during any bow or firearm established turkey hunting
24season using the method of take authorized by rule for each
25season being hunted. If a tag is filled during one of the
26seasons, the license will not be valid in subsequent seasons.
27c. Upon written application on forms furnished by the
28department, the department shall issue annually without fee two
29deer hunting licenses, one antlered or any sex deer hunting
30license and one antlerless deer only deer hunting license, to
31the owner of a farm unit or a member of the owner’s family,
32but only a total of two licenses for both, and to the tenant
33of a farm unit or a member of the tenant’s family, but only
34a total of two licenses for both. The deer hunting licenses
35issued shall be valid only for use on the farm unit for which
-78-1the applicant applies pursuant to this paragraph. The owner or
2the tenant need not reside on the farm unit to qualify for the
3free deer hunting licenses to hunt on that farm unit. The free
4deer hunting licenses issued pursuant to this paragraph shall
5be valid and may be used during any bow or firearm established
6 deer hunting season using the method of take authorized by rule
7for each season being hunted. If a tag is filled during one
8of the seasons, the license will not be valid in subsequent
9seasons. The licenses may be used to harvest deer in two
10different seasons. In addition, a person who receives a free
11deer hunting license pursuant to this paragraph shall pay a one
12dollar twenty-five cent fee for each license that shall be used
13and is appropriated for the purpose of deer herd population
14management, including assisting with the cost of processing
15deer donated to the help us stop hunger program administered
16by the commission.
17EXPLANATION
18The inclusion of this explanation does not constitute agreement with
19the explanation’s substance by the members of the general assembly.
20This bill relates to state and local taxation, regulation,
21the Iowa reinvestment act, innovation fund, hunting and fees,
22and provides for properly related matters.
23DEPARTMENT OF REVENUE ADMINISTRATION AND PENALTY PROVISIONS.
24The amendment to Code section 421.6 enhances the readability of
25the Code section by including in the definition of “return” the
26moneys and credits tax turn administered by the department of
27revenue under Code section 533.329.
28The bill enacts new Code section 421.17(36) which permits
29the director of revenue to enter into Code chapter 28E
30agreements with the state fair or a county or district fair
31to collect and remit sales taxes and fees from sellers making
32retail sales on the grounds owned by the fair or through events
33conducted by the fair.
34The amendment to Code section 421.27(1) provides that in
35the case of a specified business with no tax shown due or
-79-1required to be shown due that fails to timely file their
2income tax return or information return shall pay the greater
3of the following penalty amounts: $200; or an amount equal
4to 10 percent of the imputed Iowa liability of the specified
5business, not to exceed $25,000.
6The amendment to Code section 421.27(1) provides that the
7penalty for individuals or specified businesses that fail to
8timely file a return may be waived under certain circumstances.
9The provision applies to tax years beginning on or after
10January 1, 2022.
11The amendment to Code section 421.27(4) provides that the
12penalty for a specified business that willfully fails to file a
13return with no tax shown due or required to be shown due with
14the intent to evade such a filing requirement or reporting
15Iowa-source income, the penalty imposed shall be the greater
16of $1,500 or an amount equal to 75 percent of the imputed Iowa
17liability of the specified business. The provision applies to
18tax years beginning on or after January 1, 2022.
19The amendment to Code section 421.27(4) expands penalty
20provisions by providing that a person who willfully fails to
21file a return or deposit form with intent to evade a filing
22requirement shall be subject to a penalty of 75 percent of the
23tax added to the amount of tax shown due or required to be shown
24due, in lieu of other penalties. The provision applies to tax
25years beginning on or after January 1, 2022.
26The amendment to Code section 421.27(6) makes numerous
27changes to the criminal offense of fraudulent practice
28by expanding the criminal offense to include a person who
29willfully makes a false application for an exemption or benefit
30with the intent to receive the exemption or benefit to which
31the person is not entitled.
32The amendment to Code section 421.27(6) also expands the
33fraudulent practice criminal offense to include when a person
34willfully submits any false information, document, or document
35containing false information in support of an application
-80-1for a refund, credit, exemption, reimbursement, rebate, or
2other payment or benefit with the intent to evade taxes;
3and to include when a person willfully submits any false
4information, document, or document containing false information
5in support of an application for a refund, credit, exemption,
6reimbursement, rebate, or other payment or benefit to which the
7person is not entitled.
8A person who commits fraudulent practice under Code section
9421.76(6), in addition to the criminal penalties, is liable for
10a penalty equal to 75 percent of the refund, credit, exemption,
11reimbursement, rebate, or other payment or benefit being
12fraudulently claimed.
13The bill enacts new Code section 421.27(8) which defines
14“imputed Iowa liability” and “specified business”. The
15provision applies to tax years beginning on or after January
161, 2022.
17The bill enacts new Code section 421.27(9) by adding an
18additional penalty under Code section 421.27 in the amount
19of $1,000 if a taxpayer fails to file a tax return within 90
20days of written notice by the department that the taxpayer is
21required to file such a return. The provision applies to a
22return a taxpayer is required to file on or after January 1,
232022.
24The bill enacts new Code section 421.27A by creating a
25criminal offense for perjury. Currently, a different perjury
26criminal offense exists in Code section 720.2. A person
27commits perjury under the following circumstances in the bill:
28the person makes a document containing false information in
29support of an application for refund, credit, exemption,
30reimbursement, rebate, or other payment or benefit with intent
31to evade tax; the person makes a document containing false
32information with intent to unlawfully receive a refund, credit,
33exemption, reimbursement, rebate, or other payment or benefit,
34to which the person is not entitled; the person knowingly makes
35any false affidavit; the person knowingly swears or affirms
-81-1falsely to any matter or thing required by the terms of title X
2of the Code (financial resources) to be sworn to or affirmed.
3A person who commits the criminal offense of perjury under new
4Code section 421.27A commits a class “D” felony. A class “D”
5felony is punishable by confinement for no more than five years
6and a fine of at least $750 but not more than $7,500.
7The bill enacts new Code section 421.59 relating to a
8power of attorney or other authority to act on behalf of the
9taxpayer. The bill formalizes a process for the following
10persons to act and receive information on behalf of and
11exercise all of the rights of a taxpayer, regardless of whether
12a power of attorney has been filed with the department: a
13guardian, conservator, or custodian appointed by the court; a
14receiver appointed pursuant to Code chapter 680; an individual
15who has been named as an authorized representative on a
16fiduciary return filed under Code section 422.14 (fiduciary
17return) or Code chapter 450 (inheritance tax); an individual
18holding a title or position within a corporation, association,
19partnership, or other business entity; a licensed attorney
20who has appeared on behalf of the taxpayer or the taxpayer’s
21estate; and a parent or legal guardian of the taxpayer who has
22not reached the age of majority.
23New Code section 421.59 also authorizes the department to
24enter into a memorandum of understanding with the taxpayer
25for each employee, officer, or member of a third-party entity
26engaged with or otherwise hired by a taxpayer to manage
27the taxpayer’s tax matters, in lieu of requiring a power of
28attorney for each person.
29The bill enacts new Code section 421.60(11) which allows a
30taxpayer to elect to receive correspondence electronically from
31the department rather than by regular mail.
32The amendments to Code section 421.62 provide that the
33regulations relating to tax return preparers apply to an
34income tax return or claim or refund under Code chapter 422
35(individual, corporate, and franchise taxes), but do not apply
-82-1to withholding returns under Code section 422.16.
2The amendment to Code section 421.64 enhances the
3readability of the Code section.
4The amendment to Code section 422.20(1) adds an intent
5element “willfully or recklessly” to the criminal offense
6related to the unlawful disclosure of tax return information
7by state personnel or former state personnel. A person who
8commits a violation under Code section 422.20(1) commits a
9serious misdemeanor. A serious misdemeanor is punishable by
10confinement for no more than one year and a fine of at least
11$315 but not more than $1,875.
12The amendment to Code section 422.20(3) provides that tax
13return information may be disclosed to authorized individuals
14pursuant to new Code section 421.59 created in the bill.
15The bill enacts new Code section 422.20(3A) permitting the
16director of revenue to disclose the tax return information of
17a partnership, limited liability company, or S corporation to
18a person who was a partner, shareholder, or member of such an
19entity during any part of the period covered by the tax return.
20The bill enacts new Code section 422.20(3B) specifying the
21information the department is required to redact prior to
22the disclosure of the record in an appeal or contested case.
23The bill specifies the department may also redact other tax
24information from the record in an appeal or contested case, if
25the taxpayer proves by clear and convincing evidence that the
26release of the tax information would disclose a trade secret
27or be an unwarranted invasion of personal privacy. The bill
28permits the department to disclose information that is required
29to be redacted if the department determines such information is
30necessary to the resolution or decision of the case.
31The bill enacts new Code section 422.25(1)(c) (income tax)
32that provides the period of examination and determination is
33unlimited under title X (financial resources) in any action
34by the department to recover or rescind a tax expenditure
35as defined in Code section 2.48, or any other incentive or
-83-1assistance administered by the economic development authority.
2The amendment takes effect upon enactment. The bill also
3provides that it is the intent of the general assembly that the
4amendment to Code section 422.25(1) is a conforming amendment
5consistent with current law, and that the amendment does not
6change the application of current law. This provision takes
7effect upon enactment.
8The amendment to Code section 422.69 requires that all
9fees, taxes, interest, and penalties under Code chapter 422
10(individual income, corporate, and franchise taxes) shall
11be paid to the department of revenue rather than the state
12treasurer.
13The amendment to Code section 422.72(1)(a) adds the intent
14element of “willfully or recklessly” to the criminal offense
15related to the unlawful disclosure by state personnel or
16former state personnel of the business affairs, operations,
17or information obtained through a tax-related investigation.
18A person who unlawfully discloses such information commits a
19serious misdemeanor under Code section 422.72(4). A serious
20misdemeanor is punishable by confinement for no more than one
21year and a fine of at least $315 but not more than $1,875.
22The bill enacts new Code section 422.72(7A), a similar
23provision to new Code section 422.20(3B) in the bill. New Code
24section 422.72(7A) specifies the information the department
25is required to redact prior to the disclosure to the general
26public of the record in an appeal or contested case. The
27bill specifies that the department may also redact other tax
28information from the record in an appeal or contested case, if
29the taxpayer proves by clear and convincing evidence that the
30release of the tax information would disclose a trade secret
31or be an unwarranted invasion of personal privacy. The bill
32permits the department to disclose information that is required
33to be redacted if the department determines such information is
34necessary to the resolution or decision of the case.
35The bill enacts new Code section 423.37(4)(sales and use
-84-1tax) that provides the period of examination and determination
2is unlimited under title X (financial resources) in any action
3by the department to recover or rescind a tax expenditure
4as defined in Code section 2.48 or any other incentive or
5assistance administered by the economic development authority.
6The amendment takes effect upon enactment. The bill also
7provides that it is the intent of the general assembly that the
8amendment to Code section 423.37(4) is a conforming amendment
9consistent with current law, and that the amendment does not
10change the application of current law. This provision takes
11effect upon enactment.
12The amendment to Code section 428A.1 (real estate
13transfer tax) provides that a county recorder shall record
14the declaration of value but is prohibited from charging a
15recording fee for the filing.
16The amendment to Code section 441.48 enhances the
17readability of the Code section by specifying the board of
18supervisors or city council, as applicable, shall provide
19the department with notice of intent to protest prior to the
20expiration of the 10 days’ notice to adjust the valuation of
21any class of property issued by the department.
22The amendments to Code sections 489.706, 490.1422, 501.813,
23and 504.1423, remove the role of the department in the
24application for reinstatement by a limited liability company,
25corporation, cooperative, or nonprofit corporation after the
26dissolution of such an entity.
27The bill enacts new Code section 533.329(03) by specifying
28that a money and credit tax return prepared by a credit union
29shall be on a form prepared by the department of revenue, and
30shall be filed with the department on or before the last day of
31April.
32The bill amends Code section 533.329(3) relating to
33enforcement of the moneys and credits tax paid by credit
34unions.
35SALES AND USE TAX. The amendments to Code sections 321G.4
-85-1(snowmobiles) and 321I.4 (all-terrain vehicles) require the
2county recorder to collect sales or use tax if an owner of such
3a vehicle is unable to present satisfactory evidence that the
4sales or use tax has been paid.
5The amendment to Code section 423.2(6)(bs) specifies that
6any services arising from or related to software sold as
7tangible personal property are subject to the sales tax.
8The amendment to Code section 423.2(8)(d)(1) specifies that
9the following is not subject to the sales tax: the retail
10sale of a specified digital product and a service where the
11specified digital product is essential and exclusive to the use
12of the service, and the true object of the transaction is the
13service.
14The amendment to Code section 423.3(3A) provides that the
15sales price from the sale of a commercial recreation service
16offering the opportunity to hunt a preserve whitetail is
17exempt from the sales tax if the sale occurred between July
181, 2005, and December 31, 2015. This provision takes effect
19upon enactment an applies retroactively to July 1, 2005. The
20bill prohibits any refunds resulting from the amendment to Code
21section 423.3(3A).
22The amendment to Code section 423.3(31) specifies that
23the sales price of tangible personal property or specified
24digital products sold to, or of services furnished to a
25tribal government as defined in Code section 216A.161, or the
26instrumentalities of such tribal government are exempt from the
27sales tax under most circumstances.
28The amendments to Code section 423.3(80)(b) and (c) specify
29that services performed pursuant to a written construction
30contract with a designated exempt entity as defined in Code
31section 423.3(80)(a)(1) are exempt from the sales tax.
32Currently, the construction contract is not required to be a
33written contract and only building materials, supplies, and
34equipment used in such a contract are exempt from the sales
35tax. The bill also provides that the building materials,
-86-1supplies, equipment, and services are exempt from the sales
2tax only if the property that is subject to the construction
3project becomes public property or the property of a designated
4exempt entity, in addition to the requirement that the
5exempt items be completely consumed in the performance of the
6construction contract.
7The amendment to Code section 423.4(1), relating to refunds
8of sales or use taxes to tax-exempt entities, enhances the
9readability of the Code section by defining a “designated
10exempt entity” and thus removing repeated references to each
11exempt entity in the Code section. The bill also adds a tribal
12government to the definition of a designated exempt entity.
13The bill strikes the terms “goods, wares, and merchandise” and
14uses the terms “building materials, supplies, and equipment”
15for purposes of claiming the exemption, when a designated
16exempt entity makes an application to the department for the
17refund of the sales or use tax upon the sales price of all
18sales or services related to the performance of a written
19construction contract. Additionally, if the sales price of
20all building materials, supplies, equipment, or services
21related to the performance of a written construction contract
22are to be exempt from the sales or use tax under the bill,
23all of the following must apply: the building materials,
24supplies, equipment, or services are completely consumed in the
25performance of a construction project; the property that is the
26subject of the construction project becomes public property or
27the property of an exempt entity; and the building materials,
28supplies, equipment, or services furnished are not used in
29the performance of a construction contract with a designated
30exempt entity in connection with the construction of certain
31facilities.
32The amendments to Code section 423.4(2)(a) and (b) relate
33to construction contracts for transportation projects by
34specifying the contractor shall pay sales or use tax for the
35services related to such contracts, and by making terminology
-87-1more consistent in the subsection.
2The amendments to Code sections 423.4(2) and 423.4(6) make
3the terminology more consistent with other changes in the bill.
4The amendment to Code section 423.5(1)(b) strikes the
5imposition of a 6 percent excise tax on the use of manufactured
6housing, or the purchase price if such housing is sold in the
7form of tangible personal property, or the installed purchase
8price if such housing is sold in the form of realty.
9The amendment to Code section 423.29(1) provides that a
10retailer maintaining a place of business in this state and
11making taxable sales shall, at the time of making such sales,
12collect the sales tax. The bill also provides that it is
13the intent of the general assembly that the amendment to
14Code section 423.29(1) is a conforming amendment consistent
15with current law, and that the amendment does not change the
16application of current law.
17The amendment to Code section 423.33(1) enhances the
18readability of the Code section by specifying that if a
19purchaser fails to pay sales tax to a retailer required to
20collect the sales tax, then the purchaser shall pay a use
21tax directly to the department. The bill specifies that the
22retailer and purchaser are jointly liable for the failure
23to pay either the sales or use tax in most circumstances.
24Additionally, the bill provides that it is the intent of the
25general assembly that the addition of “joint liability” is a
26conforming amendment consistent with current law, and that
27the amendment does not change the application of current law.
28The bill provides that if the purchaser pays the use tax,
29the retailer remains liable for any local option sales and
30services tax under Code chapter 423B that the retailer failed
31to collect.
32INCOME TAX. The bill strikes and replaces Code section
33422.9(3)(c). The bill provides that a taxpayer may elect
34to waive the entire carryback period with respect to an
35Iowa net operating loss for any taxable year, in the manner
-88-1prescribed by the department, and by the due date for filing
2the taxpayer’s return, including extensions of time. After the
3election is made for any taxable year, the election shall be
4irrevocable for such taxable year. If an election has been
5properly made, the bill provides that the Iowa net operating
6loss shall be carried forward 20 taxable years.
7The amendment to Code section 422.9(3)(d) modifies the
8election for an Iowa farming loss, which may be carried back
9for five taxable years prior to the taxable year of the loss.
10The bill specifies that a farming business that has an Iowa
11farming loss may make an election to carry back the loss for
12five taxable years, in the manner prescribed by the department,
13and shall be made by the due date for filing the taxpayer’s
14return, including extensions of time. After the election is
15made for any taxable year, the bill provides the election shall
16be irrevocable for such taxable year.
17The division applies to tax years beginning on or after
18January 1, 2020.
19RESEARCH ACTIVITIES TAX CREDIT. The amendments to Code
20sections 15.335, 422.10, and 422.33 update references to the
21Internal Revenue Code relating to the alternative simplified
22credit for increasing research activities.
23The division takes effect upon enactment and applies
24retroactively to January 1, 2019, for tax years beginning on
25or after that date.
26PARTNERSHIP AND PASS-THROUGH ENTITY AUDITS AND REPORTING
27OF FEDERAL ADJUSTMENTS. The amendment to Code section
28421.27(2)(c) specifies that a taxpayer is required to pay
29a penalty of 5 percent of the tax due, unless the taxpayer
30provides written notification to the department of a federal
31audit while it is in progress and voluntarily files an amended
32return which includes the final disposition of the audit
33and final federal adjustments to taxes paid within 180 days
34of the final determination date. The bill defines “final
35determination date” to generally mean the first day on which no
-89-1federal adjustments to taxes arising from the audit or other
2action remain to be finally determined. In cases of a final
3federal partnership adjustment arising from a partnership
4level audit, the taxpayer voluntarily and timely complies with
5reporting and payment requirements under new Code section
6422.25A(4) and (5) created in the bill.
7The bill enacts new Code section 422.7(59) providing that
8any income subtracted from federal taxable income shall be
9added back in computing net income for state individual income
10tax purposes when federal adjustments are made to taxes in the
11adjustment year. The bill defines “adjustment year” to mean
12the year in which the final determination of the adjustment
13occurs.
14The amendment to Code section 422.25 adds definitions to the
15Code section for “federal adjustment”, “federal adjustments
16report”, “final determination date”, and “final federal
17adjustment”.
18The bill enacts new Code section 422.25A which creates a
19process for audited partnerships and their direct and indirect
20partners to report final federal partnership adjustments to
21the department. The bill provides that the state partnership
22representative for the reviewed year shall have sole authority
23to act on behalf of the partnership. The bill creates
24reporting and payment requirements for audited partnerships
25and their partners subject to final federal adjustments.
26The bill permits an audited partnership or a tiered partner
27(partner that is a partnership or pass-through entity) to make
28irrevocable elections about the payment of any adjustments,
29and specifies the consequences of making certain elections.
30The bill permits an audited partnership or tiered partner to
31enter into an agreement with the department to use alternative
32reporting and payment methods. The bill permits the department
33to assess additional Iowa income tax, interest, and penalties
34arising from a federal partnership adjustments in the same
35manner as provided in other tax-related provisions.
-90- 1The bill enacts new Code section 422.25B that requires
2the state partnership representative acting on behalf of the
3partnership for the reviewed year to be the partnership’s
4federal partnership representative with respect to an action
5required or permitted to be taken by a state partnership
6representative, unless the partnership designates in writing in
7the manner prescribed by the department another person to act
8as the state partnership representative.
9The bill enacts new Code section 422.25C relating to
10partnership or pass-through entity audits and examinations.
11The bill provides that for tax years beginning on or after
12January 1, 2020, any adjustments to a partnership’s or
13pass-through entity’s taxes or an adjustment allocated to a
14partner’s taxes as a result of a department audit shall be
15determined at the partnership or pass-through entity level in
16the same manner as provided by federal law. The bill specifies
17that the state partnership representative shall have the sole
18authority to act on behalf of the partnership or pass-through
19entity with respect to any actions taken due to the audit,
20including appealing decisions to the director of revenue or
21seeking judicial review of the director’s decision. The
22provisions of new Code section 422.25C may be applied to tax
23years beginning before January 1, 2020, if the partnership or
24pass-through entity and the department agree.
25The bill enacts new Code section 422.35(26) providing that
26any income subtracted from federal taxable income shall be
27added back in computing net income for state corporate 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 bill amends Code section 422.39 by specifying that Code
33sections relating to payments of interest, computation of tax,
34liens, and final reports of fiduciaries apply to not just
35payments and collections but to reporting, examinations, and
-91-1assessments with respect to corporations including pass-through
2entities organized as corporations.
3The amendment to Code section 422.73 relates to credits
4against taxes due because of errors. The bill changes the
5period of limitation (statute of limitations) for a claim for
6a refund of or a credit against individual income tax by a
7taxpayer to one year from the final determination date of any
8final adjustment with respect to the particular tax year to
9claim an income tax refund or credit. Currently, a claim for
10a refund of or a credit against the individual income tax by
11a taxpayer is six months from the final disposition of any
12income tax matter between the taxpayer and the internal revenue
13service. The bill makes other changes relating to agreements
14entered into by the department and the internal revenue
15service for the transmission of federal income tax reports on
16individuals who have been involved in an income tax matter with
17the internal revenue service.
18The division applies to federal adjustments and federal
19partnership adjustments that have a final determination date
20after the effective date of the division.
21SETOFF PROCEDURES — RULEMAKING — EFFECTIVE DATE. The
22bill modifies the effective date of either Senate File 2328 or
23House File 2565 (setoff procedures), by providing that either
24Senate File 2328 or House File 2565, if enacted, take effect
25on the later of January 1, 2021, or the effective date of the
26rules adopted by the department of revenue implementing the
27bill other than the adopting of transitional rules by the
28department. This provision takes effect upon enactment, and
29applies retroactively to the effective date of either Act.
30PRO RATA SHARE OF ENTITY-LEVEL INCOME TAX PAID BY
31SHAREHOLDERS OR BENEFICIARIES. The bill provides that a
32resident partner of an entity taxed as a partnership, a
33resident shareholder of an S corporation, or a resident
34beneficiary of an estate or trust shall be deemed to have paid
35the resident partner’s, resident shareholder’s, or resident
-92-1beneficiary’s pro rata share of entity-level income tax paid
2by the partnership, S corporation, estate, or trust to another
3state or foreign country on income that is also subject to
4Iowa personal income tax, but only if the entity provides the
5resident partner, resident shareholder, or resident beneficiary
6a statement that documents the resident partner’s, resident
7shareholder’s, or resident beneficiary’s share of the income
8derived in the other state or foreign country, the income tax
9liability of the entity in that state or foreign country, and
10the income tax paid by the entity to that state or foreign
11country.
12The bill also provides that a resident shareholder of a
13regulated investment company shall be deemed to have paid the
14shareholder’s pro rata share of entity-level income tax paid by
15the regulated investment company to another state or foreign
16country and treated as paid by its shareholders pursuant to
17section 853 of the Internal Revenue Code, but only if the
18regulated investment company provides the resident shareholder
19a statement that documents the resident shareholder’s share of
20the income derived in the other state or foreign country, the
21income tax liability of the regulated investment company in
22that state or foreign country, and the income tax paid by the
23regulated investment company to that state or foreign country.
24This division takes effect upon enactment and applies
25retroactively to January 1, 2020, for tax years beginning on
26or after that date.
27BONUS DEPRECIATION. The bill provides that for purposes
28of Iowa taxes, the state will couple with any future changes
29to the increased expensing allowance under section 179 of the
30Internal Revenue Code (bonus depreciation). The change to
31bonus depreciation applies retroactively to January 1, 2020,
32for tax years beginning on or after that date.
33MARRIED TAXPAYERS — JOINT LIABILITY. The bill provides
34that relief from Iowa joint tax liability is available under
35all circumstances that are available under federal law. The
-93-1bill also provides a mechanism for the department of revenue to
2allow the spouse not requesting relief from joint tax liability
3to intervene in the department’s process for deciding whether
4to grant relief. This provision takes effect upon enactment.
5SALES TAX PAID BY THIRD-PARTY DEVELOPERS. The bill allows
6a pass-through entity awarded a refundable tax credit under
7Code section 15.331C (corporate tax credit for sales and use
8tax paid) to pass through the refundable tax credit to the
9owners of the pass-through entity to claim the owner’s share
10of the refundable tax credit. The provision takes effect upon
11enactment, and applies retroactively to January 1, 2020, for
12tax years beginning on or after that date.
13IOWA EDUCATIONAL SAVINGS PLAN TRUST (529 PLANS). The bill
14specifies that funds in a 529 plan may be used to pay expenses
15for the participation in a certified apprenticeship program.
16The bill also allows up to $10,000 of 529 plan funds to be used
17to pay the student loans of the beneficiary of the 529 plan or a
18sibling of the beneficiary, respectively.
19IOWA EDUCATIONAL SAVINGS ACCOUNT — EXTENSION. A
20participant who makes a contribution to the Iowa educational
21savings plan trust pursuant to Code section 12D.3, subsection
221, on or after January 1, 2020, and on or before July 31, 2020,
23may elect to be deemed to have made the contribution on the
24last day of calendar year 2019. This provision takes effect
25upon enactment.
26IOWA FIRST-TIME HOMEBUYER ACCOUNT — EXTENSION. An
27individual who opened a first-time homebuyer account during
28calendar year 2019 and who wishes to participate in the
29Iowa first-time homebuyer savings account program shall
30designate the account as a first-time homebuyer account and the
31beneficiary of such an account on or before July 31, 2020, on
32forms provided by the department of revenue. This provision
33takes effect upon enactment.
34QUALIFYING PERSONAL PROTECTIVE EQUIPMENT (PPE) — DONATION.
35The bill exempts from the use tax qualifying protective
-94-1personal equipment and materials assembled and donated by a
2business during the period beginning with a state of disaster
3emergency proclamation by the governor under Code section 29C.6
4and ending 180 days after the expiration of such proclamation.
5The division takes effect upon enactment and permits refunds of
6taxes, interest, or penalties that arise from claims resulting
7from the enactment of the division for donations occurring
8prior to the effective date of the division. The division
9specifies refund claims shall not be allowed unless claims
10are filed prior to October 1, 2020. The division applies
11retroactively to January 1, 2020, for qualifying personal
12protective equipment and materials assembled and donated on or
13after that date.
14SHORT-TERM RENTAL PROPERTIES. The bill prohibits a county
15or city from adopting or enforcing an ordinance that prohibits
16short-term rental properties within the county or city. The
17bill requires a county or city to consider short-term rental
18properties as a residential land use for zoning purposes.
19The bill authorizes a county or city to enact or enforce an
20ordinance that regulates, prohibits, or otherwise limits
21short-term rental properties if such enforcement is performed
22in the same manner as enforcement applicable to similar
23properties and if such enforcement meets a specified primary
24purpose. The bill also prohibits a county or city from
25adopting or enforcing any regulation, restriction, or other
26ordinance related to distance separation requirements for
27single-family homes and duplexes.
28FUTURE TAX CHANGES. The bill amends 2018 Iowa Acts,
29chapter 1161, section 133 (trigger), by striking the two
30conditions necessary for the trigger to occur, and specifies
31the provisions in 2018 Iowa Acts, chapter 1161, sections 99-132
32simply go into effect January 1, 2023.
33BUSINESS INTEREST EXPENSE DEDUCTION. The federal Tax Cuts
34and Jobs Act (TCJA) created a new limitation on the deduction
35of business interest expense for tax years beginning on or
-95-1after January 1, 2018. Currently, the state couples with
2federal law limiting the deduction of business interest expense
3for tax years beginning on or after January 1, 2019.
4The bill decouples, for Iowa individual and corporate income
5tax purposes, from the federal limitation on deduction of
6business interest expenses for tax years beginning on or after
7January 1, 2019.
8The decoupling from the federal limitation on deduction
9of business interest expense does not apply during any tax
10year in which the additional first-year depreciation allowance
11authorized in section 168(k) of the Internal Revenue Code
12(bonus depreciation) applies in computing net income for state
13tax purposes.
14For any tax year in which a taxpayer is not permitted to
15deduct any amount of interest expense paid or accrued in a
16previous taxable year due to the allowance of the additional
17first-year depreciation, the bill prohibits the deduction of
18any amount of interest expense paid or accrued in a previous
19taxable year in the current taxable year by reason of the
20carryforward of disallowed business interest provisions of
21section 163(j)(2) of the Internal Revenue Code, if either of
22the following apply: the interest expense was originally paid
23or accrued during a tax year in which there was a decoupling
24from the federal limitation on business expense, or the
25interest expense was originally paid or accrued during a tax
26year in which the taxpayer was not required to file an Iowa
27return.
28GLOBAL INTANGIBLE LOW-TAXED INCOME (GILTI). Federal
29law includes in a taxpayer’s gross income global intangible
30low-taxed income (GILTI) as defined in section 951A of the
31Internal Revenue Code, subject to a deduction equal to 50
32percent of the corporation’s GILTI under section 250(a)(1)(B)
33of the Internal Revenue Code. The bill enacts new Code section
34422.35(27) that allows a corporate taxpayer to deduct GILTI
35under section 951A of the Internal Revenue Code.
-96- 1RESCISSION OF RULES. The division rescinds rules relating
2to GILTI under section 951A of the Internal Revenue Code.
3The division takes effect upon enactment, and applies
4retroactively to January 1, 2019, for tax years beginning on
5or after that date.
6REINVESTMENT ACT. Code chapter 15J, the “Iowa Reinvestment
7Act”, authorizes municipalities (a city or a county) to
8establish reinvestment districts and receive remittances of
9specified amounts of state sales tax and state hotel and
10motel tax revenues collected in those districts for use in
11undertaking projects in the district. Eligible municipalities
12must seek approval from the economic development authority
13board to establish a reinvestment district. Code chapter
1415J currently prohibits the board from approving a proposed
15district plan on or after July 1, 2018, and imposes a $100
16million aggregate limit of state sales tax revenues and state
17hotel and motel tax revenues that may be approved by the board
18for remittance to all municipalities.
19The bill establishes an additional period of time for the
20board to approve reinvestment districts, beginning July 1,
212020, and ending July 1, 2025, and establishes an additional
22$100 million aggregate limit of state sales tax revenues and
23state hotel and motel tax revenues that may be approved by the
24board for remittance to all municipalities for those districts
25approved on or after July 1, 2020, but before July 1, 2025.
26The bill also expands the definition of “municipality”
27to include a joint board or other legal entity established
28or designated in an agreement between two or more contiguous
29cities or counties pursuant to Code chapter 28E. The bill also
30makes corresponding changes to other provisions of Code chapter
3115J to reflect such municipalities’ authority under the Iowa
32reinvestment Act.
33As part of the criteria for establishing a district, current
34law requires the district to consist of contiguous parcels not
35to exceed 25 acres in total. For districts approved under the
-97-1bill on or after July 1, 2020, the area comprising the district
2may consist of contiguous parcels not to exceed 75 acres in
3total.
4Part of the approval criteria for a district includes the
5requirement that the amount of proposed capital investment
6within the proposed district related to retail businesses does
7not exceed 50 percent of the total capital investment for all
8proposed projects in the proposed district plan, excluding “new
9lessors”, as defined in Code section 15J.2, from the definition
10of “retail business”. The bill adds businesses engaged in an
11activity subject to the sales tax under Code section 423.2(3)
12to that exclusion from the definition of “retail business”.
13Code section 15J.7 prohibits revenues received by a
14municipality from being used for a project that includes
15relocation of a commercial or industrial enterprise not
16presently located within the municipality. “Relocation”
17is defined in Code section 15J.7 to mean the closure or
18substantial reduction of an enterprise’s existing operations
19in one area of the state and the initiation of substantially
20the same operation in the same county or a contiguous county in
21the state. The bill provides, however, that if the initiation
22of operations includes an expanded scope or nature of the
23enterprise’s existing operations, the new operation shall not
24be considered to be “substantially the same operation”.
25Code section 15J.8 provides that as of the date 20 years
26after the district’s commencement date, the department of
27revenue shall cease to deposit state sales tax revenues and
28state hotel and motel tax revenues into the district’s account
29within the fund, unless the municipality dissolves the district
30prior to that date. The bill provides that, upon request of
31the municipality prior to the dissolution of the district,
32and following a determination by the economic development
33authority board that the amounts of new state sales tax revenue
34and new state hotel and motel tax revenue deposited in the
35municipality’s reinvestment project fund are substantially
-98-1lower than the amounts established by the board when the
2district was approved, the board may extend the district’s
320-year period of time for depositing and receiving revenues by
4up to five additional years if such an extension is in the best
5interest of the public.
6The bill relates to certain tax credits awarded by the
7economic development authority for equity investments in a
8qualifying business or innovation fund. The bill directs
9the economic development authority to determine on or before
10June 30 of each year the amount of tax credits that will be
11issued for the following fiscal year for equity investments in
12qualifying businesses pursuant to Code section 15E.43 and in
13innovation funds pursuant to Code section 15E.52. The bill
14caps the aggregate amount of these tax credits at $10 million.
15The bill changes the maximum amount of tax credits that may
16be issued in a year to a natural person and the person’s spouse
17or dependant, or for equity investments in any one qualifying
18business, from a calendar year basis to a fiscal year basis.
19The division takes effect upon enactment.
20CAPITAL GAINS. The bill provides a capital gains deduction
21for tax years beginning on or after January 1, 2020, in the
22amount of 15 percent of the taxpayer’s net capital gain as
23defined in section 1222 of the Internal Revenue Code.
24LOCAL ASSESSORS. This division of the bill relates to the
25appointment and duties of local assessors.
26Code section 441.6 establishes the process for filling the
27office of county or city assessor. When a vacancy occurs, the
28examining board requests the director of revenue to forward
29a register containing the names of all individuals eligible
30for appointment as assessor. The examining board then makes
31a written report of the examination and submits the report
32together with the names of those individuals certified by the
33director of revenue to the conference board. Upon receipt
34of the report of the examining board, the conference board
35appoints an assessor from the register of eligible candidates
-99-1and gives written notice to the director of revenue of the
2appointment.
3Under the bill, the appointee selected by the conference
4board shall not assume the office of city or county assessor
5until the appointment is confirmed by the director of revenue.
6If the director of revenue rejects the appointment, the
7examining board must conduct a new examination and submit a new
8report to the conference board.
9The bill also provides that an assessor or deputy assessor
10shall not personally assess a property if the person or a
11member of the person’s immediate family owns the property,
12has a financial interest in the property, or has a financial
13interest in the entity that owns the property.
14Code section 441.41 authorizes the conference board to
15employ special counsel to assist the city legal department or
16the county attorney in litigation dealing with assessments.
17The bill provides that such authority is subject to review
18and prior approval by the city legal department or the county
19attorney, as applicable.
20RURAL IMPROVEMENT ZONES. Under Code chapter 357H, the board
21of supervisors of a county with less than 20,000 residents
22and with a private lake development may designate an area
23surrounding the lake, if it is an unincorporated area of the
24county, a rural improvement zone upon receipt of a qualifying
25petition and upon the board’s determination that the area is in
26need of improvements. The bill modifies that provision in Code
27section 357H.1 to provide that the board of supervisors of such
28a county with a private real estate development adjacent to or
29abutting in part a lake may designate an area surrounding the
30lake a rural improvement zone upon the receipt of the petition
31and a determination that the area is in need of improvements.
32This division of the bill takes effect upon enactment
33and applies to rural improvement zones in existence on or
34established on or after the effective date of the division of
35the bill.
-100- 1SCHOOL TUITION ORGANIZATION TAX CREDITS. Beginning January
21, 2022, the bill allows the total approved school tuition
3tax credits, currently set at $15 million for calendar year
42020, to increase each calendar year, if the amount of awarded
5tax credits from the preceding calendar year are equal to or
6greater than 90 percent of the total approved school tuition
7tax credits for the current calendar year, until reaching a
8maximum of amount of $20 million per calendar year.
9Currently, the maximum amount of school tuition organization
10tax credits that may be approved for corporations in the
11aggregate shall not exceed 25 percent of the total amount of
12school tuition organization tax credits allowable in a calendar
13year in Code section 422.11S(8). The bill permits corporations
14in the aggregate to be awarded more than the 25 percent of the
15allowable school tuition organization tax credits in a calendar
16year by striking the 25 percent limitation.
17PAYCHECK PROTECTION PROGRAM. The bill excludes from the
18calculation of Iowa income tax for certain fiscal filers the
19federal paycheck protection program loan proceeds that were
20forgiven and excluded from federal gross income. This division
21takes effect upon enactment.
22INCOME TAX EXCLUSION — EMERGENCY STUDENT GRANT MONEY. The
23bill excludes from Iowa net income federal Coronavirus Aid,
24Relief, and Economic Security Act funds received by a student
25through a higher education institution to support the student’s
26financial needs as a result of the COVID-19 pandemic pursuant
27for any tax year ending after March 27, 2020. This provision
28takes effect upon enactment, and applies retroactively to March
2927, 2020, for tax years ending on or after that date.
30IOWA INCOME EXCLUSION — STIMULUS CHECKS. In determining
31the amount of deduction for federal income tax under Code
32section 422.9 for tax years beginning in the 2020 calendar
33year, the amount of the deduction for the tax year shall not
34be adjusted by the amount received during the tax year of the
35income tax rebate provided pursuant to the federal Recovery
-101-1Rebates and Coronavirus Aid, Relief, and Economic Security Act,
2and the amount of such income tax rebate shall not be subject
3to taxation.
4HUNTING DEER AND TURKEY ON A FARM UNIT. Current law allows
5an owner or tenant of a farm unit or a member of that person’s
6family who receives a wild turkey license for use on that
7person’s farm unit to use the license during any bow or firearm
8turkey hunting season. An owner or tenant of a farm unit or
9a member of that person’s family who receives a deer hunting
10license for use on that person’s farm unit may use the license
11during any bow or firearm deer hunting season. Current law
12requires the payment of a $1 fee that shall be appropriated
13to the help us stop hunger (HUSH) program for each free deer
14hunting license issued for use on a farm unit.
15The bill allows an owner or tenant of a farm unit or a member
16of that person’s family to use on the farm unit a wild turkey
17hunting license during any established turkey hunting season
18and a deer hunting license during any established deer hunting
19season using the method of take authorized by rule for the
20respective season being hunted. A tag filled during one of the
21seasons will not be valid in subsequent seasons. An owner,
22tenant, or family member who receives a free deer hunting
23license for use on a farm unit shall pay a fee of $1.25 for each
24license issued that shall be appropriated to the HUSH program.
-102-jm/jh
2Iowa reinvestment Act, innovation fund, hunting and fees,
3and providing for properly related matters, and including
4effective date and retroactive applicability provisions.
5BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
1DIVISION I
2DEPARTMENT OF revenue ADMINISTRATION AND PENALTY PROVISIONS
3 Section 1. Section 421.6, Code 2020, is amended to read as
4follows:
5421.6 Definition of return.
6For purposes of this title, unless the context otherwise
7requires, “return” means any tax or information return, amended
8return, declaration of estimated tax, or claim for refund
9that is required by, provided for, or permitted under, the
10provisions of this title or section 533.329, and which is filed
11with the department by, on behalf of, or with respect to any
12person. “Return” includes any amendment or supplement to these
13items, including supporting schedules, attachments, or lists
14which are supplemental to or part of the filed return.
15 Sec. 2. Section 421.17, Code 2020, is amended by adding the
16following new subsection:
17 NEW SUBSECTION. 36. To enter into an agreement pursuant
18to chapter 28E with the state fair organized under chapter 173
19or with a fair defined in section 174.1, to collect and remit
20taxes and fees from sellers making sales at retail on property
21owned, controlled, or operated by a fair or through events
22conducted by a fair.
23 Sec. 3. Section 421.27, subsections 1, 4, and 6, Code 2020,
24are amended to read as follows:
251. Failure to timely file a return or deposit form. a. If
26a person fails to file with the department on or before the due
27date a return or deposit form there shall be added to the tax
28shown due or required to be shown due a penalty of ten percent
29of the tax shown due or required to be shown due.
30b. In the case of a specified business with no tax shown
31due or required to be shown due that fails to timely file an
32income return, the specified business shall pay the greater of
33the following penalty amounts:
34(1) Two hundred dollars.
35(2) An amount equal to ten percent of the imputed Iowa
-1-1liability of the specified business, not to exceed twenty-five
2thousand dollars.
3c. The penalty, if assessed pursuant to paragraph “a” or
4“b”, shall be waived by the department upon a showing of any of
5the following conditions:
6a. (1) At An amount of tax greater than zero is required to
7be shown due and at least ninety percent of the tax required to
8be shown due has been paid by the due date of the tax.
9b. (2) Those taxpayers who are required to file quarterly
10returns, or monthly or semimonthly deposit forms may have one
11late return or deposit form within a three-year period. The
12use of any other penalty exception will not count as a late
13return or deposit form for purposes of this exception.
14c. (3) The death of a taxpayer, death of a member of
15the immediate family of the taxpayer, or death of the person
16directly responsible for filing the return and paying the tax,
17when the death interferes with timely filing.
18d. (4) The onset of serious, long-term illness or
19hospitalization of the taxpayer, of a member of the immediate
20family of the taxpayer, or of the person directly responsible
21for filing the return and paying the tax.
22e. (5) Destruction of records by fire, flood, or other act
23of God.
24f. (6) The taxpayer presents proof that the taxpayer
25relied upon applicable, documented, written advice specifically
26made to the taxpayer, to the taxpayer’s preparer, or to an
27association representative of the taxpayer from the department,
28state department of transportation, county treasurer, or
29federal internal revenue service, whichever is appropriate,
30that has not been superseded by a court decision, ruling by a
31quasi-judicial body, or the adoption, amendment, or repeal of
32a rule or law.
33g. (7) Reliance upon results in a previous audit was a
34direct cause for the failure to file where the previous audit
35expressly and clearly addressed the issue and the previous
-2-1audit results have not been superseded by a court decision, or
2the adoption, amendment, or repeal of a rule or law.
3h. (8) Under rules prescribed by the director, the taxpayer
4presents documented proof of substantial authority to rely
5upon a particular position or upon proof that all facts and
6circumstances are disclosed on a return or deposit form.
7i. (9) The return, deposit form, or payment is timely,
8but erroneously, mailed with adequate postage to the internal
9revenue service, another state agency, or a local government
10agency and the taxpayer provides proof of timely mailing with
11adequate postage.
12j. (10) The tax has been paid by the wrong licensee and the
13payments were timely remitted to the department for one or more
14tax periods prior to notification by the department.
15k. (11) The failure to file was discovered through a
16sanctioned self-audit program conducted by the department.
17l. (12) If the availability of funds in payment of tax
18required to be made through electronic funds transfer is
19delayed and the delay of availability is due to reasons beyond
20the control of the taxpayer. “Electronic funds transfer” means
21any transfer of funds, other than a transaction originated
22by check, draft, or similar paper instrument, that is
23initiated through an electronic terminal telephone, computer,
24magnetic tape, or similar device for the purpose of ordering,
25instructing, or authorizing a financial institution to debit or
26credit an account.
27m. (13) The failure to file a timely inheritance tax return
28resulting solely from a disclaimer that required the personal
29representative to file an inheritance tax return. The penalty
30shall be waived if such return is filed and any tax due is paid
31within the later of nine months from the date of death or sixty
32days from the delivery or filing of the disclaimer pursuant to
33section 633E.12.
34n. (14) That an Iowa inheritance tax return is filed for
35an estate within the later of nine months from the date of
-3-1death or sixty days from the filing of a disclaimer by the
2beneficiary of the estate refusing to take the property or
3right or interest in the property.
44. Willful failure to file or deposit.
5a. (1) In case of willful failure to file a return
6or deposit form with the intent to evade tax or a filing
7requirement, or in case of willfully filing a false return
8or deposit form with the intent to evade tax, in lieu of the
9penalties otherwise provided in this section, a penalty of
10seventy-five percent shall be added to the amount shown due or
11required to be shown as tax on the return or deposit form.
12(2) In case of a willful failure by a specified business to
13file an income return with no tax shown due or required to be
14shown due with intent to evade a filing requirement, or in case
15of willfully filing a false income return with no tax shown due
16or required to be shown due with the intent to evade reporting
17of Iowa-source income, the penalty imposed shall be the greater
18of the following amounts:
19(a) One thousand five hundred dollars.
20(b) An amount equal to seventy-five percent of the imputed
21Iowa liability of the specified business.
22(3) If penalties are applicable for failure to file a
23return or deposit form and failure to pay the tax shown due or
24required to be shown due on the return or deposit form, the
25penalty provision for failure to file shall be in lieu of the
26penalty provisions for failure to pay the tax shown due or
27required to be shown due on the return or deposit form, except
28in the case of willful failure to file a return or deposit form
29or willfully filing a false return or deposit form with intent
30to evade tax.
31b. The penalties imposed under this subsection are not
32subject to waiver.
336. Improper receipt of payments Liability — fraudulent
34practice. A person who makes an erroneous application for
35refund, credit, reimbursement, rebate, or other payment shall
-4-1be liable for any overpayment received or tax liability reduced
2plus interest at the rate in effect under section 421.7.
3a. In addition, a person who willfully commits a fraudulent
4practice and is liable for a penalty equal to seventy-five
5percent of the refund, credit, exemption, reimbursement,
6rebate, or other payment or benefit being claimed if the person
7does any of the following:
8(1) Willfullymakes a false or frivolous application for
9refund, credit, reimbursement, rebate, or other payment or
10benefit with intent to evade tax or with intent to receive
11a refund, credit, reimbursement, rebate, or other payment or
12benefit, to which the person is not entitled is guilty of
13a fraudulent practice and is liable for a penalty equal to
14seventy-five percent of the refund, credit, reimbursement,
15rebate, or other payment being claimed.
16(2) Willfully submits any false information, document,
17or document containing false information in support of an
18application for refund, credit, exemption, reimbursement,
19rebate, or other payment or benefit with the intent to evade
20tax.
21(3) Willfully submits with any false information, document,
22or document containing false information in support of an
23application for refund with the intent to receive a refund,
24credit, exemption, reimbursement, rebate, or other payment
25benefit, to which the person is not entitled.
26b. Payments, penalties, and interest due under this
27subsection may be collected and enforced in the same manner as
28the tax imposed.
29 Sec. 4. Section 421.27, Code 2020, is amended by adding the
30following new subsections:
31 NEW SUBSECTION. 8. Definitions. As used in this section:
32a. “Imputed Iowa liability” means any of the following:
33(1) In the case of corporations other than corporations
34described in section 422.34 or section 422.36, subsection 5,
35the corporation’s Iowa net income after the application of the
-5-1Iowa business activity ratio, if applicable, multiplied by the
2top income tax rate imposed under section 422.33 for the tax
3year.
4(2) In the case of financial institutions as defined in
5section 422.61, the financial institution’s Iowa net income
6after the application of the Iowa business activity ratio, if
7applicable, multiplied by the franchise tax rate imposed under
8section 422.63 for the tax year.
9(3) In the case of all other entities, including
10corporations described in section 422.36, subsection 5, and all
11other entities required to file an information return under
12section 422.15, subsection 2, the entity’s Iowa net income
13after the application of the Iowa business activity ratio, if
14applicable, multiplied by the top income tax rate imposed under
15section 422.5A for the tax year.
16b. “Income return” means an income tax return or information
17return required under section 422.15, subsection 2, or section
18422.36, 422.37, or 422.62.
19c. “Specified business” means a partnership or other entity
20required to file an information return under section 422.15,
21subsection 2, a corporation required to file a return under
22section 422.36 or 422.37, or a financial institution required
23to file a return under section 422.62.
24 NEW SUBSECTION. 9. Additional penalty. In addition to the
25penalties imposed by this section, if a taxpayer fails to file
26a return within ninety days of written notice by the department
27that the taxpayer is required to do so, there shall be added to
28the amount shown due or required to be shown due a penalty in
29the amount of one thousand dollars.
30 Sec. 5. NEW SECTION. 421.27A Perjury.
311. For purposes of this title, a form, application, or any
32other documentation required or requested by the department
33shall be required to be certified under penalty of perjury that
34the information contained in the form, application, or other
35documentation is true and correct.
-6- 12. A person commits a class “D” felony under any of the
2following circumstances:
3a. The person makes a form, application, or other document
4containing false information in support of an application for
5refund, credit, exemption, reimbursement, rebate, or other
6payment or benefit with intent to evade tax.
7b. The person makes a form, application, or other document
8containing false information with intent to unlawfully receive
9a refund, credit, exemption, reimbursement, rebate, or other
10payment or benefit, to which the person is not entitled.
11c. The person knowingly makes any false affidavit.
12d. The person knowingly swears or affirms falsely to any
13matter or thing required by the terms of this title to be sworn
14to or affirmed.
15 Sec. 6. NEW SECTION. 421.59 Power of attorney — authority
16to act on behalf of taxpayer.
171. a. A taxpayer may authorize an individual to act on
18behalf of the taxpayer by filing a power of attorney with the
19department, on a form prescribed by the department.
20b. A taxpayer may at any time revoke a power of attorney
21filed with the department pursuant to subsection 1. Upon
22processing of the taxpayer’s revocation of a power of attorney,
23the department shall cease honoring the power of attorney.
242. The department may authorize the following persons to act
25and receive information on behalf of and exercise all of the
26rights of a taxpayer, regardless of whether a power of attorney
27has been filed pursuant to subsection 1:
28a. A guardian, conservator, or custodian appointed by a
29court, if a taxpayer has been deemed legally incompetent by a
30court. The authority of the appointee to act on behalf of the
31taxpayer shall be limited to the extent specifically stated in
32the order of appointment.
33(1) Upon request, a guardian, conservator, or custodian of
34a taxpayer shall submit to the department a copy of the court
35order appointing the guardian, conservator, or custodian.
-7- 1(2) The department may petition the court that appointed the
2guardian, conservator, or custodian to verify the appointment
3or to determine the scope of the appointment.
4b. A receiver appointed pursuant to chapter 680. An
5appointed receiver shall be limited to act on behalf of the
6taxpayer by the authority stated in the order of appointment.
7(1) Upon the request of the department, a receiver shall
8submit to the department a copy of the court order appointing
9the receiver.
10(2) The department may petition the court that appointed the
11receiver to verify the appointment or to determine the scope
12of the appointment.
13c. An individual who has been named as an authorized
14representative on a fiduciary return of income filed under
15section 422.14 or a tax return filed under chapter 450.
16d. (1) An individual holding the following title or
17position within a corporation, association, partnership, or
18other business entity:
19(a) A president or chief executive officer, or any other
20officer of the corporation or association if the president or
21chief executive officer certifies that the officer has the
22authority to legally bind the corporation or association.
23(b) A designated partner duly authorized to act on behalf
24of the partnership.
25(c) A person authorized to act on behalf of a limited
26liability company in tax matters pursuant to a valid statement
27of authority.
28(2) An individual seeking to act on behalf of a taxpayer
29pursuant to this paragraph shall file an affidavit with the
30department attesting to the identity and qualifications of the
31individual and any necessary certifications required under this
32paragraph. The department may require any documents or other
33evidence to demonstrate the individual has authority to act on
34behalf of the taxpayer before the department.
35e. A licensed attorney who has appeared on behalf of the
-8-1taxpayer or the taxpayer’s estate in a court proceeding.
2Authorization under this paragraph is limited to those matters
3within the scope of the representation.
4f. A parent or guardian of a taxpayer who has not reached
5the age of majority where the parent or guardian has signed the
6taxpayer’s return on behalf of the taxpayer. Authorization
7under this paragraph is limited to those matters relating to
8the return signed by the parent or guardian. Authorization
9under this paragraph automatically terminates when the taxpayer
10reaches the age of majority pursuant to section 599.1.
113. a. In lieu of executing a power of attorney pursuant
12to subsection 1, the department may enter into a memorandum of
13understanding with the taxpayer for each employee, officer,
14or member of a third-party entity engaged with or otherwise
15hired by a taxpayer to manage the tax matters of the taxpayer,
16to permit the disclosure of confidential tax information to
17the third-party entity and the authority to act on behalf of
18the taxpayer. The memorandum of understanding shall adhere to
19requirements as established by the director.
20b. The memorandum of understanding shall be signed by
21the director, the taxpayer, and the third-party entity or an
22authorized representative of the third-party entity.
23c. At any time, a taxpayer may unilaterally revoke
24a memorandum of understanding entered into pursuant to
25this subsection by filing a notice of revocation with the
26department. Upon the filing of such a revocation by the
27taxpayer, the department shall cease honoring the memorandum
28of understanding.
294. The department shall adopt rules pursuant to chapter 17A
30to administer this section.
31 Sec. 7. Section 421.60, subsection 2, paragraph a,
32subparagraph (2), Code 2020, is amended to read as follows:
33(2) The statement prepared in accordance with this
34paragraph shall be available on the department’s internet site.
35The internet site for this information shall be distributed by
-9-1the department to all taxpayers at the first contact by the
2department with respect to the determination or collection of
3any tax, except in the case of simply providing tax forms.
4 Sec. 8. Section 421.60, Code 2020, is amended by adding the
5following new subsection:
6 NEW SUBSECTION. 11. Electronic communication.
7Notwithstanding any provision of the law to the contrary, for
8purposes of this title and sections 321.105A and 533.329, a
9taxpayer may elect to receive any notices, correspondence,
10or other communication electronically that the department is
11required to send by regular mail. The director may establish
12procedures and limitations for obtaining this election from the
13taxpayer.
14 Sec. 9. Section 421.62, subsection 1, Code 2020, is amended
15by adding the following new paragraph:
16 NEW PARAGRAPH. 0b. “Income tax return or claim for refund”
17means any tax return or claim for refund under chapter 422,
18excluding withholding returns under section 422.16.
19 Sec. 10. Section 421.62, subsection 1, paragraph c,
20subparagraph (1), Code 2020, is amended to read as follows:
21(1) “Tax return preparer” means any individual who, for
22a fee or other consideration, prepares ten or more income
23 tax returns or claims for refund under chapter 422 during
24a calendar year, or who assumes final responsibility for
25completed work on such income tax returns or claims for refund
26under chapter 422 on which preliminary work has been done by
27another individual.
28 Sec. 11. Section 421.62, subsection 2, paragraph a, Code
292020, is amended to read as follows:
30a. On or after January 1, 2020, a tax return preparer
31is required to include the tax return preparer’s PTIN on
32any income tax return or claim for refund prepared by the
33tax return preparer and filed under chapter 422 with the
34department.
35 Sec. 12. Section 421.64, subsection 1, Code 2020, is amended
-10-1to read as follows:
21. For purposes of this section, “tax return preparer” means
3the same as defined in section 421.61 421.62.
4 Sec. 13. Section 422.20, subsections 1 and 2, Code 2020, are
5amended to read as follows:
61. It shall be unlawful for any present or former officer
7or employee of the state to willfully or recklessly divulge or
8to make known in any manner whatever not provided by law to
9any person the amount or source of income, profits, losses,
10expenditures, or any particular thereof, set forth or disclosed
11in any income return, or to permit any income return or copy
12thereof or any book containing any abstract or particulars
13thereof to be seen or examined by any person except as provided
14by law; and it shall be unlawful for any person to willfully or
15recklessly print or publish in any manner whatever not provided
16by law any income return, or any part thereof or source of
17income, profits, losses, or expenditures appearing in any
18income return; and any person committing an offense against the
19foregoing provision shall be guilty of a serious misdemeanor.
20If the offender is an officer or employee of the state, such
21person shall also be dismissed from office or discharged from
22employment. Nothing herein shall prohibit turning over to duly
23authorized officers of the United States or tax officials of
24other states state information and income returns pursuant
25to agreement between the director and the secretary of the
26treasury of the United States or the secretary’s delegate or
27pursuant to a reciprocal agreement with another state.
282. It is unlawful for an officer, employee, or agent, or
29former officer, employee, or agent of the state to willfully
30or recklessly disclose to any person, except as authorized
31in subsection 1 of this section, any federal tax return
32or return information as defined in section 6103(b) of the
33Internal Revenue Code. It is unlawful for a person to whom
34any federal tax return or return information, as defined in
35section 6103(b) of the Internal Revenue Code, is disclosed
-11-1in a manner unauthorized by subsection 1 of this section
2to thereafter willfully or recklessly print or publish in
3any manner not provided by law any such return or return
4information. A person violating this provision is guilty of
5a serious misdemeanor.
6 Sec. 14. Section 422.20, subsection 3, paragraph a, Code
72020, is amended to read as follows:
8a. Unless otherwise expressly permitted by section 8A.504,
9section 8G.4, section 11.41, section 96.11, subsection 6,
10section 421.17, subsections 22, 23, and 26, section 421.17,
11subsection 27, paragraph “k”, section 421.17, subsection 31,
12section 252B.9, section 321.40, subsection 6, sections 321.120,
13421.19, 421.28, 421.59, 422.72, and 452A.63, this section, or
14another provision of law, a tax return, return information, or
15investigative or audit information shall not be divulged to any
16person or entity, other than the taxpayer, the department, or
17internal revenue service for use in a matter unrelated to tax
18administration.
19 Sec. 15. Section 422.20, Code 2020, is amended by adding the
20following new subsections:
21 NEW SUBSECTION. 3A. The director may disclose the tax
22return of a partnership, limited liability company, or S
23corporation, any such return information, or any investigative
24information related to the return, to any person who was a
25partner, shareholder, or member of such an entity during any
26part of the period covered by the return.
27 NEW SUBSECTION. 3B. a. Prior to being made available for
28public inspection, the department shall redact from the record
29in an appeal or contested case the following information from
30any pleading, exhibit, attachment, motion, written evidence,
31final order, decision, or opinion:
32(1) A financial account number.
33(2) An account number generated by the department to
34identify an audit or examination.
35(3) A social security number.
-12- 1(4) A federal employer identification number.
2(5) The name of a minor.
3(6) A medical record or other medical information.
4b. Upon a motion filed by the taxpayer, the department
5may redact from the record in an appeal or contested case any
6other information from a pleading, exhibit, attachment, motion,
7or written evidence, if the taxpayer proves by clear and
8convincing evidence that the release of such information would
9disclose a trade secret or be a clear, unwarranted invasion of
10personal privacy.
11c. Notwithstanding paragraph “a”, when making final orders,
12decisions, or opinions available for public inspection, the
13department may disclose the items in paragraph “a” if the
14department determines such information is necessary to the
15resolution or decision of the appeal or case.
16d. Except as described in paragraphs “a” and “b”, all
17information contained in a pleading, exhibit, attachment,
18motion, written evidence, final order, decision, opinion,
19and the record in an appeal or contested case is subject to
20examination to the extent provided by chapter 22.
21 Sec. 16. Section 422.25, subsection 1, Code 2020, is amended
22by adding the following new paragraph:
23 NEW PARAGRAPH. c. The period of examination and
24determination is unlimited under this title in the case of
25any action by the department to recover or rescind any tax
26expenditure as defined by section 2.48, subsection 1, or any
27other incentive or assistance, due to a failure to meet or
28maintain the requirements of a program administered by the
29economic development authority.
30 Sec. 17. Section 422.69, subsection 1, Code 2020, is amended
31to read as follows:
321. All fees, taxes, interest, and penalties imposed under
33this chapter shall be paid to the department in the form of
34remittances payable to the state treasurer department and the
35department shall transmit each payment daily to the state
-13-1treasurer.
2 Sec. 18. Section 422.72, subsection 1, paragraph a,
3subparagraph (1), Code 2020, is amended to read as follows:
4(1) It is unlawful for the director, or any person having
5an administrative duty under this chapter, or any present or
6former officer or other employee of the state authorized by the
7director to examine returns, to willfully or recklessly divulge
8in any manner whatever, the business affairs, operations, or
9information obtained by an investigation under this chapter of
10records and equipment of any person visited or examined in the
11discharge of official duty, or the amount or source of income,
12profits, losses, expenditures or any particular thereof, set
13forth or disclosed in any return, or to willfully or recklessly
14 permit any return or copy of a return or any book containing
15any abstract or particulars thereof to be seen or examined by
16any person except as provided by law.
17 Sec. 19. Section 422.72, Code 2020, is amended by adding the
18following new subsection:
19 NEW SUBSECTION. 7A. a. Prior to being made available for
20public inspection, the department shall redact from the record
21in an appeal or contested case the following information from
22any pleading, exhibit, attachment, motion, written evidence,
23final order, decision, or opinion:
24(1) A financial account number.
25(2) An account number generated by the department to
26identify an audit or examination.
27(3) A social security number.
28(4) A federal employer identification number.
29(5) The name of a minor.
30(6) A medical record or other medical information.
31b. Upon a motion filed by the taxpayer, the department
32may redact from the record in an appeal or contested case any
33other information from a pleading, exhibit, attachment, motion,
34or written evidence, if the taxpayer proves by clear and
35convincing evidence that the release of such information would
-14-1disclose a trade secret or be a clear, unwarranted invasion of
2personal privacy.
3c. Notwithstanding paragraph “a”, when making final orders,
4decisions, or opinions available for public inspection, the
5department may disclose the items in paragraph “a” if the
6department determines such information is necessary to the
7resolution or decision of the appeal or case.
8d. Except as described in paragraphs “a” and “b”, all
9information contained in a pleading, exhibit, attachment,
10motion, written evidence, final order, decision, opinion,
11and the record in an appeal or contested case is subject to
12examination to the extent provided by chapter 22.
13 Sec. 20. Section 423.37, Code 2020, is amended by adding the
14following new subsection:
15 NEW SUBSECTION. 4. The period of limitation on examination
16and determination is unlimited under this title in the case
17of any action by the department to recover or rescind any tax
18expenditure as defined by section 2.48, subsection 1, or any
19other incentive or assistance, due to a failure to meet or
20maintain the requirements of a program administered by the
21economic development authority.
22 Sec. 21. Section 428A.1, subsection 3, Code 2020, is amended
23to read as follows:
243. The declaration of value shall state the full
25consideration paid for the real property transferred. If
26agricultural land, as defined in section 9H.1, is purchased by
27a corporation, limited partnership, trust, alien or nonresident
28alien, the declaration of value shall include the name and
29address of the buyer, the name and address of the seller, a
30legal description of the agricultural land, and identify the
31buyer as a corporation, limited partnership, trust, alien, or
32nonresident alien. The county recorder shall not record the
33declaration of value, but shall enter on the declaration of
34value information the director of revenue requires for the
35production of the sales/assessment ratio study and transmit
-15-1all declarations of value to the city or county assessor in
2whose jurisdiction the property is located. The city or county
3assessor shall enter on the declaration of value provide the
4information the director of revenue requires for the production
5of the sales/assessment ratio study and transmit one copy of
6each declaration of value to the director of revenue, at times
7as directed by the director of revenue. The assessor shall
8retain one copy of each declaration of value for three years
9from December 31 of the year in which the transfer of realty
10for which the declaration was filed took place. The director
11of revenue shall, upon receipt of the information required to
12be filed under this chapter by the city or county assessor,
13send to the office of the secretary of state that part of the
14declaration of value which identifies a corporation, limited
15partnership, trust, alien, or nonresident alien as a purchaser
16of agricultural land as defined in section 9H.1.
17 Sec. 22. Section 441.48, Code 2020, is amended to read as
18follows:
19441.48 Notice of adjustment.
201. Before the department of revenue shall adjust the
21valuation of any class of property any such percentage, the
22department shall first serve ten days’ notice by mail, on the
23county auditor of the county whose valuation is proposed to be
24adjusted. The department shall hold an adjourned meeting after
25such
262. If the county or assessing jurisdiction intends to
27protest the proposed adjustment, the board of supervisors or
28city council, as applicable, shall provide the department with
29notice of intent to protest prior to expiration of the ten
30days’ notice.
313. After expiration of theten days’ notice, at which time
32 the county or assessing jurisdiction may appear by its city
33council or board of supervisors, city or county attorney, and
34other assessing jurisdiction, or city or county officials, and
35make written or oral protest against such proposed adjustment.
-16- 14. The protest shall consist simply of a statement of the
2error, or errors, complained of with such facts as may lead to
3their correction. At the adjourned meeting
45. After written protest is received, or an oral protest
5is heard, thefinal action may be taken in reference to the
6proposed adjustment.
7 Sec. 23. Section 489.706, subsection 2, Code 2020, is
8amended to read as follows:
92. The secretary of state shall refer the federal tax
10identification number contained in the application for
11reinstatement to the departments department of revenue and
12 workforce development. The departments department of revenue
13and workforce development shall report to the secretary of
14state the tax status of the limited liability company. If
15either the department reports to the secretary of state that
16a filing delinquency or liability exists against the limited
17liability company, the secretary of state shall not cancel the
18declaration of dissolution until the filing delinquency or
19liability is satisfied.
20 Sec. 24. Section 490.1422, subsection 2, paragraph a, Code
212020, is amended to read as follows:
22a. The secretary of state shall refer the federal tax
23identification number contained in the application for
24reinstatement to the departments department of revenue and
25 workforce development. The departments department of revenue
26and workforce development shall report to the secretary
27of state the tax status of the corporation. If either the
28 department reports to the secretary of state that a filing
29delinquency or liability exists against the corporation,
30the secretary of state shall not cancel the certificate of
31dissolution until the filing delinquency or liability is
32satisfied.
33 Sec. 25. Section 501.813, subsection 2, paragraph a, Code
342020, is amended to read as follows:
35a. The secretary of state shall refer the federal tax
-17-1identification number contained in the application for
2reinstatement to the departments department of revenue and
3 workforce development. The departments department of revenue
4and workforce development shall report to the secretary
5of state the tax status of the cooperative. If either the
6 department reports to the secretary of state that a filing
7delinquency or liability exists against the cooperative,
8the secretary of state shall not cancel the certificate of
9dissolution until the filing delinquency or liability is
10satisfied.
11 Sec. 26. Section 504.1423, subsection 2, paragraph a, Code
122020, is amended to read as follows:
13a. The secretary of state shall refer the federal tax
14identification number contained in the application for
15reinstatement to the departments department of revenue and
16 workforce development. The departments department of revenue
17and workforce development shall report to the secretary
18of state the tax status of the corporation. If either the
19 department reports to the secretary of state that a filing
20delinquency or liability exists against the corporation,
21the secretary of state shall not cancel the certificate of
22dissolution until the filing delinquency or liability is
23satisfied.
24 Sec. 27. Section 533.329, Code 2020, is amended by adding
25the following new subsection:
26 NEW SUBSECTION. 03. Returns shall be in the form the
27director of revenue prescribes, and shall be filed with the
28department of revenue on or before the last day of the fourth
29month after the expiration of the tax year. The moneys and
30credits tax is due and payable on the last day of the fourth
31month after the expiration of the tax year.
32 Sec. 28. Section 533.329, subsection 3, Code 2020, is
33amended to read as follows:
343. The department of revenue shall administer and enforce
35the provisions of this section, and except as explicitly
-18-1provided in this section or another provision of law, shall
2apply all applicable penalty, interest, and administrative
3provisions of chapters 421 and 422 as nearly as possible in
4administering and enforcing the moneys and credits tax imposed
5by this section.
6 Sec. 29. LEGISLATIVE INTENT. It is the intent of the
7general assembly that the sections of this division amending
8Code sections 422.25 and 423.37 are conforming amendments
9consistent with current state law, and that the amendments
10do not change the application of current law but instead
11reflect current law both before and after the enactment of this
12division of this Act.
13 Sec. 30. EFFECTIVE DATE. The following, being deemed of
14immediate importance, take effect upon enactment:
151. The section of this division of this Act amending section
16422.25.
172. The section of this division of this Act amending section
18423.37.
19 Sec. 31. APPLICABILITY. The following applies to any
20return for which a written notice that the taxpayer is required
21to file such return is issued by the department on or after
22January 1, 2022:
23The portion of the section of this division of this Act
24enacting section 421.27, subsection 9.
25 Sec. 32. APPLICABILITY. The following apply to tax years
26beginning on or after January 1, 2022:
271. The section of this division of this Act amending section
28421.27, subsection 1.
292. The portion of the section of this division of this Act
30amending section 421.27, subsection 4.
313. The portion of the section of this division of this Act
32enacting section 421.27, subsection 8.
33DIVISION II
34SALES AND USE TAX
35 Sec. 33. Section 321G.4, subsection 2, Code 2020, is amended
-19-1to 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
-20-1321I.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:
-21- 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, subsection 80, paragraphs b and c,
24Code 2020, are amended to read as follows:
25b. Subject to the limitations in paragraph “c”, if a
26contractor, subcontractor, or builder is to use building
27materials, supplies, and equipment, or services in the
28performance of a written construction contract with a
29designated exempt entity, the person shall purchase such
30items of tangible personal property or services without
31liability for the tax if such property or services will be
32used in the performance of the written construction contract
33and a purchasing agent authorization letter and an exemption
34certificate, issued by the designated exempt entity, are
35presented to the retailer.
-22- 1c. (1) With regard to a written construction contract
2with a designated exempt entity described in paragraph “a”,
3subparagraph (1), the sales price of building materials,
4supplies, or equipment, or services is exempt from tax by this
5subsection only to the extent the building materials, supplies,
6or equipment, or services are completely consumed in the
7performance of the construction contract with the designated
8exempt entity, and only if the property that is the subject
9of the construction project becomes public property or the
10property of the designated exempt entity.
11(2) With regard to a written construction contract with
12a designated exempt entity described in paragraph “a”,
13subparagraph (2), the sales price of building materials,
14supplies, or equipment, or services is exempt from tax by this
15subsection only to the extent the building materials, supplies,
16or equipment, or services are completely consumed in the
17performance of a construction contract to construct a project,
18as defined in section 15J.2, subsection 10, which project has
19been approved by the economic development authority board in
20accordance with chapter 15J.
21 Sec. 40. Section 423.4, subsection 1, Code 2020, is amended
22to read as follows:
231. a. For purposes of this subsection, a “designated exempt
24entity” means any of the following:
25(1) A private nonprofit educational institution in this
26state,.
27(2) Anonprofit Iowa affiliate of a nonprofit international
28organization whose primary activity is the promotion of the
29construction, remodeling, or rehabilitation of one-family or
30two-family dwellings for low-income families,.
31(3) Anonprofit private museum in this state,.
32(4) Atax-certifying or tax-levying body or governmental
33subdivision of the state, including the state board of regents,
34state department of human services, state department of
35transportation, a.
-23- 1(5) Amunicipally owned solid waste facility which sells all
2or part of its processed waste as fuel to a municipally owned
3public utility, and all.
4(6) The state of Iowa.
5(7) Any political subdivision of the state.
6(8) Alldivisions, boards, commissions, agencies, or
7instrumentalities of state, federal, county, or municipal
8government which do not have earnings going to the benefit of
9an equity investor or stockholder,.
10(9) A tribal government as defined in section 216A.161,
11and any instrumentalities of the tribal government which do
12not have earnings going to the benefit of an equity investor
13or stockholder.
14b. A designated exempt entitymay make application apply
15 to the department for the refund of the sales or use tax upon
16the sales price of all sales of goods, wares, or merchandise
17 building materials, supplies, equipment, or from services
18furnished to a contractor, used in the fulfillment performance
19 of a written contract with the state of Iowa, any political
20subdivision of the state, or a division, board, commission,
21agency, or instrumentality of the state or a political
22subdivision, a private nonprofit educational institution in
23this state, a nonprofit Iowa affiliate described in this
24subsection, or a nonprofit private museum in this state if the
25property becomes an integral part of the project under contract
26and at the completion of the project becomes public property,
27is devoted to educational uses, becomes part of a low-income
28one-family or two-family dwelling in the state, or becomes a
29nonprofit private museum; except goods, wares, or merchandise,
30 designated exempt entity if all of the following apply:
31(1) The building materials, supplies, equipment, or
32services are completely consumed in the performance of a
33construction project with the designated entity.
34(2) The property that is subject of the construction project
35becomes public property or the property of an exempt entity.
-24- 1(3) The building materials, supplies, equipment,or
2services furnished which are not used in the performance of
3any contract in connection with the operation of any municipal
4utility engaged in selling gas, electricity, or heat to
5the general public or in connection with the operation of a
6municipal pay television system; and except goods, wares, and
7merchandise are not used in the performance of a contract for a
8“project” under chapter 419 as defined in that chapter other
9than goods, wares, or merchandise used in the performance of
10a contract for a “project” under chapter 419 for which a bond
11issue was approved by a municipality prior to July 1, 1968, or
12for which the goods, wares, or merchandise becomes an integral
13part of the project under contract and at the completion of the
14project becomes public property or is devoted to educational
15uses.
16a. c. Such A contractor shall state under oath, on forms
17provided by the department, the amount of such sales of goods,
18wares, or merchandise, or services furnished and used in the
19performance of such contract, and upon which sales or use tax
20has been paid, and shall file such forms with the governmental
21unit, private nonprofit educational institution, nonprofit Iowa
22affiliate, or nonprofit private museum designated exempt entity
23 which has made any written contract for performance by the
24contractor. The forms shall be filed by the contractor with
25the governmental unit, educational institution, nonprofit Iowa
26affiliate, or nonprofit private museum designated exempt entity
27 before final settlement is made.
28b. d. Such governmental unit, educational institution,
29nonprofit Iowa affiliate, or nonprofit private museum A
30designated exempt entity shall, not more than one year after
31the final settlement has been made, make application apply
32 to the department for any refund of the amount of the sales
33or use tax which shall have been paid upon any goods, wares,
34or merchandise building materials, supplies, equipment,
35or services furnished, the application to be made in the
-25-1manner and upon forms to be provided by the department,
2and the department shall forthwith audit the claim and, if
3approved, issue a warrant to the governmental unit, educational
4institution, nonprofit Iowa affiliate, or nonprofit private
5museum designated exempt entity in the amount of the sales or
6use tax which has been paid to the state of Iowa under the
7contract.
8c. e. Refunds authorized under this subsection shall accrue
9interest in accordance with section 421.60, subsection 2,
10paragraph “e”.
11d. f. Any contractor who willfully makes a false report of
12tax paid under the provisions of this subsection is guilty of
13a simple misdemeanor and in addition shall be liable for the
14payment of the tax and any applicable penalty and interest.
15 Sec. 41. Section 423.4, subsection 2, paragraphs a and b,
16Code 2020, are amended to read as follows:
17a. A contractor awarded a contract for a transportation
18construction project is considered the consumer of all building
19materials, building supplies, and equipment, and services and
20shall pay sales tax to the supplier or remit consumer use tax
21directly to the department.
22b. The contractor is not required to file information with
23the state department of transportation stating the amount of
24goods, wares, or merchandise, or services rendered, furnished,
25or performed and building materials, supplies, equipment, or
26services used in the performance of the contract or the amount
27of sales or use tax paid.
28 Sec. 42. Section 423.4, subsection 6, paragraph a,
29subparagraph (1), Code 2020, is amended to read as follows:
30(1) The owner of a collaborative educational facility
31in this state may make application to the department for the
32refund of the sales or use tax upon the sales price of all sales
33of goods, wares, or merchandise building materials, supplies,
34equipment, or from services furnished to a contractor, used
35in the fulfillment of a written construction contract with
-26-1the owner of the collaborative educational facility for the
2original construction, or additions or modifications to, a
3building or structure to be used as part of the collaborative
4educational facility.
5 Sec. 43. Section 423.4, subsection 6, paragraphs b and c,
6Code 2020, are amended to read as follows:
7b. Such A contractor shall state under oath, on forms
8provided by the department, the amount of such sales of goods,
9wares, or merchandise building materials, supplies, equipment,
10or services furnished and used in the performance of such
11contract, and upon which sales or use tax has been paid, and
12shall file such forms with the owner of the collaborative
13educational facility which has made any written contract for
14performance by the contractor.
15c. (1) The owner of the collaborative educational facility
16shall, not more than one year after the final settlement has
17been made, make application to the department for any refund
18of the amount of the sales or use tax which shall have been
19paid upon any goods, wares, or merchandise building materials,
20supplies, equipment, or services furnished, the application
21to be made in the manner and upon forms to be provided by
22the department, and the department shall forthwith audit the
23claim and, if approved, issue a warrant to the owner of the
24collaborative educational facility in the amount of the sales
25or use tax which has been paid to the state of Iowa under the
26contract.
27(2) Refunds authorized under this subsection shall accrue
28interest in accordance with section 421.60, subsection 2,
29paragraph “e”.
30 Sec. 44. Section 423.5, subsection 1, paragraph b, Code
312020, is amended by striking the paragraph.
32 Sec. 45. Section 423.29, subsection 1, Code 2020, is amended
33to read as follows:
341. Every seller who is a retailer and who is making taxable
35sales of tangible personal property or specified digital
-27-1products in Iowa or who is a retailer maintaining a place
2of business in this state making taxable sales of tangible
3personal property or specified digital products shall, at
4the time of making the sale, collect the sales tax. Every
5seller who is a retailer that is not otherwise required to
6collect sales tax under the provisions of this chapter and who
7is selling tangible personal property or specified digital
8products for use in Iowa shall, at the time of making the sale,
9whether within or without the state, collect the use tax.
10 Sellers required to collect sales or use tax shall give to any
11purchaser a receipt for the tax collected in the manner and
12form prescribed by the director.
13 Sec. 46. Section 423.33, subsection 1, Code 2020, is amended
14to read as follows:
151. Liability of purchaser for sales tax and retailer.
16a. If a purchaser fails to pay sales tax to the retailer
17required to collect the tax, then in addition to all of the
18rights, obligations, and remedies provided, the a use tax
19is payable by the purchaser directly to the department, and
20sections 423.31, 423.32, 423.37, 423.38, 423.39, 423.40,
21423.41, and 423.42 apply to the purchaser.
22b. For failure to pay the sales or use tax as described
23in paragraph “a”, the retailer and purchaser are jointly
24 liable, unless the circumstances described in section 29C.24,
25subsection 3, paragraph “a”, subparagraph (2), section 421.60,
26subsection 2, paragraph “m”, section 423.34A, or section
27423.45, subsection 4, paragraph “b” or “e”, or subsection 5,
28paragraph “c” or “e”, are applicable.
29c. If the retailer fails to collect sales tax at the time
30of the transaction, the retailer shall thereafter remit the
31applicable sales tax, or the purchaser thereafter shall remit
32the applicable use tax. If the purchaser remits all applicable
33use tax, the retailer remains liable for any local sales and
34services tax under chapter 423B that the retailer failed to
35collect.
-28-1 Sec. 47. REFUNDS RELATED TO PRESERVE WHITETAIL DEER
2HUNTING. Refunds of taxes, interest, or penalties that arise
3from claims resulting from the amendment of section 423.3,
4subsection 3A, for sales occurring between July 1, 2005,
5and the effective date of the amendment to section 423.3,
6subsection 3A, shall not be allowed, notwithstanding any other
7law to the contrary.
8 Sec. 48. LEGISLATIVE INTENT.
91. It is the intent of the general assembly that the section
10of this division of this Act amending section 423.29 is a
11conforming amendment consistent with current state law, and
12that the amendment does not change the application of current
13law but instead reflects current law both before and after the
14enactment of this division of this Act.
152. It is the intent of the general assembly that the
16addition of “jointly” in the section of this division of
17this Act amending section 423.33 is a conforming amendment
18consistent with current state law, and that the amendment
19does not change the application of current law but instead
20reflects current law both before and after the enactment of
21this division of this Act.
22 Sec. 49. EFFECTIVE DATE. The following, being deemed of
23immediate importance, take effect upon enactment:
241. The section of this division of this Act amending section
25423.3A.
262. The section of this division of this Act relating
27to refunds for commercial recreation services offering an
28opportunity to hunt preserve whitetail deer.
29 Sec. 50. RETROACTIVE APPLICABILITY. The following applies
30retroactively to July 1, 2005:
31The section of this division of this Act amending section
32423.3A.
33DIVISION III
34INCOME TAX
35 Sec. 51. Section 422.9, subsection 3, paragraph c, Code
-29-12020, is amended by striking the paragraph and inserting in
2lieu thereof the following:
3c. A taxpayer may elect to waive the entire carryback period
4with respect to an Iowa net operating loss for any taxable year
5beginning on or after January 1, 2020. The election shall be
6made in the manner and form prescribed by the department, and
7shall be made by the due date for filing the taxpayer’s Iowa
8return, including extensions of time. After the election is
9made for any taxable year, the election shall be irrevocable
10for such taxable year. When an election has been properly
11made, the Iowa net operating loss shall be carried forward
12twenty taxable years.
13 Sec. 52. Section 422.9, subsection 3, paragraph d, Code
142020, is amended to read as follows:
15d. Notwithstanding paragraph “a”, for a taxpayer who is
16engaged in the trade or business of farming, which means the
17same as a “farming business” as defined in section 263A(e)(4) of
18the Internal Revenue Code, and has a farming loss from farming
19 as defined in section 172(b)(1)(B) of the Internal Revenue Code
20including modifications prescribed by rule by the director,
21the Iowa farming loss from the trade or business of farming is
22a net operating loss which may, at the time of the election of
23the taxpayer, be carried back five taxable years prior to the
24taxable year of the loss. The election shall be made in the
25manner and form prescribed by the department, and shall be made
26by the due date for filing the taxpayer’s return, including
27extensions of time. After the election is made for any taxable
28year, the election shall be irrevocable for such taxable year.
29 Sec. 53. APPLICABILITY. This division of this Act applies
30to tax years beginning on or after January 1, 2020.
31DIVISION IV
32RESEARCH ACTIVITIES CREDIT
33 Sec. 54. Section 15.335, subsection 4, paragraph a, Code
342020, is amended to read as follows:
35a. In lieu of the credit amount computed in subsection 2, an
-30-1eligible business may elect to compute the credit amount for
2qualified research expenses incurred in this state in a manner
3consistent with the alternative simplified credit described in
4section 41(c)(5) 41(c)(4) of the Internal Revenue Code. The
5taxpayer may make this election regardless of the method used
6for the taxpayer’s federal income tax. The election made under
7this paragraph is for the tax year and the taxpayer may use
8another or the same method for any subsequent year.
9 Sec. 55. Section 15.335, subsection 4, paragraph b,
10unnumbered paragraph 1, Code 2020, is amended to read as
11follows:
12For purposes of the alternate credit computation method in
13paragraph “a”, the credit percentages applicable to qualified
14research expenses described in section 41(c)(5)(A) 41(c)(4)(A)
15 and clause (ii) of section 41(c)(5)(B) 41(c)(4)(B) of the
16Internal Revenue Code are as follows:
17 Sec. 56. Section 422.10, subsection 1, paragraphs c and d,
18Code 2020, are amended to read as follows:
19c. In lieu of the credit amount computed in paragraph “b”,
20subparagraph (1), subparagraph division (a), a taxpayer may
21elect to compute the credit amount for qualified research
22expenses incurred in this state in a manner consistent with the
23alternative simplified credit described in section 41(c)(5)
24 41(c)(4) of the Internal Revenue Code. The taxpayer may make
25this election regardless of the method used for the taxpayer’s
26federal income tax. The election made under this paragraph is
27for the tax year and the taxpayer may use another or the same
28method for any subsequent year.
29d. For purposes of the alternate credit computation
30method in paragraph “c”, the credit percentages applicable to
31qualified research expenses described in section 41(c)(5)(A)
32 41(c)(4)(A) and clause (ii) of section 41(c)(5)(B) 41(c)(4)(B)
33 of the Internal Revenue Code are four and fifty-five
34hundredths percent and one and ninety-five hundredths percent,
35respectively.
-31-1 Sec. 57. Section 422.33, subsection 5, paragraphs c and d,
2Code 2020, are amended to read as follows:
3c. In lieu of the credit amount computed in paragraph
4“a”, subparagraph (1), a corporation may elect to compute the
5credit amount for qualified research expenses incurred in this
6state in a manner consistent with the alternative simplified
7credit described in section 41(c)(5) 41(c)(4) of the Internal
8Revenue Code. The taxpayer may make this election regardless
9of the method used for the taxpayer’s federal income tax. The
10election made under this paragraph is for the tax year and the
11taxpayer may use another or the same method for any subsequent
12year.
13d. For purposes of the alternate credit computation
14method in paragraph “c”, the credit percentages applicable to
15qualified research expenses described in section 41(c)(5)(A)
16 41(c)(4)(A) and clause (ii) of section 41(c)(5)(B) 41(c)(4)(B)
17 of the Internal Revenue Code are four and fifty-five
18hundredths percent and one and ninety-five hundredths percent,
19respectively.
20 Sec. 58. EFFECTIVE DATE. This division of this Act, being
21deemed of immediate importance, takes effect upon enactment.
22 Sec. 59. RETROACTIVE APPLICABILITY. This division of this
23Act applies retroactively to January 1, 2019, for tax years
24beginning on or after that date.
25DIVISION V
26PARTNERSHIP AND PASS-THROUGH ENTITY AUDITS AND REPORTING OF
27FEDERAL ADJUSTMENTS
28 Sec. 60. Section 421.27, subsection 2, paragraph c, Code
292020, is amended to read as follows:
30c. (1) The taxpayer provides written notification to the
31department of a federal audit while it is in progress and
32 voluntarily files an amended return which includes a copy of
33the federal document showing the final disposition or final
34federal adjustments and pays any additional Iowa tax due
35 within sixty one hundred eighty days of the final disposition
-32-1 determination date of the federal government’s audit. For
2purposes of this subparagraph, “final determination date” means
3the same as defined in section 422.25.
4(2) (a) In the case of a final federal partnership
5adjustment arising from a partnership level audit, with respect
6to the audited partnership or a direct partner or indirect
7partner of the audited partnership, the audited partnership,
8direct partner, or indirect partner voluntarily and timely
9complies with its reporting and payment requirements under
10section 422.25A, subsection 4 or 5.
11(b) As used in this subparagraph, all words and phrases
12defined in section 422.25A shall have the same meaning given
13them by that section.
14 Sec. 61. Section 422.7, Code 2020, is amended by adding the
15following new subsection:
16 NEW SUBSECTION. 59. Any income subtracted from federal
17taxable income for an adjustment year pursuant to section 6225
18of the Internal Revenue Code and the regulations thereunder
19shall be added back in computing net income for state tax
20purposes for the adjustment year.
21 Sec. 62. Section 422.25, subsections 1 and 2, Code 2020,
22are amended by striking the subsections and inserting in lieu
23thereof the following:
241. a. For purposes of this subsection:
25(1) “Federal adjustment” means a change to an item or amount
26required to be determined under the Internal Revenue Code and
27the regulations thereunder that is used by the taxpayer to
28compute state tax owed whether such change results from action
29by the internal revenue service, or the filing of a timely
30amended federal return or timely federal refund claim. A
31federal adjustment is positive to the extent that it increases
32Iowa taxable income as determined under this title and is
33negative to the extent that it decreases Iowa taxable income
34as determined under this title.
35(2) “Federal adjustments report” means the method or form
-33-1required by the department by rule to report final federal
2adjustments or final federal partnership adjustments as defined
3in section 422.25A, and in the case of any entity taxed as a
4partnership or S corporation for federal income tax purposes,
5identifies all owners that hold an interest directly in such
6entity and provides the effect of the final federal adjustments
7on such owner’s Iowa income.
8(3) “Final determination date” means the following:
9(a) Except as provided in subparagraph divisions (b) and
10(c), for federal adjustments arising from an internal revenue
11service audit or other action by the internal revenue service,
12the final determination date is the first day on which no
13federal adjustments arising from that audit or other action
14remain to be finally determined, whether by internal revenue
15service decision with respect to which all rights of appeal
16have been waived or exhausted, by agreement, or, if appealed
17or contested, by a final decision with respect to which all
18rights of appeal have been waived or exhausted. For agreements
19required to be signed by the internal revenue service and the
20taxpayer, the final determination date is the date on which the
21last party signed the agreement.
22(b) For federal adjustments arising from an internal
23revenue service audit or other action by the internal revenue
24service, if the taxpayer filed as a member of a consolidated
25return under section 422.37, the final determination date
26is the first day on which no related federal adjustments
27arising from that audit or other action remain to be finally
28determined, as described in subparagraph division (a), for the
29entire group.
30(c) For federal adjustments arising from a timely filed
31amended federal return or a timely filed federal refund
32claim, or if it is a federal adjustment reported on a timely
33amended federal return or other similar report filed pursuant
34to section 6225(c) of the Internal Revenue Code, the final
35determination date is the day on which the amended return,
-34-1refund claim, or other similar report was filed.
2(4) “Final federal adjustment” means a federal adjustment
3after the final determination date for that federal adjustment
4has passed.
5b. Within three years after the return is filed or within
6three years after the return became due, including any
7extensions of time for filing, whichever time is the later,
8the department shall examine the return and determine the tax.
9However, if the taxpayer omits from income an amount which
10will, under the Internal Revenue Code, extend the statute of
11limitations for assessment of federal tax to six years under
12the federal law, the period for examination and determination
13is six years.
14c. The period for examination and determination of the
15correct amount of tax is unlimited in the case of a false or
16fraudulent return made with the intent to evade tax or in the
17case of a failure to file a return.
18d. In lieu of the period of limitation for any prior year
19for which an overpayment of tax or an elimination or reduction
20of an underpayment of tax due for that prior year results from
21the carryback to that prior year of a net operating loss or
22net capital loss, the period is the period of limitation for
23the taxable year of the net operating loss or net capital loss
24which results in the carryback.
25e. (1) In addition to the applicable period of limitation
26for examination and determination in paragraph “b”, “c”, or “d”,
27the department may make an examination and determination at any
28time within one year from the date of receipt by the department
29of a federal adjustments report with respect to a final
30federal adjustment or final federal partnership adjustment
31as defined in section 422.25A for a particular tax year. In
32order to begin the running of the one-year period, the federal
33adjustments report related to the final federal adjustment or
34final federal partnership adjustment shall be transmitted to
35the department by the taxpayer in the form and manner specified
-35-1by the department by rule.
2(2) The department in its discretion may adopt rules to
3establish a de minimis amount for which subparagraph (1) shall
4not apply and the taxpayer shall not be required to file a
5federal adjustments report.
6(3) The department may in its discretion and when
7administratively feasible adopt a process through rule by
8which a taxpayer may make estimated payments of tax expected
9to result from a pending internal revenue service audit
10prior to the filing of a federal adjustments report with the
11department. The process shall provide that the estimated
12tax payments shall be credited against any tax liability
13ultimately found to be due to the state from the internal
14revenue service audit and will limit the accrual of further
15statutory interest on that liability. The process shall also
16provide that if the estimated tax payments exceed the final
17tax liability and statutory interest ultimately determined to
18be due, the taxpayer is entitled to a refund or credit for
19the excess, without interest, provided the taxpayer files a
20federal adjustments report, or a claim for refund or credit of
21tax under section 422.73, no later than one year following the
22final determination date.
232. a. If the tax found due under subsection 1 is greater
24than the amount paid, the department shall compute the amount
25due, together with interest and penalties as provided in
26paragraph “b”, and shall mail a notice of assessment to the
27taxpayer and, if applicable, to the taxpayer’s authorized
28representative of the total, which shall be computed as a sum
29certain, with interest computed to the last day of the month
30in which the notice is dated.
31b. In addition to the tax or additional tax determined
32by the department under subsection 1, the taxpayer shall pay
33interest on the tax or additional tax at the rate in effect
34under section 421.7 for each month counting each fraction of
35a month as an entire month, computed from the date the return
-36-1was required to be filed. In addition to the tax or additional
2tax, the taxpayer shall pay a penalty as provided in section
3421.27.
4 Sec. 63. NEW SECTION. 422.25A Reporting and treatment of
5certain partnership adjustments.
61. Definitions. As used in this section and sections
7422.25B and 422.25C, unless the context otherwise requires:
8a. “Administrative adjustment request” means the same as
9provided in section 6227 of the Internal Revenue Code.
10b. “Audited partnership” means a partnership subject
11to a final federal partnership adjustment resulting from a
12partnership level audit.
13c. “C corporation” means an entity that elects or is
14required to be taxed as a corporation under title 26, chapter
151, subchapter A, part 2, of the Internal Revenue Code.
16d. “Corporate partner” means a C corporation partner that is
17subject to tax pursuant to section 422.33.
18e. “Direct partner” means a person that holds an interest
19directly in a partnership or pass-through entity.
20f. “Exempt partner” means a partner that is exempt from
21taxation pursuant to section 422.34.
22g. “Federal adjustments report” means the same as defined
23in section 422.25.
24h. “Federal partnership adjustment” means a change to an
25item or amount required to be determined under the Internal
26Revenue Code and the regulations thereunder that is used by a
27partnership and its direct and indirect partners to compute
28state tax owed for the reviewed year where such change results
29from a partnership level audit or an administrative adjustment
30request. A federal partnership adjustment is positive to the
31extent that it increases Iowa taxable income as determined
32under this title and is negative to the extent that it
33decreases Iowa taxable income as determined under this title.
34A federal adjustment reported on an amended federal return
35or other similar report filed pursuant to section 6225(c) of
-37-1the Internal Revenue Code shall not be considered a federal
2partnership adjustment for purposes of this section.
3i. “Federal partnership representative” means the person
4the partnership designates for the taxable year as the
5partnership’s representative, or the person the internal
6revenue service has appointed to act as the federal partnership
7representative, pursuant to section 6223(a) of the Internal
8Revenue Code and the regulations thereunder.
9j. “Fiduciary partner” means a partner that is a fiduciary
10that is subject to tax pursuant to sections 422.5 and 422.6.
11k. “Final determination date” means any one of the following
12dates:
13(1) In the case of a federal partnership adjustment that
14arises from a partnership level audit, the first day on which
15no federal adjustments arising from that audit remain to be
16finally determined, whether by agreement, or, if appealed
17or contested, by a final decision with respect to which all
18rights of appeal have been waived or exhausted. For agreements
19required to be signed by the internal revenue service and the
20audited partnership, the final determination date is the date
21on which the last party signed the agreement.
22(2) In the case of a federal partnership adjustment that
23results from a timely filed administrative adjustment request,
24the day on which the administrative adjustment request was
25filed with the internal revenue service.
26l. “Final federal partnership adjustment” means a federal
27partnership adjustment after the final determination date for
28that federal partnership adjustment has passed.
29m. “Indirect partner” means a partner in a partnership or
30pass-through entity where such partnership or pass-through
31entity itself holds an interest directly, or through another
32indirect partner, in a partnership or pass-through entity.
33n. “Individual partner” means a partner who is a natural
34person that is subject to tax pursuant to section 422.5.
35o. “Nonresident partner” means a partner that is not a
-38-1resident partner as defined in this subsection.
2p. “Partner” means a person that holds an interest, directly
3or indirectly, in a partnership or pass-through entity.
4q. “Partnership” means an entity subject to taxation
5under subchapter K of the Internal Revenue Code and the
6regulations thereunder and includes but is not limited to a
7syndicate, group, pool, joint venture, or other unincorporated
8organization through or by means of which any business,
9financial operation, or venture is carried on and which is
10not, within the meaning of this chapter, a trust, estate, or
11corporation.
12r. “Partnership level audit” means an examination by the
13internal revenue service at the partnership level pursuant to
14subchapter C, title 26, subtitle F, chapter 63, of the Internal
15Revenue Code, as enacted by the Bipartisan Budget Act of 2015,
16Pub.L. No.114-74, and as amended, which results in final
17federal partnership adjustments initiated and made by the
18internal revenue service.
19s. “Pass-through entity” means an entity, other than
20a partnership, that is not subject to tax under section
21422.33 for C corporations but excluding an exempt partner.
22“Pass-through entity” includes but is not limited to S
23corporations, estates, and trusts other than grantor trusts.
24t. “Reallocation adjustment” means a final federal
25partnership adjustment that changes the shares of items of
26partnership income, gain, loss, expense, or credit allocated
27to a partner that holds an interest directly in a partnership
28or pass-through entity. A positive reallocation adjustment
29means the portion of a reallocation adjustment that would
30increase Iowa taxable income for such partners, and a negative
31reallocation adjustment means the portion of a reallocation
32adjustment that would decrease Iowa taxable income for such
33partners.
34u. “Resident partner” means any of the following:
35(1) For an individual partner, a “resident” as defined in
-39-1section 422.4.
2(2) For a fiduciary partner, one with situs in Iowa.
3(3) For all other partners, a partner whose headquarters or
4principal place of business is located in Iowa.
5v. “Reviewed year” means the taxable year of a partnership
6that is subject to a partnership level audit from which final
7federal partnership adjustments arise, or otherwise means the
8taxable year of the partnership or pass-through entity that is
9the subject of a state partnership audit.
10w. “State partnership audit” means an examination by the
11director at the partnership or pass-through entity level which
12results in adjustments to partnership or pass-through entity
13related items or reallocations of income, gains, losses,
14expenses, credits, and other attributes among such partners for
15the reviewed year.
16x. “Tiered partner” means any partner that is a partnership
17or pass-through entity.
18y. “Unrelated business income” means the income which is
19defined in section 512 of the Internal Revenue Code and the
20regulations thereunder.
212. Application. Partnerships and their direct partners
22and indirect partners shall report final federal partnership
23adjustments as provided in this section.
243. State partnership representative. Notwithstanding any
25other law to the contrary, the state partnership representative
26for the reviewed year shall have the sole authority to act on
27behalf of the partnership or pass-through entity with respect
28to an action required or permitted to be taken by a partnership
29or pass-through entity under this section or section 422.28 or
30422.29 with respect to final federal partnership adjustments
31arising from a partnership level audit or an administrative
32adjustment request, and its direct partners and indirect
33partners shall be bound by those actions.
344. Reporting and payment requirements for audited
35partnerships and their partners subject to final federal
-40-1partnership adjustments.
2a. Unless an audited partnership makes the election in
3subsection 5, the audited partnership shall do all of the
4following for all final federal partnership adjustments no
5later than ninety days after the final determination date of
6the audited partnership:
7(1) File a completed federal adjustments report.
8(2) Notify each direct partner of such partner’s
9distributive share of the adjustments in the manner and form
10prescribed by the department by rule.
11(3) File an amended composite return under section 422.13
12if one was originally filed, and if applicable for withholding
13from partners, file an amended withholding report under
14section 422.16, and pay the additional amount under this title
15that would have been due had the final federal partnership
16adjustments been reported properly as required, including any
17applicable interest and penalties.
18b. Unless an audited partnership paid an amount on behalf
19of the direct partners of the audited partnership pursuant to
20subsection 5, all direct partners of the audited partnership
21shall do all of the following no later than one hundred
22eighty days after the final determination date of the audited
23partnership:
24(1) File a completed federal adjustments report reporting
25the direct partner’s distributive share of the adjustments
26required to be reported to such partners under paragraph “a”.
27(2) If the direct partner is a tiered partner, notify all
28partners that hold an interest directly in the tiered partner
29of such partner’s distributive share of the adjustments in the
30manner and form prescribed by the department by rule.
31(3) If the direct partner is a tiered partner and subject to
32section 422.13, file an amended composite return under section
33422.13 if such return was originally filed, and if applicable
34for withholding from partners file an amended withholding
35report under section 422.16 if one was originally required to
-41-1be filed.
2(4) Pay any additional amount under this title that would
3have been due had the final federal partnership adjustments
4been reported properly as required, including any applicable
5penalty and interest.
6c. Unless a partnership or tiered partner paid an amount on
7behalf of the partners pursuant to subsection 5, each indirect
8partner shall do all of the following:
9(1) Within ninety days after the time for filing and
10furnishing statements to tiered partners and their partners
11as established by section 6226 of the Internal Revenue Code
12and the regulations thereunder, file a completed federal
13adjustments report.
14(2) If the indirect partner is a tiered partner, within
15ninety days after the time for filing and furnishing statements
16to tiered partners and their partners as established by
17section 6226 of the Internal Revenue Code and the regulations
18thereunder but within sufficient time for all indirect partners
19to also complete the requirements of this subsection, notify
20all of the partners that hold an interest directly in the
21tiered partner of such partner’s distributive share of the
22adjustments in the manner and form prescribed by the department
23by rule.
24(3) Within ninety days after the time for filing and
25furnishing statements to tiered partners and their partners
26as established by section 6226 of the Internal Revenue Code
27and the regulations thereunder, if the indirect partner
28is a tiered partner and subject to section 422.13, file an
29amended composite return under section 422.13 if such return
30was originally filed, and if applicable for withholding from
31partners, file an amended withholding report under section
32422.16 if one was originally required to be filed.
33(4) Within ninety days after the time for filing and
34furnishing statements to tiered partners and the partners of
35the tiered partners as established by section 6226 of the
-42-1Internal Revenue Code and the regulations thereunder, pay any
2additional amount due under this title, including any penalty
3and interest that would have been due had the final federal
4partnership adjustments been reported properly as required.
55. Election for partnership or tiered partners to pay.
6a. An audited partnership, or a tiered partner that receives
7a notification of a final federal partnership adjustment under
8subsection 4, may make an election to pay as provided under
9this subsection.
10b. An audited partnership or tiered partner makes an
11election to pay under this subsection by filing a completed
12federal adjustments report, notifying the department in the
13manner and form prescribed by the department that it is making
14the election under this subsection, notifying each of the
15direct partners of such partner’s distributive share of the
16adjustments, and paying on behalf of its partners an amount
17calculated in paragraph “c”, including any applicable penalty
18and interest. These requirements shall all be fulfilled within
19one of the following time periods:
20(1) For the audited partnership, no later than ninety days
21after the final determination date of the audited partnership.
22(2) For a direct tiered partner, no later than one hundred
23eighty days after the final determination date of the audited
24partnership.
25(3) For an indirect tiered partner, within ninety days
26after the time for filing and furnishing statements to a
27tiered partner and the partner of the tiered partner, as
28established by section 6226 of the Internal Revenue Code and
29the regulations thereunder.
30c. The amount due under this subsection from an audited
31partnership or tiered partner shall be calculated as follows:
32(1) Exclude from final federal partnership adjustments and
33any positive reallocation adjustments the distributive share
34of such adjustments reported to an exempt partner that holds
35an interest directly in the audited partnership if the audited
-43-1partnership is making the election or that holds an interest
2directly in the tiered partner if the tiered partner is making
3the election, but only to the extent the distributive share is
4not unrelated business income.
5(2) Determine the total distributive share of all final
6federal partnership adjustments and positive reallocation
7adjustments as modified by this title that are reported to
8corporate partners, and to exempt partners to the extent the
9distributive share is unrelated business income, and allocate
10and apportion such adjustments as provided in section 422.33
11at the partnership or tiered partner level, and multiply the
12resulting amount by the maximum state corporate income tax rate
13pursuant to section 422.33 for the reviewed year.
14(3) Determine the total distributive share of all final
15federal partnership adjustments and positive reallocation
16adjustments as modified by this title that are reported to
17nonresident individual partners and nonresident fiduciary
18partners and allocate and apportion such adjustments as
19provided in section 422.33 at the partnership or tiered
20partner level, and multiply the resulting amount by the maximum
21individual income tax rate pursuant to section 422.5A for the
22reviewed year.
23(4) For the total distributive share of all final federal
24partnership adjustments and positive reallocation adjustments
25as modified by this title that are reported to tiered partners:
26(a) Determine the amount of such adjustments which are of a
27type that would be subject to sourcing to Iowa under section
28422.8, subsection 2, paragraph “a”, as a nonresident, and then
29determine the portion of this amount that would be sourced to
30Iowa under those provisions as if the tiered partner were a
31nonresident.
32(b) Determine the amount of such adjustments which are of
33a type that would not be subject to sourcing to Iowa under
34section 422.8, subsection 2, paragraph “a”, as a nonresident.
35(c) Determine the portion of the amount in subparagraph
-44-1division (b) that can be established, as prescribed by the
2department by rule, to be properly allocable to indirect
3partners that are nonresident partners or other partners not
4subject to tax on the adjustments.
5(d) Multiply the total of the amounts determined in
6subparagraph divisions (a) and (b), reduced by any amount
7determined in subparagraph division (c), by the highest
8individual income tax rate pursuant to section 422.5A for the
9reviewed year.
10(5) For the total distributive share of all final federal
11partnership adjustments and positive reallocation adjustments
12as modified by this title that are reported to resident
13individual partners and resident fiduciary partners, multiply
14that amount by the highest individual income tax rate pursuant
15to section 422.5A for the reviewed year.
16(6) Total the amounts computed pursuant to subparagraphs
17(2) through (5) and calculate any interest and penalty as
18provided under this title. Notwithstanding any provision of
19law to the contrary, interest and penalties on the amount due
20by the audited partnership or tiered partner shall be computed
21from the day after the due date of the reviewed year return
22without extension, and shall be imposed as if the audited
23partnership or tiered partner was required to pay tax or show
24tax due on the original return for the reviewed year.
25d. Adjustments subject to the election in this subsection
26do not include any adjustments arising from an administrative
27adjustment request.
28e. An audited partnership or tiered partner not otherwise
29subject to any reporting or payment obligation to Iowa that
30makes an election under this subsection consents to be subject
31to the Iowa laws related to reporting, assessment, collection,
32and payment of Iowa tax, interest, and penalties calculated
33under the election.
346. Modified reporting and payment method. The department may
35adopt procedures for an audited partnership or tiered partner
-45-1to enter into an agreement with the department to use an
2alternative reporting and payment method, including applicable
3time requirements or any other provision of this section. The
4audited partnership or tiered partner must demonstrate that
5the requested method will reasonably provide for the reporting
6and payment of taxes, penalties, and interest due under the
7provisions of this section. Application for approval of an
8alternative reporting and payment method must be made by the
9audited partnership or tiered partner within the time for
10making an election to pay under subsection 5 and in the manner
11prescribed by the department. Approval of such an alternative
12reporting and payment method shall be at the discretion of the
13department.
147. Effect of election by partnership or tiered partner and
15payment of amount due.
16a. The election made under subsection 5 is irrevocable,
17unless in the discretion of the director, the director
18determines otherwise.
19b. The amount determined in subsection 5, when properly
20reported and paid by the audited partnership or tiered partner,
21shall be treated as paid on behalf of the partners of such
22audited partnership or tiered partner on the same final federal
23partnership adjustments, provided, however, that no partner may
24take any deduction or credit for the amount, claim a refund of
25the amount, or include the amount on such partner’s Iowa return
26in any manner.
27c. In the event another state offers to an audited
28partnership or tiered partner a similar election to pay state
29tax resulting from final federal partnership adjustments,
30nothing in this subsection shall prohibit a resident who holds
31an interest directly in that audited partnership or tiered
32partner, as the case may be, from claiming a credit for taxes
33paid by the resident to another state under section 422.8,
34subsection 1, for any amounts paid by the audited partnership
35or tiered partner on such resident partner’s behalf to another
-46-1state, provided such payment otherwise meets the requirements
2of section 422.8, subsection 1.
3d. Nothing in this section shall prohibit the department
4from assessing direct partners and indirect partners for taxes
5they owe in the event that an audited partnership or tiered
6partner fails to timely make any report or payment required by
7this section for any reason.
88. Assessments of additional Iowa income tax, interest, and
9penalties, and claims for refund, arising from final federal
10partnership adjustments.
11a. The department shall assess additional Iowa income
12tax, interest, and penalties arising from final federal
13partnership adjustments in the same manner as provided in
14this title unless a different treatment is provided by this
15subsection. Since final federal partnership adjustments are
16determined at the audited partnership level, any assessment
17issued to partners shall not be appealable by the partner.
18The department may assess any taxes, including on-behalf-of
19amounts, interest, and penalties arising from the final federal
20partnership adjustments if it issues a notice of assessment to
21the audited partnership, tiered partner, or other direct or
22indirect partner on or before the expiration of the applicable
23limitations period specified in section 422.25.
24b. In addition to the period for claiming a refund or credit
25provided in section 422.73, subsection 1, paragraph “a”, and
26notwithstanding section 422.73, subsection 1, paragraph “b”,
27a partnership, tiered partner, or other direct or indirect
28partner, as the case may be, may file a claim for refund of
29Iowa income tax arising directly or indirectly from a final
30federal partnership adjustment arising from a partnership level
31audit on or before the date which is one year from the date the
32federal adjustments report for that final federal partnership
33adjustment was required to be filed by such person under this
34section.
359. Rules. The department may adopt any rules pursuant to
-47-1chapter 17A to implement this section.
2 Sec. 64. NEW SECTION. 422.25B State partnership
3representative.
41. As used in this section, all words and phrases defined
5in section 422.25A shall have the same meaning given them by
6that section.
72. The state partnership representative for the reviewed
8year for a partnership shall be the partnership’s federal
9partnership representative with respect to an action required
10or permitted to be taken by a state partnership representative
11under this chapter for a reviewed year, unless the partnership
12designates in writing another person as the state partnership
13representative as provided in subsection 3. The state
14partnership representative for the reviewed year for a
15pass-through entity is the person designated in subsection 3.
163. The department may establish reasonable qualifications
17for a person to be a state partnership representative. If
18a partnership desires to designate a person other than the
19federal partnership representative, the partnership shall
20designate such person in the manner and form prescribed by the
21department. A pass-through entity shall designate a person as
22the state partnership representative in the manner and form
23prescribed by the department. A partnership or pass-through
24entity shall be allowed to change such designation by notifying
25the department at the time the change occurs in the manner and
26form prescribed by the department.
274. The department may adopt any rules pursuant to chapter
2817A to implement this section.
29 Sec. 65. NEW SECTION. 422.25C Partnership and pass-through
30entity audits and examinations — consistent treatment of
31entity-level items — binding actions — amended returns.
321. As used in this section, all words and phrases defined
33in section 422.25A shall have the same meaning given them by
34that section.
352. For tax years beginning on or after January 1, 2020, any
-48-1adjustments to a partnership’s or pass-through entity’s items
2of income, gain, loss, expense, or credit, or an adjustment
3to such items allocated to a partner that holds an interest
4in a partnership or pass-through entity for the reviewed year
5by the department as a result of a state partnership audit,
6shall be determined at the partnership level or pass-through
7entity level in the same manner as provided by section 6221(a)
8of the Internal Revenue Code and the regulations thereunder
9unless a different treatment is specifically provided in this
10title. The provisions of sections 6222, 6223, and 6227 of the
11Internal Revenue Code and the regulations thereunder shall also
12apply to a partnership or pass-through entity and its direct
13or indirect partners in the same manner as provided in such
14sections unless a different treatment is specifically provided
15in this title. For purposes of applying such sections, due
16account shall be made for differences in federal and Iowa
17terminology. The adjustment provided by section 6221(a) of
18the Internal Revenue Code shall be determined as provided in
19such section but shall be based on Iowa taxable income or
20other tax attributes of the partnership as determined pursuant
21to this chapter for the reviewed year. The department shall
22issue a notice of adjustment to the partnership or pass-through
23entity. Such notice shall be treated as an assessment for
24the purposes of section 422.25, and the notice shall be
25appealable by the partnership or pass-through entity pursuant
26to sections 422.28 and 422.29 and shall be issued within the
27time period provided by section 422.25. Once the adjustments
28to partnership-related or pass-through entity-related items or
29reallocations of income, gains, losses, expenses, credits, and
30other attributes among such partners for the reviewed year are
31finally determined, the partnership or pass-through entity and
32any direct partners or indirect partners shall then be subject
33to the provisions of section 422.25, subsection 1, paragraph
34“e”, and section 422.25A in the same manner as if the state
35partnership audit were a federal partnership level audit, and
-49-1as if the final state partnership audit adjustment were a final
2federal partnership adjustment. The penalty exceptions in
3section 421.27, subsection 2, paragraphs “b” and “c”, shall not
4apply to a state partnership audit.
53. The state partnership representative for the reviewed
6year as determined under section 422.25B shall have the sole
7authority to act on behalf of the partnership or pass-through
8entity with respect to an action required or permitted to
9be taken by a partnership or pass-through entity under this
10section, including proceedings under section 422.28 or 422.29,
11and the partnership’s or pass-through entity’s direct partners
12and indirect partners shall be bound by those actions.
134. If the department, the partnership or pass-through
14entity, and the partnership or pass-through entity owners
15agree, the provisions of this section may be applied to tax
16years beginning before January 1, 2020.
175. The department may adopt rules pursuant to chapter 17A to
18implement this section.
19 Sec. 66. Section 422.35, Code 2020, is amended by adding the
20following new subsection:
21 NEW SUBSECTION. 26. Any income subtracted from federal
22taxable income for an adjustment year pursuant to section 6225
23of the Internal Revenue Code and the regulations thereunder
24shall be added back in computing net income for state tax
25purposes for the adjustment year.
26 Sec. 67. Section 422.39, Code 2020, is amended by striking
27the section and inserting in lieu thereof the following:
28422.39 Statutes applicable to corporations and corporation
29tax.
30All the provisions of sections 422.24 through 422.27
31of division II, respecting payment, collection, reporting,
32examination, and assessment, shall apply in respect to a
33corporation subject to the provisions of this division and to
34the tax due and payable by a corporation taxable under this
35division. This includes but is not limited to a corporation
-50-1that is a pass-through entity as defined in section 422.25A.
2 Sec. 68. Section 422.73, Code 2020, is amended by adding the
3following new subsection:
4 NEW SUBSECTION. 01. For purposes of this section, “federal
5adjustment”, “final determination date”, and “final federal
6adjustment” all mean the same as defined in section 422.25.
7 Sec. 69. Section 422.73, subsections 1 and 3, Code 2020, are
8amended to read as follows:
91. a. If it appears that an amount of tax, penalty, or
10interest has been paid which was not due under division II,
11III or V of this chapter, then that amount shall be credited
12against any tax due on the books of the department by the
13person who made the excessive payment, or that amount shall be
14refunded to the person or with the person’s approval, credited
15to tax to become due. A claim for refund or credit that has
16not been filed with the department within three years after
17the return upon which a refund or credit claimed became due,
18or within one year after the payment of the tax upon which a
19refund or credit is claimed was made, whichever time is the
20later, shall not be allowed by the director. If, as a result of
21a carryback of a net operating loss or a net capital loss, the
22amount of tax in a prior period is reduced and an overpayment
23results, the claim for refund or credit of the overpayment
24shall be filed with the department within the three years after
25the return for the taxable year of the net operating loss or
26net capital loss became due.
27b. Notwithstanding the period of limitation specified in
28paragraph “a”, the taxpayer shall have six months one year from
29the day of final disposition final determination date of any
30income tax matter between the taxpayer and the internal revenue
31service final federal adjustment arising from an internal
32revenue service audit or other similar action by the internal
33revenue service with respect to the particular tax year to
34claim an income tax refund or credit arising from that final
35federal adjustment.
-51- 13. The department shall enter into an agreement with the
2internal revenue service for the transmission of federal income
3tax reports on individuals required to file an Iowa income tax
4return who have been involved in an income tax matter with the
5internal revenue service. After final disposition the final
6determination date of the income tax matter that involves a
7final federal adjustment between the taxpayer and the internal
8revenue service, the department shall determine whether the
9individual is due a state income tax refund as a result of that
10 final disposition of federal adjustment from such income tax
11matter. If the individual is due a state income tax refund,
12the department shall notify the individual within thirty days
13and request the individual to file a claim for refund or credit
14with the department.
15 Sec. 70. APPLICABILITY. This division of this Act applies
16to federal adjustments and federal partnership adjustments that
17have a final determination date after the effective date of
18this division of this Act.
19DIVISION VI
20SETOFF PROCEDURES — RULEMAKING — EFFECTIVE DATE
21 Sec. 71. RULES.The following applies to 2020 Iowa Acts,
22Senate File 2328 or House File 2565, if enacted:
23The department of revenue shall adopt rules governing
24setoffs that occur during the transition from the department of
25administrative services to the department of revenue.
26 Sec. 72. 2020 Iowa Acts, Senate File 2328, if enacted, is
27amended by adding the following new section:
28 NEW SECTION. Sec. ___. EFFECTIVE DATE. This Act takes
29effect on the later of January 1, 2021, or the effective date
30of the rules adopted by the department of revenue pursuant
31to chapter 17A implementing this Act other than transitional
32rules.
33 Sec. 73. 2020 Iowa Acts, House File 2565, section 28, if
34enacted, is amended to read as follows:
35SEC. 28. EFFECTIVE DATE. This Act takes effect on the
-52-1later of January 1, 2021, or the effective date of the rules
2adopted by the department of revenue pursuant to chapter 17A
3implementing this Act other than transitional rules.
4 Sec. 74. EFFECTIVE DATE. This division of this Act, being
5deemed of immediate importance, takes effect upon enactment.
6 Sec. 75. RETROACTIVE APPLICABILITY. This division of this
7Act applies retroactively to the effective date of 2020 Iowa
8Acts, Senate File 2328 or House File 2565, if enacted.
9DIVISION VII
10PRO RATA SHARE OF ENTITY-LEVEL INCOME TAX PAID BY SHAREHOLDERS
11OR BENEFICIARIES
12 Sec. 76. Section 422.8, subsection 1, Code 2020, is amended
13to read as follows:
141. a. The amount of income tax paid to another state or
15foreign country by a resident taxpayer of this state on income
16derived from sources outside of Iowa shall be allowed as a
17credit against the tax computed under this chapter, except that
18the credit shall not exceed what the amount of the Iowa tax
19would have been on the same income which was taxed by the other
20state or foreign country. The limitation on this credit shall
21be computed according to the following formula: Income earned
22outside of Iowa and taxed by another state or foreign country
23shall be divided by the total income of the resident taxpayer
24of Iowa. This quotient multiplied times by the net Iowa tax as
25determined on the total income of the taxpayer as if entirely
26earned in Iowa shall be the maximum tax credit against the Iowa
27net tax.
28b. (1) For purposes of paragraph “a”, a resident partner
29of an entity taxed as a partnership for federal tax purposes,
30a resident shareholder of an S corporation, or a resident
31beneficiary of an estate or trust shall be deemed to have paid
32the resident partner’s, resident shareholder’s, or resident
33beneficiary’s pro rata share of entity-level income tax paid
34by the partnership, S corporation, estate, or trust to another
35state or foreign country on income that is also subject to
-53-1tax under this division, but only if the entity provides the
2resident partner, resident shareholder, or resident beneficiary
3a statement that documents the resident partner’s, resident
4shareholder’s, or resident beneficiary’s share of the income
5derived in the other state or foreign country, the income tax
6liability of the entity in that state or foreign country, and
7the income tax paid by the entity to that state or foreign
8country.
9(2) For purposes of paragraph “a”, a resident shareholder of
10a regulated investment company shall be deemed to have paid the
11shareholder’s pro rata share of entity-level income tax paid by
12the regulated investment company to another state or foreign
13country and treated as paid by its shareholders pursuant to
14section 853 of the Internal Revenue Code, but only if the
15regulated investment company provides the resident shareholder
16a statement that documents the resident shareholder’s share of
17the income derived in the other state or foreign country, the
18income tax liability of the regulated investment company in
19that state or foreign country, and the income tax paid by the
20regulated investment company to that state or foreign country.
21 Sec. 77. EFFECTIVE DATE. This division of this Act, being
22deemed of immediate importance, takes effect upon enactment.
23 Sec. 78. RETROACTIVE APPLICABILITY. This division of this
24Act applies retroactively to January 1, 2020, for tax years
25beginning on or after that date.
26DIVISION VIII
27BONUS DEPRECIATION
28 Sec. 79. Section 422.7, subsections 51 and 52, Code 2020,
29are amended by striking the subsections.
30 Sec. 80. Section 422.9, subsection 2, paragraph h, Code
312020, is amended to read as follows:
32h. For purposes of calculating the deductions in this
33subsection that are authorized under the Internal Revenue Code,
34and to the extent that any of such deductions is determined by
35an individual’s federal adjusted gross income, the individual’s
-54-1federal adjusted gross income is computed in accordance with
2section 422.7, subsections 39, 39A, 39B, 51, 52, and 53.
3 Sec. 81. Section 422.35, subsections 14 and 15, Code 2020,
4are amended by striking the subsections.
5 Sec. 82. PRESERVATION OF EXISTING RIGHTS. The sections of
6this division striking section 422.7, subsections 51 and 52,
7and section 422.35, subsections 14 and 15, respectively, shall
8not limit, modify, or otherwise adversely affect a taxpayer’s
9right to deduct for a tax year beginning on or after January 1,
102020, any amount determined under section 422.7, subsection 52,
11paragraph “b”, subparagraph (3), Code 2020, or under section
12422.35, subsection 15, paragraph “b”, subparagraph (3), Code
132020, for a tax year beginning prior to January 1, 2020.
14 Sec. 83. RETROACTIVE APPLICABILITY. This division of this
15Act applies retroactively to January 1, 2020, for tax years
16beginning on or after that date.
17DIVISION IX
18MARRIED TAXPAYERS — JOINT LIABILITY
19 Sec. 84. Section 422.21, subsection 7, Code 2020, is amended
20to read as follows:
217. If married taxpayers file a joint return or file
22separately on a combined return in accordance with rules
23prescribed by the director, both spouses are jointly and
24severally liable for the total tax due on the return, except
25when one spouse is considered to be an innocent spouse eligible
26for relief under criteria established pursuant to section 6015
27of the Internal Revenue Code. The department may notify the
28nonrequesting spouse or former spouse and permit, by rule, the
29intervention of a nonrequesting spouse or former spouse when
30relief from joint and several liability is requested.
31 Sec. 85. EFFECTIVE DATE. This division of this Act, being
32deemed of immediate importance, takes effect upon enactment.
33DIVISION X
34SALES TAX PAID BY THIRD-PARTY DEVELOPERS
35 Sec. 86. Section 15.331C, subsection 2, Code 2020, is
-55-1amended to read as follows:
22. A third-party developer shall state under oath, on
3forms provided by the department of revenue, the amount of
4taxes paid as described in subsection 1 and shall submit such
5forms to the department of revenue. The taxes paid shall be
6itemized to allow identification of the taxes attributable
7to racks, shelving, and conveyor equipment to be used in a
8warehouse or distribution center. After receiving the form
9from the third-party developer, the department of revenue shall
10issue a tax credit certificate to the eligible business equal
11to the sales and use taxes paid by a third-party developer
12under chapter 423 for gas, electricity, water, or sewer
13utility services, goods, wares, or merchandise, or on services
14rendered, furnished, or performed to or for a contractor or
15subcontractor and used in the fulfillment of a written contract
16relating to the construction or equipping of a facility.
17The department of revenue shall also issue a tax credit
18certificate to the eligible business equal to the taxes paid
19and attributable to racks, shelving, and conveyor equipment to
20be used in a warehouse or distribution center. The aggregate
21combined total amount of tax refunds under section 15.331A for
22taxes attributable to racks, shelving, and conveyor equipment
23to be used in a warehouse or distribution center and of tax
24credit certificates issued by the department of revenue for the
25taxes paid and attributable to racks, shelving, and conveyor
26equipment to be used in a warehouse or distribution center
27shall not exceed five hundred thousand dollars in a fiscal
28year. If an applicant for a tax credit certificate does not
29receive a certificate for the taxes paid and attributable
30to racks, shelving, and conveyor equipment to be used in a
31warehouse or distribution center, the application shall be
32considered in succeeding fiscal years. The eligible business
33shall not claim a tax credit under this section unless a tax
34credit certificate issued by the department of revenue is
35included with the taxpayer’s tax return for the tax year for
-56-1which the tax credit is claimed. A tax credit certificate
2shall contain the eligible business’s name, address, tax
3identification number, the amount of the tax credit, and other
4information deemed necessary by the department of revenue.
5An individual under this section may claim a tax credit of
6a partnership, limited liability company, S corporation,
7estate, or trust electing to have income taxed directly to
8the individual. The amount claimed by the individual shall
9be based upon the pro rata share of the individual’s earnings
10from the partnership, limited liability company, S corporation,
11estate, or trust.
12 Sec. 87. NEW SECTION. 422.12O Corporate tax credit for
13certain sales taxes paid by third-party developer.
14The taxes imposed under this division, less the credits
15allowed under section 422.12, shall be reduced by a corporate
16tax credit authorized pursuant to section 15.331C for certain
17sales taxes paid by a third-party developer.
18 Sec. 88. EFFECTIVE DATE. This division of this Act, being
19deemed of immediate importance, takes effect upon enactment.
20 Sec. 89. RETROACTIVE APPLICABILITY. This division of this
21Act applies retroactively to January 1, 2020, for tax years
22beginning on or after that date.
23DIVISION XI
24IOWA EDUCATIONAL SAVINGS PLAN TRUST (529 PLANS)
25 Sec. 90. Section 12D.1, subsection 2, paragraph k, Code
262020, is amended to read as follows:
27k. “Qualified education expenses” means the same as
28“qualified higher education expenses” as defined in section
29529(e)(3) of the Internal Revenue Code, as amended by Pub.L.
30No.115-97, and shall include elementary and secondary school
31expenses for tuition described in section 529(c)(7) of the
32Internal Revenue Code, subject to the limitations imposed by
33section 529(e)(3)(A) of the Internal Revenue Code. “Qualified
34education expenses” includes expenses for the participation
35in an apprenticeship program registered and certified with
-57-1the United States secretary of labor under section 1 of the
2National Apprenticeship Act, 29 U.S.C. §50, and amounts paid as
3principal or interest on any qualified education loan on behalf
4of a beneficiary or a sibling of the beneficiary, subject to
5the limitations imposed by section 529(c)(9)(B) and (C) of the
6Internal Revenue Code.
7 Sec. 91. Section 12D.1, subsection 2, Code 2020, is amended
8by adding the following new paragraphs:
9 NEW PARAGRAPH. 0l. “Qualified education loan” means the
10same as “qualified education loan” as defined in section 221(d)
11of the Internal Revenue Code.
12 NEW PARAGRAPH. 0m. “Sibling” means a brother, sister,
13stepbrother, or stepsister of the beneficiary.
14 Sec. 92. Section 422.7, subsection 32, paragraph c,
15subparagraph (1), Code 2020, is amended by adding the following
16new subparagraph divisions:
17 NEW SUBPARAGRAPH DIVISION. (d) The payment of expenses
18for fees, books, supplies, and equipment required for the
19participation of a beneficiary in an apprenticeship program.
20 NEW SUBPARAGRAPH DIVISION. (e) The payment of qualified
21education loan repayments.
22 Sec. 93. Section 422.7, subsection 32, paragraph c,
23subparagraph (2), Code 2020, is amended by adding the following
24new subparagraph divisions:
25 NEW SUBPARAGRAPH DIVISION. (0a) “Apprenticeship program”
26means a program registered and certified with the United
27States secretary of labor under section 1 of the National
28Apprenticeship Act, 29 U.S.C. §50.
29 NEW SUBPARAGRAPH DIVISION. (0c) “Qualified education loan”
30means the same as defined in section 12D.1, subsection 2.
31 NEW SUBPARAGRAPH DIVISION. (00c) “Qualified education loan
32repayments” means amounts paid as principal or interest on any
33qualified education loan of the beneficiary or a sibling of
34the beneficiary. The repayment amounts shall not exceed ten
35thousand dollars in the aggregate for the beneficiary or the
-58-1sibling, respectively.
2 NEW SUBPARAGRAPH DIVISION. (d) “Sibling” means the same as
3defined in section 12D.1, subsection 2.
4 Sec. 94. EFFECTIVE DATE. This division of this Act, being
5deemed of immediate importance, takes effect upon enactment.
6 Sec. 95. RETROACTIVE APPLICABILITY. This division of this
7Act applies retroactively to January 1, 2019, for tax years
8beginning on or after that date.
9DIVISION XII
10IOWA EDUCATIONAL SAVINGS ACCOUNT AND FIRST-TIME HOMEBUYER
11ACCOUNT — EXTENSIONS
12 Sec. 96. EXTENSION OF IOWA EDUCATIONAL SAVINGS ACCOUNT
13CONTRIBUTION DEDUCTION FOR TAX YEAR 2019. Notwithstanding any
14provision of law to the contrary, in determining the deduction
15provided under section 422.7, subsection 32, paragraph “a”,
16for tax years beginning during the 2019 calendar year, a
17participant who makes a contribution to the Iowa educational
18savings plan trust pursuant to section 12D.3, subsection 1, on
19or after January 1, 2020, but on or before July 31, 2020, may
20elect to be deemed to have made the contribution on the last
21day of calendar year 2019.
22 Sec. 97. EXTENSION OF IOWA FIRST-TIME HOMEBUYER ACCOUNT AND
23BENEFICIARY DESIGNATION FOR ACCOUNTS OPENED IN 2019.
241. Notwithstanding section 541B.3, subsection 1, paragraph
25“a”, or any other provision of law to the contrary, an
26individual who opened a first-time homebuyer account during
27calendar year 2019 and who wishes to participate in the Iowa
28first-time homebuyer savings account program shall designate
29the account as a first-time homebuyer account on or before July
3031, 2020, on forms provided by the department of revenue.
312. Notwithstanding section 541B.3, subsection 2, paragraph
32“a”, or any other provision of law to the contrary, an
33individual who opened a first-time homebuyer account during
34calendar year 2019 and who wishes to participate in the Iowa
35first-time homebuyer savings account program shall designate an
-59-1individual as beneficiary of the first-time homebuyer savings
2account on or before July 31, 2020, on forms provided by the
3department of revenue.
4 Sec. 98. EFFECTIVE DATE. This division of this Act, being
5deemed of immediate importance, takes effect upon enactment.
6DIVISION XIII
7QUALIFYING PERSONAL PROTECTION EQUIPMENT — DONATION
8 Sec. 99. Section 423.6, Code 2020, is amended by adding the
9following new subsection:
10 NEW SUBSECTION. 18. Qualifying personal protective
11equipment and materials which are assembled to become
12qualifying personal protective equipment. For purposes of this
13subsection, “qualifying personal protective equipment” means
14personal protective equipment that is assembled and donated by
15a person during the period beginning with a state of disaster
16emergency proclamation by the governor under section 29C.6 and
17ending one hundred eighty days after the expiration of such
18proclamation.
19 Sec. 100. REFUNDS. Refunds of taxes, interest, or penalties
20that arise from claims resulting from the enactment of this
21division of this Act, for donations occurring prior to the
22effective date of this division of this Act, shall not be
23allowed unless claims are filed prior to October 1, 2020,
24notwithstanding any other provision of the law to the contrary.
25 Sec. 101. EFFECTIVE DATE. This division of this Act, being
26deemed of immediate importance, takes effect upon enactment.
27 Sec. 102. RETROACTIVE APPLICABILITY. This division of this
28Act applies retroactively to January 1, 2020, for qualifying
29personal protective equipment and materials assembled and
30donated on or after that date.
31DIVISION XIV
32SHORT-TERM RENTAL PROPERTIES
33 Sec. 103. Section 331.301, Code 2020, is amended by adding
34the following new subsection:
35 NEW SUBSECTION. 18. a. For purposes of this subsection,
-60-1“short-term rental property” means any individually or
2collectively owned single-family house or dwelling unit;
3any unit or group of units in a condominium, cooperative,
4or timeshare; or an owner-occupied residential home that is
5offered for a fee for thirty days or less. “Short-term rental
6property” does not include a unit that is used for any retail,
7restaurant, banquet space, event center, or other similar use.
8b. A county shall not adopt or enforce any ordinance
9prohibiting short-term rental properties within the county. A
10short-term rental property shall be classified as a residential
11land use for zoning purposes.
12c. Notwithstanding paragraph “b”, a county may enact or
13enforce an ordinance that regulates, prohibits, or otherwise
14limits short-term rental properties for the following primary
15purposes if enforcement is performed in the same manner as
16enforcement applicable to similar properties that are not
17short-term rental properties:
18(1) Protection of public health and safety related to fire
19and building safety, sanitation, or traffic control.
20(2) Residential use and zoning purposes related to noise,
21property maintenance, or nuisance issues.
22(3) Limitation or prohibition of use of property to house
23sex offenders; to manufacture, exhibit, distribute, or sell
24illegal drugs, liquor, pornography, or obscenity; or to operate
25an adult-oriented entertainment establishment as described in
26section 239B.5, subsection 4, paragraph “a”.
27(4) To provide the county with an emergency contact for a
28short-term rental property.
29 Sec. 104. Section 414.1, subsection 1, Code 2020, is amended
30by adding the following new paragraphs:
31 NEW PARAGRAPH. e. A city shall not adopt or enforce any
32regulation, restriction, or other ordinance related to distance
33separation requirements for single-family homes or duplexes.
34 NEW PARAGRAPH. f. (1) For purposes of this paragraph,
35“short-term rental property” means any individually or
-61-1collectively owned single-family house or dwelling unit;
2any unit or group of units in a condominium, cooperative,
3or timeshare; or an owner-occupied residential home that is
4offered for a fee for thirty days or less. “Short-term rental
5property” does not include a unit that is used for any retail,
6restaurant, banquet space, event center, or other similar use.
7(2) A city shall not adopt or enforce any ordinance
8prohibiting short-term rental properties within the city. A
9short-term rental property shall be classified as a residential
10land use for zoning purposes.
11(3) Notwithstanding subparagraph (2), a city may enact or
12enforce an ordinance that regulates, prohibits, or otherwise
13limits short-term rental properties for the following primary
14purposes if enforcement is performed in the same manner as
15enforcement applicable to similar properties that are not
16short-term rental properties:
17(a) Protection of public health and safety related to fire
18and building safety, sanitation, or traffic control.
19(b) Residential use and zoning purposes related to noise,
20property maintenance, or nuisance issues.
21(c) Limitation or prohibition of use of property to house
22sex offenders; to manufacture, exhibit, distribute, or sell
23illegal drugs, liquor, pornography, or obscenity; or to operate
24an adult-oriented entertainment establishment as described in
25section 239B.5, subsection 4, paragraph “a”.
26(d) To provide the city with an emergency contact for a
27short-term rental property.
28DIVISION XV
29FUTURE TAX CHANGES
30 Sec. 105. 2018 Iowa Acts, chapter 1161, section 133, is
31amended by striking the section and inserting in lieu thereof
32the following:
33SEC. 133. This division of this Act takes effect January 1,
342023.
35DIVISION XVI
-62-1BUSINESS INTEREST EXPENSE DEDUCTION AND GLOBAL INTANGIBLE
2LOW-TAXED INCOME
3 Sec. 106. Section 422.7, Code 2020, is amended by adding the
4following new subsection:
5 NEW SUBSECTION. 59. a. Section 163(j) of the Internal
6Revenue Code does not apply in computing net income for state
7tax purposes. If the taxpayer’s federal adjusted gross income
8for the tax year was increased or decreased by reason of the
9application of section 163(j) of the Internal Revenue Code,
10the taxpayer shall recompute net income for state tax purposes
11under rules prescribed by the director.
12b. Paragraph “a” shall not apply during any tax year
13in which the additional first-year depreciation allowance
14authorized in section 168(k) of the Internal Revenue Code
15applies in computing net income for state tax purposes.
16c. For any tax year in which paragraph “a” does not apply,
17a taxpayer shall not be permitted to deduct any amount of
18interest expense paid or accrued in a previous taxable year
19that is allowed as a deduction in the current taxable year by
20reason of the carryforward of disallowed business interest
21provisions of section 163(j)(2) of the Internal Revenue Code,
22if either of the following apply:
23(1) The interest expense was originally paid or accrued
24during a tax year in which paragraph “a” applied.
25(2) The interest expense was originally paid or accrued
26during a tax year in which the taxpayer was not required to
27file an Iowa return.
28 Sec. 107. Section 422.35, Code 2020, is amended by adding
29the following new subsections:
30 NEW SUBSECTION. 26. a. Section 163(j) of the Internal
31Revenue Code does not apply in computing net income for state
32tax purposes. If the taxpayer’s federal taxable income for
33the tax year was increased or decreased by reason of the
34application of section 163(j) of the Internal Revenue Code,
35the taxpayer shall recompute net income for state tax purposes
-63-1under rules prescribed by the director.
2b. Paragraph “a” shall not apply during any tax year
3in which the additional first-year depreciation allowance
4authorized in section 168(k) of the Internal Revenue Code
5applies in computing net income for state tax purposes.
6c. For any tax year in which paragraph “a” does not apply,
7a taxpayer shall not be permitted to deduct any amount of
8interest expense paid or accrued in a previous taxable year
9that is allowed as a deduction in the current taxable year by
10reason of the carryforward of disallowed business interest
11provisions of section 163(j)(2) of the Internal Revenue Code,
12if either of the following apply:
13(1) The interest expense was originally paid or accrued
14during a tax year in which paragraph “a” applied.
15(2) The interest expense was originally paid or accrued
16during a tax year in which the taxpayer was not required to
17file an Iowa return.
18 NEW SUBSECTION. 27. Subtract, to the extent included,
19global intangible low-taxed income under section 951A of the
20Internal Revenue Code.
21 Sec. 108. RESCISSION OF ADMINISTRATIVE RULES.
221. Contingent upon the enactment of the section of this
23Act amending section 422.35, subsection 27, the following Iowa
24administrative rules are rescinded:
25a. 701 Iowa administrative code, rule 54.2, subrule 3,
26paragraph “i”.
27b. 701 Iowa administrative code, rule 59.28, subrule 2,
28paragraph “p”.
292. As soon as practicable, the Iowa administrative code
30editor shall remove the language of the Iowa administrative
31rules referenced in subsection 1 of this section from the Iowa
32administrative code.
33 Sec. 109. EFFECTIVE DATE. This Act, being deemed of
34immediate importance, takes effect upon enactment.
35 Sec. 110. RETROACTIVE APPLICABILITY. The following applies
-64-1retroactively to January 1, 2019, for tax years beginning on
2or after that date:
3The portion of the section of this division of this Act
4enacting section 422.35, subsection 27.
5 Sec. 111. RETROACTIVE APPLICABILITY. The following apply
6retroactively to January 1, 2020 for tax years beginning on or
7after that date:
81. The section of this division of this Act enacting section
9422.7, subsection 59.
102. The portion of the section of this division of this Act
11enacting section 422.35, subsection 26.
12DIVISION XVII
13REINVESTMENT ACT
14 Sec. 112. Section 15J.2, subsections 4, 7, 8, and 9, Code
152020, are amended to read as follows:
164. “District” means the area within a municipality that is
17designated a reinvestment district pursuant to section 15J.4.
187. “Municipality” means a county or an incorporated city.
19 any of the following:
20a. A county.
21b. An incorporated city.
22c. A joint board or other legal entity established or
23designated in an agreement between two or more contiguous
24municipalities identified in paragraph “a” or “b” pursuant to
25chapter 28E.
268. a. “New lessor” means a lessor, as defined in section
27423A.2, operating a business in the district that was not in
28operation in the area of the district before the effective
29date of the ordinance or resolution establishing the district,
30regardless of ownership.
31b. “New lessor” also includes any lessor, defined in section
32423A.2, operating a business in the district if the place of
33business for that business is the subject of a project that was
34approved by the board.
359. a. “New retail establishment” means a business operated
-65-1in the district by a retailer, as defined in section 423.1,
2that was not in operation in the area of the district before
3the effective date of the ordinance or resolution establishing
4the district, regardless of ownership.
5b. “New retail establishment” also includes any business
6operated in the district by a retailer, as defined in section
7423.1, if the place of business for that retail establishment
8is the subject of a project that was approved by the board.
9 Sec. 113. Section 15J.4, subsection 1, unnumbered paragraph
101, Code 2020, is amended to read as follows:
11A municipality that has an area suitable for development
12within the boundaries of the municipality or within the
13combined boundaries of a municipality under section 15J.2,
14subsection 7, paragraph “c”, is eligible to seek approval from
15the board to establish a reinvestment district under this
16section consisting of the area suitable for development. To
17be designated a reinvestment district, an area shall meet the
18following requirements:
19 Sec. 114. Section 15J.4, subsection 1, paragraphs c and d,
20Code 2020, are amended to read as follows:
21c. The For districts approved before July 1, 2018, the area
22consists of contiguous parcels and does not exceed twenty-five
23acres in total. For districts approved on or after July 1,
242020, the area consists of contiguous parcels and does not
25exceed seventy-five acres in total.
26d. For a municipality that is a city or for a city that
27is party to an agreement under section 15J.2, subsection 7,
28paragraph “c”, the area does not include the entire incorporated
29area of the city.
30 Sec. 115. Section 15J.4, subsection 3, paragraph a, Code
312020, is amended to read as follows:
32a. The municipality shall submit a copy of the resolution,
33the proposed district plan, and all accompanying materials
34adopted pursuant to this section to the board for evaluation.
35The board shall not approve a proposed district plan on or
-66-1after July 1, 2018 2025.
2 Sec. 116. Section 15J.4, subsection 3, paragraph b,
3subparagraph (6), Code 2020, is amended to read as follows:
4(6) The amount of proposed capital investment within the
5proposed district related to retail businesses in the proposed
6district does not exceed fifty percent of the total capital
7investment for all proposed projects in the proposed district
8plan. For the purposes of this subparagraph, “retail business”
9means any business engaged in the business of selling tangible
10personal property or taxable services at retail in this state
11that is obligated to collect state sales or use tax under
12chapter 423. However, for the purposes of this subparagraph,
13“retail business” does not include a new lessor or a business
14engaged in an activity subject to tax under section 423.2,
15subsection 3.
16 Sec. 117. Section 15J.4, subsection 3, paragraph f, Code
172020, is amended to read as follows:
18f. (1) The total aggregate amount of state sales tax
19revenues and state hotel and motel tax revenues that may be
20approved by the board for remittance to all municipalities and
21that may be transferred to the state reinvestment district
22fund under section 423.2A or 423A.6, and remitted to all
23municipalities having a reinvestment district under this
24chapter for districts approved by the board before July 1,
252018, shall not exceed one hundred million dollars.
26(2) The total aggregate amount of state sales tax revenues
27and state hotel and motel tax revenues that may be approved by
28the board for remittance to all municipalities and that may
29be transferred to the state reinvestment district fund under
30section 423.2A or 423A.6, and remitted to all municipalities
31having a reinvestment district under this chapter for districts
32approved on or after July 1, 2020, but before July 1, 2025,
33shall not exceed one hundred million dollars.
34 Sec. 118. Section 15J.4, subsections 4 and 5, Code 2020, are
35amended to read as follows:
-67- 14. a. Upon receiving the approval of the board, the
2municipality may shall adopt an ordinance, or in the case of
3a municipality under section 15J.2, subsection 7, paragraph
4“c”, a resolution, establishing the district and shall notify
5the director of revenue of the district’s commencement date
6established by the board and the information required under
7paragraph “b” no later than thirty days after adoption of the
8ordinance or resolution.
9b. For each district approved by the board on or after July
101, 2020, the municipality shall include in the notification
11under paragraph “a” and in the statement required under
12paragraph “c” all of the following:
13(1) For each new retail establishment under section 15J.2,
14subsection 9, paragraph “b”, that was in operation before
15the establishment of the district, the monthly amount of
16sales subject to the state sales tax from the most recently
17available twelve-month period preceding the establishment of
18the district.
19(2) For each new lessor under section 15J.2, subsection 8,
20paragraph “b”, that was in operation before the establishment
21of the district, the monthly amount of sales subject to the
22state hotel and motel tax from the most recently available
23twelve-month period preceding the establishment of the
24district.
25c. The ordinance or resolution adopted by the municipality
26shall include the district’s commencement date and a detailed
27statement of the manner in which the approved projects to be
28undertaken in the district will be financed, including but not
29limited to the financial information included in the project
30plan under subsection 2, paragraph “d”.
31d. Following establishment of the district, a municipality
32may use the moneys deposited in the municipality’s reinvestment
33project fund created pursuant to section 15J.7 to fund the
34development of those projects included within the district
35plan.
-68- 15. A municipality may amend the district plan to add
2or modify projects. However, a proposed modification to a
3project and each project proposed to be added shall first be
4approved by the board in the same manner as provided for the
5original plan. In no case, however, shall an amendment to the
6district plan result in the extension of the commencement date
7established by the board. If a district plan is amended to
8add or modify a project, the municipality shall, if necessary,
9 amend the ordinance or resolution, as applicable, if necessary,
10 to reflect any changes to the financial information required to
11be included under subsection 4.
12 Sec. 119. Section 15J.5, subsection 1, paragraph b, Code
132020, is amended to read as follows:
14b. (1) The For districts established before July 1,
152020, the amount of new state sales tax revenue for purposes
16of paragraph “a” shall be the product of the amount of sales
17subject to the state sales tax in the district during the
18quarter from new retail establishments times four percent.
19(2) For districts established on or after July 1, 2020, the
20amount of new state sales tax revenue for purposes of paragraph
21“a” shall be the product of four percent times the remainder of
22amount of sales subject to the state sales tax in the district
23during the quarter from new retail establishments minus the sum
24of the sales from the corresponding quarter of the twelve-month
25period determined under section 15J.4, subsection 4, paragraph
26“b”, subparagraph (1), for new retail establishments identified
27under section 15J.4, subsection 4, paragraph “b”, subparagraph
28(1), that were in operation at the end of the quarter.
29 Sec. 120. Section 15J.5, subsection 2, paragraph b, Code
302020, is amended to read as follows:
31b. (1) The For districts established before July 1,
322020, the amount of new state hotel and motel tax revenue for
33purposes of paragraph “a” shall be the product of the amount of
34sales subject to the state hotel and motel tax in the district
35during the quarter from new lessors times the state hotel and
-69-1motel tax rate imposed under section 423A.3.
2(2) For districts established on or after July 1, 2020, the
3amount of new state hotel and motel tax revenue for purposes of
4paragraph “a” shall be the product of the state hotel and motel
5tax rate imposed under section 423A.3 times the remainder of
6amount of sales subject to the state hotel and motel tax in the
7district during the quarter from new lessors minus the sum of
8the sales from the corresponding quarter of the twelve month
9period determined under section 15J.4, subsection 4, paragraph
10“b”, subparagraph (2), for new lessors identified under section
1115J.4, subsection 4, paragraph “b”, subparagraph (2), that were
12in operation at the end of the quarter.
13 Sec. 121. Section 15J.7, subsection 4, paragraph b, Code
142020, is amended to read as follows:
15b. For the purposes of this subsection, “relocation”
16means the closure or substantial reduction of an enterprise’s
17existing operations in one area of the state and the initiation
18of substantially the same operation in the same county or a
19contiguous county in the state. However, if the initiation
20of operations includes an expanded scope or nature of the
21enterprise’s existing operations, the new operation shall
22not be considered to be substantially the same operation.
23 “Relocation” does not include an enterprise expanding its
24operations in another area of the state provided that existing
25operations of a similar nature are not closed or substantially
26reduced.
27 Sec. 122. Section 15J.7, subsection 6, Code 2020, is amended
28to read as follows:
296. Upon dissolution of a district pursuant to section 15J.8,
30moneys remaining in the reinvestment project fund that were
31deposited pursuant to subsection 2 and all interest remaining
32in the fund that was earned on such amounts shall be deposited
33in the general fund of the municipality or, for a municipality
34under section 15J.2, subsection 7, paragraph “c”, the governing
35body shall allocate such amounts to the participating cities
-70-1and counties for deposit in each city or county general fund
2according to the chapter 28E agreement.
3 Sec. 123. Section 15J.8, Code 2020, is amended to read as
4follows:
515J.8 End of deposits — district dissolution.
61. As of the date twenty years after the district’s
7commencement date, the department shall cease to deposit state
8sales tax revenues and state hotel and motel tax revenues into
9the district’s account within the fund, unless the municipality
10dissolves the district by ordinance or resolution prior to that
11date. Following the expiration of the twenty-year period, the
12district shall be dissolved by ordinance or resolution of the
13municipality adopted within twelve months of the conclusion of
14the twenty-year period.
152. If the municipality dissolves the district by ordinance
16or resolution prior to the expiration of the twenty-year
17period specified in subsection 1, the municipality shall
18notify the director of revenue of the dissolution as soon as
19practicable after adoption of the ordinance or resolution, and
20the department shall, as of the effective date of dissolution,
21cease to deposit state sales tax revenues and state hotel and
22motel tax revenues into the district’s account within the fund.
233. Upon request of the municipality prior to the dissolution
24of the district, and following a determination by the board
25that the amounts of new state sales tax revenue and new state
26hotel and motel tax revenue deposited in the municipality’s
27reinvestment project fund under section 15J.7 are substantially
28lower than the amounts established by the board under section
2915J.4, subsection 3, paragraph “e”, the board may extend
30the district’s twenty-year period of time for depositing and
31receiving revenues under this chapter by up to five additional
32years if such an extension is in the best interest of the
33public.
34DIVISION XVIII
35INNOVATION FUNDS
-71-1 Sec. 124. Section 15.119, subsection 2, paragraphs d and e,
2Code 2020, are amended to read as follows:
3d. The tax credits for investments in qualifying businesses
4issued pursuant to section 15E.43. In allocating tax credits
5pursuant to this subsection, the authority shall allocate at
6least two million and not more than four million dollars for
7purposes of this paragraph, unless the authority determines
8that the tax credits awarded will be less than that amount.
9e. The tax credits for investments in an innovation fund
10pursuant to section 15E.52. In allocating tax credits pursuant
11to this subsection, the authority shall allocate at least six
12million and not more than eight million dollars for purposes of
13this paragraph, unless the authority determines that the tax
14credits awarded will be less than that amount.
15 Sec. 125. Section 15.119, Code 2020, is amended by adding
16the following new subsection:
17 NEW SUBSECTION. 2A. On or before June 30 of each year,
18the authority shall determine the amount of tax credits that
19shall be issued pursuant to sections 15E.43 and 15E.52 for
20the following fiscal year. In allocating the amount of tax
21credits authorized pursuant to subsection 1 among the programs
22specified in subsection 2, the aggregate amount allocated by
23the authority for purposes of subsection 2, paragraphs “d” and
24“e”, shall not exceed ten million dollars.
25 Sec. 126. Section 15E.43, subsection 2, paragraphs b and c,
26Code 2020, are amended to read as follows:
27b. The maximum amount of a tax credit that may be issued
28per calendar fiscal year to a natural person and the person’s
29spouse or dependent shall not exceed one hundred thousand
30dollars combined. For purposes of this paragraph, a tax
31credit issued to a partnership, limited liability company, S
32corporation, estate, or trust electing to have income taxed
33directly to the individual shall be deemed to be issued to
34the individual owners based upon the pro rata share of the
35individual’s earnings from the entity. For purposes of this
-72-1paragraph, “dependent” has the same meaning as provided by the
2Internal Revenue Code.
3c. The maximum amount of tax credits that may be issued
4per calendar fiscal year for equity investments in any one
5qualifying business shall not exceed five hundred thousand
6dollars.
7 Sec. 127. EFFECTIVE DATE. This division of this Act, being
8deemed of immediate importance, takes effect upon enactment.
9DIVISION XIX
10CAPITAL GAINS
11 Sec. 128. Section 422.7, Code 2020, is amended by adding the
12following new subsection:
13 NEW SUBSECTION. 21A. Subtract, to the extent included,
14for tax years beginning on or after the 2020 calendar year and
15not already deducted under another provision of this section,
16fifteen percent of the taxpayer’s net capital gain as defined
17in section 1222 of the Internal Revenue Code.
18 Sec. 129. EFFECTIVE DATE. This division of this Act, being
19deemed of immediate importance, takes effect upon enactment.
20 Sec. 130. RETROACTIVE APPLICABILITY. This division of this
21Act applies retroactively to January 1, 2020, for tax years
22beginning on or after that date.
23DIVISION XX
24LOCAL ASSESSORS
25 Sec. 131. Section 441.6, subsection 2, Code 2020, is amended
26to read as follows:
272. Upon receipt of the report of the examining board, the
28chairperson of the conference board shall by written notice
29call a meeting of the conference board to appoint an assessor.
30The meeting shall be held not later than seven days after the
31receipt of the report of the examining board by the conference
32board. At the meeting, the conference board shall appoint an
33assessor from the register of eligible candidates. However,
34if a special examination has not been conducted previously for
35the same vacancy, the conference board may request the director
-73-1of revenue to hold a special examination pursuant to section
2441.7. The chairperson of the conference board shall give
3written notice to the director of revenue of the appointment
4and its effective date within ten days of the decision of the
5board.
6 Sec. 132. Section 441.6, Code 2020, is amended by adding the
7following new subsection:
8 NEW SUBSECTION. 3. The appointee selected by the conference
9board under subsection 2 shall not assume the office of city
10or county assessor until such appointment is confirmed by
11the director of revenue. If the director of revenue rejects
12the appointment, the examining board shall conduct a new
13examination and submit a new report to the conference board
14under subsection 1. The director of revenue shall adopt rules
15pursuant to chapter 17A to implement and administer this
16subsection.
17 Sec. 133. Section 441.17, subsection 2, Code 2020, is
18amended to read as follows:
192. Cause to be assessed, in accordance with section 441.21,
20all the property in the assessor’s county or city, except
21property exempt from taxation, or the assessment of which is
22otherwise provided for by law. However, an assessor or deputy
23assessor shall not personally assess a property if the person
24or a member of the person’s immediate family owns the property,
25has a financial interest in the property, or has a financial
26interest in the entity that owns the property. The director of
27revenue shall adopt rules pursuant to chapter 17A to implement
28and administer this subsection.
29 Sec. 134. Section 441.41, Code 2020, is amended to read as
30follows:
31441.41 Legal counsel.
32In the case of cities having an assessor, the city legal
33department shall represent the assessor and board of review
34in all litigation dealing with assessments. In the case of
35counties, the county attorney shall represent the assessor and
-74-1board of review in all litigation dealing with assessments.
2Any taxing district interested in the taxes received from such
3assessments may be represented by an attorney and shall be
4required to appear by attorney upon written request of the
5assessor to the presiding officer of any such taxing district.
6The Subject to review and prior approval by either the city
7legal department in the case of a city or the county attorney
8in the case of a county, the conference board may employ
9special counsel to assist the city legal department or county
10attorney as the case may be.
11DIVISION XXI
12RURAL IMPROVEMENT ZONES
13 Sec. 135. Section 357H.1, subsection 1, Code 2020, is
14amended to read as follows:
151. The board of supervisors of a county with less than
16twenty thousand residents, not counting persons admitted or
17committed to an institution enumerated in section 218.1 or
18904.102, based upon the most recent certified federal census,
19and with a private lake real estate development adjacent to or
20abutting in part a lake may designate an area surrounding the
21lake, if it is an unincorporated area of the county, a rural
22improvement zone upon receipt of a petition pursuant to section
23357H.2, and upon the board’s determination that the area is in
24need of improvements.
25 Sec. 136. EFFECTIVE DATE. This division of this Act, being
26deemed of immediate importance, takes effect upon enactment.
27 Sec. 137. APPLICABILITY. This division of this Act applies
28to rural improvement zones in existence on or established on or
29after the effective date of this division of this Act.
30DIVISION XXII
31SCHOOL TUITION ORGANIZATION TAX CREDIT
32 Sec. 138. Section 422.11S, subsection 8, paragraph a,
33subparagraph (2), Code 2020, is amended to read as follows:
34(2) (a) “Total approved tax credits” means for the 2006
35calendar year, two million five hundred thousand dollars, for
-75-1the 2007 calendar year, five million dollars, for calendar
2years beginning on or after January 1, 2008, but before January
31, 2012, seven million five hundred thousand dollars, for
4calendar years beginning on or after January 1, 2012, but
5before January 1, 2014, eight million seven hundred fifty
6thousand dollars, for calendar years beginning on or after
7January 1, 2014, but before January 1, 2019, twelve million
8dollars, and for calendar years beginning on or after January
91, 2019, but before January 1, 2020, thirteen million dollars,
10and for calendar years beginning on or after January 1, 2020,
11fifteen million dollars.
12(b) (i) During any calendar year beginning on or after
13January 1, 2022, if the amount of awarded tax credits from the
14preceding calendar year are equal to or greater than ninety
15percent of the total approved tax credits for the current
16calendar year, the total approved tax credits for the current
17calendar year shall equal the product of ten percent multiplied
18by the total approved tax credits for the current calendar year
19plus the total approved tax credits for the current calendar
20year.
21(ii) If total approved tax credits are recomputed pursuant
22to subparagraph subdivision (i), the total approved tax credits
23shall equal the previous total approved tax credits recomputed
24pursuant to subparagraph subdivision (i) for purposes of future
25recomputations under subparagraph subdivision (i), provided
26that the maximum total approved tax credits recomputed pursuant
27to this subparagraph division (b) shall not exceed twenty
28million dollars in a calendar year.
29 Sec. 139. Section 422.33, subsection 28, Code 2020, is
30amended to read as follows:
3128. The taxes imposed under this division shall be reduced
32by a school tuition organization tax credit allowed under
33section 422.11S. The maximum amount of tax credits that
34may be approved under this subsection for a tax year equals
35twenty-five percent of the school tuition organization’s tax
-76-1credits that may be approved pursuant to section 422.11S,
2subsection 8, for a tax year.
3DIVISION XXIII
4PAYCHECK PROTECTION PROGRAM
5 Sec. 140. IOWA NET INCOME EXCLUSION FOR FEDERAL PAYCHECK
6PROTECTION PROGRAM LOAN FORGIVENESS FOR CERTAIN FISCAL-YEAR
7FILERS IN TAX YEAR 2019. Notwithstanding any other provision
8of law to the contrary, for any tax year beginning on or after
9January 1, 2019, and ending after March 27, 2020, Pub.L. No.
10116-136, §1106(i), applies in computing net income for state
11tax purposes under section 422.7 or 422.35.
12 Sec. 141. EFFECTIVE DATE. This division of this Act, being
13deemed of immediate importance, takes effect upon enactment.
14DIVISION XXIV
15INCOME TAX EXCLUSION — EMERGENCY STUDENT GRANT MONEY
16 Sec. 142. Section 422.7, Code 2020, is amended by adding the
17following new subsection:
18 NEW SUBSECTION. 59. Notwithstanding any other provision of
19law to the contrary, any funds received by a student through a
20higher education institution to support the student’s financial
21needs as a result of the COVID-19 pandemic pursuant to §§3504,
2218004, or 18008 of Pub.L. No.116-136 shall not be included
23in the student’s Iowa net income for any tax year ending after
24March 27, 2020.
25 Sec. 143. EFFECTIVE DATE. This division of this Act, being
26deemed of immediate importance, takes effect upon enactment.
27 Sec. 144. RETROACTIVE APPLICABILITY. This division of this
28Act applies retroactively to March 27, 2020, for tax years
29ending on or after that date.
30DIVISION XXV
31IOWA INCOME EXCLUSION — STIMULUS CHECKS
32 Sec. 145. IOWA INCOME TAX EXCLUSION FOR ECONOMIC IMPACT
33PAYMENTS. In determining the amount of deduction for federal
34income tax under section 422.9 for tax years beginning in
35the 2020 calendar year, the amount of the deduction for the
-77-1tax year shall not be adjusted by the amount received during
2the tax year of the income tax rebate provided pursuant to
3the federal Recovery Rebates and Coronavirus Aid, Relief,
4and Economic Security Act, Pub.L. No.116-136, §2201, and
5the amount of such income tax rebate shall not be subject to
6taxation under chapter 422, division II.
7DIVISION XXVI
8HUNTING DEER AND TURKEY ON A FARM UNIT
9 Sec. 146. Section 483A.24, subsection 2, paragraphs b and c,
10Code 2019, are amended to read as follows:
11b. Upon written application on forms furnished by the
12department, the department shall issue annually without fee one
13wild turkey license to the owner of a farm unit or to a member
14of the owner’s family, but not to both, and to the tenant or
15to a member of the tenant’s family, but not to both. The wild
16turkey hunting licenses issued shall be valid only on the
17farm unit for which an applicant qualifies pursuant to this
18subsection and shall be equivalent to the least restrictive
19license issued under section 481A.38. The owner or the tenant
20need not reside on the farm unit to qualify for a free license
21to hunt on that farm unit. The free turkey hunting licenses
22issued pursuant to this paragraph shall be valid and may be
23used during any bow or firearm established turkey hunting
24season using the method of take authorized by rule for each
25season being hunted. If a tag is filled during one of the
26seasons, the license will not be valid in subsequent seasons.
27c. Upon written application on forms furnished by the
28department, the department shall issue annually without fee two
29deer hunting licenses, one antlered or any sex deer hunting
30license and one antlerless deer only deer hunting license, to
31the owner of a farm unit or a member of the owner’s family,
32but only a total of two licenses for both, and to the tenant
33of a farm unit or a member of the tenant’s family, but only
34a total of two licenses for both. The deer hunting licenses
35issued shall be valid only for use on the farm unit for which
-78-1the applicant applies pursuant to this paragraph. The owner or
2the tenant need not reside on the farm unit to qualify for the
3free deer hunting licenses to hunt on that farm unit. The free
4deer hunting licenses issued pursuant to this paragraph shall
5be valid and may be used during any bow or firearm established
6 deer hunting season using the method of take authorized by rule
7for each season being hunted. If a tag is filled during one
8of the seasons, the license will not be valid in subsequent
9seasons. The licenses may be used to harvest deer in two
10different seasons. In addition, a person who receives a free
11deer hunting license pursuant to this paragraph shall pay a one
12dollar twenty-five cent fee for each license that shall be used
13and is appropriated for the purpose of deer herd population
14management, including assisting with the cost of processing
15deer donated to the help us stop hunger program administered
16by the commission.
17EXPLANATION
18The inclusion of this explanation does not constitute agreement with
19the explanation’s substance by the members of the general assembly.
20This bill relates to state and local taxation, regulation,
21the Iowa reinvestment act, innovation fund, hunting and fees,
22and provides for properly related matters.
23DEPARTMENT OF REVENUE ADMINISTRATION AND PENALTY PROVISIONS.
24The amendment to Code section 421.6 enhances the readability of
25the Code section by including in the definition of “return” the
26moneys and credits tax turn administered by the department of
27revenue under Code section 533.329.
28The bill enacts new Code section 421.17(36) which permits
29the director of revenue to enter into Code chapter 28E
30agreements with the state fair or a county or district fair
31to collect and remit sales taxes and fees from sellers making
32retail sales on the grounds owned by the fair or through events
33conducted by the fair.
34The amendment to Code section 421.27(1) provides that in
35the case of a specified business with no tax shown due or
-79-1required to be shown due that fails to timely file their
2income tax return or information return shall pay the greater
3of the following penalty amounts: $200; or an amount equal
4to 10 percent of the imputed Iowa liability of the specified
5business, not to exceed $25,000.
6The amendment to Code section 421.27(1) provides that the
7penalty for individuals or specified businesses that fail to
8timely file a return may be waived under certain circumstances.
9The provision applies to tax years beginning on or after
10January 1, 2022.
11The amendment to Code section 421.27(4) provides that the
12penalty for a specified business that willfully fails to file a
13return with no tax shown due or required to be shown due with
14the intent to evade such a filing requirement or reporting
15Iowa-source income, the penalty imposed shall be the greater
16of $1,500 or an amount equal to 75 percent of the imputed Iowa
17liability of the specified business. The provision applies to
18tax years beginning on or after January 1, 2022.
19The amendment to Code section 421.27(4) expands penalty
20provisions by providing that a person who willfully fails to
21file a return or deposit form with intent to evade a filing
22requirement shall be subject to a penalty of 75 percent of the
23tax added to the amount of tax shown due or required to be shown
24due, in lieu of other penalties. The provision applies to tax
25years beginning on or after January 1, 2022.
26The amendment to Code section 421.27(6) makes numerous
27changes to the criminal offense of fraudulent practice
28by expanding the criminal offense to include a person who
29willfully makes a false application for an exemption or benefit
30with the intent to receive the exemption or benefit to which
31the person is not entitled.
32The amendment to Code section 421.27(6) also expands the
33fraudulent practice criminal offense to include when a person
34willfully submits any false information, document, or document
35containing false information in support of an application
-80-1for a refund, credit, exemption, reimbursement, rebate, or
2other payment or benefit with the intent to evade taxes;
3and to include when a person willfully submits any false
4information, document, or document containing false information
5in support of an application for a refund, credit, exemption,
6reimbursement, rebate, or other payment or benefit to which the
7person is not entitled.
8A person who commits fraudulent practice under Code section
9421.76(6), in addition to the criminal penalties, is liable for
10a penalty equal to 75 percent of the refund, credit, exemption,
11reimbursement, rebate, or other payment or benefit being
12fraudulently claimed.
13The bill enacts new Code section 421.27(8) which defines
14“imputed Iowa liability” and “specified business”. The
15provision applies to tax years beginning on or after January
161, 2022.
17The bill enacts new Code section 421.27(9) by adding an
18additional penalty under Code section 421.27 in the amount
19of $1,000 if a taxpayer fails to file a tax return within 90
20days of written notice by the department that the taxpayer is
21required to file such a return. The provision applies to a
22return a taxpayer is required to file on or after January 1,
232022.
24The bill enacts new Code section 421.27A by creating a
25criminal offense for perjury. Currently, a different perjury
26criminal offense exists in Code section 720.2. A person
27commits perjury under the following circumstances in the bill:
28the person makes a document containing false information in
29support of an application for refund, credit, exemption,
30reimbursement, rebate, or other payment or benefit with intent
31to evade tax; the person makes a document containing false
32information with intent to unlawfully receive a refund, credit,
33exemption, reimbursement, rebate, or other payment or benefit,
34to which the person is not entitled; the person knowingly makes
35any false affidavit; the person knowingly swears or affirms
-81-1falsely to any matter or thing required by the terms of title X
2of the Code (financial resources) to be sworn to or affirmed.
3A person who commits the criminal offense of perjury under new
4Code section 421.27A commits a class “D” felony. A class “D”
5felony is punishable by confinement for no more than five years
6and a fine of at least $750 but not more than $7,500.
7The bill enacts new Code section 421.59 relating to a
8power of attorney or other authority to act on behalf of the
9taxpayer. The bill formalizes a process for the following
10persons to act and receive information on behalf of and
11exercise all of the rights of a taxpayer, regardless of whether
12a power of attorney has been filed with the department: a
13guardian, conservator, or custodian appointed by the court; a
14receiver appointed pursuant to Code chapter 680; an individual
15who has been named as an authorized representative on a
16fiduciary return filed under Code section 422.14 (fiduciary
17return) or Code chapter 450 (inheritance tax); an individual
18holding a title or position within a corporation, association,
19partnership, or other business entity; a licensed attorney
20who has appeared on behalf of the taxpayer or the taxpayer’s
21estate; and a parent or legal guardian of the taxpayer who has
22not reached the age of majority.
23New Code section 421.59 also authorizes the department to
24enter into a memorandum of understanding with the taxpayer
25for each employee, officer, or member of a third-party entity
26engaged with or otherwise hired by a taxpayer to manage
27the taxpayer’s tax matters, in lieu of requiring a power of
28attorney for each person.
29The bill enacts new Code section 421.60(11) which allows a
30taxpayer to elect to receive correspondence electronically from
31the department rather than by regular mail.
32The amendments to Code section 421.62 provide that the
33regulations relating to tax return preparers apply to an
34income tax return or claim or refund under Code chapter 422
35(individual, corporate, and franchise taxes), but do not apply
-82-1to withholding returns under Code section 422.16.
2The amendment to Code section 421.64 enhances the
3readability of the Code section.
4The amendment to Code section 422.20(1) adds an intent
5element “willfully or recklessly” to the criminal offense
6related to the unlawful disclosure of tax return information
7by state personnel or former state personnel. A person who
8commits a violation under Code section 422.20(1) commits a
9serious misdemeanor. A serious misdemeanor is punishable by
10confinement for no more than one year and a fine of at least
11$315 but not more than $1,875.
12The amendment to Code section 422.20(3) provides that tax
13return information may be disclosed to authorized individuals
14pursuant to new Code section 421.59 created in the bill.
15The bill enacts new Code section 422.20(3A) permitting the
16director of revenue to disclose the tax return information of
17a partnership, limited liability company, or S corporation to
18a person who was a partner, shareholder, or member of such an
19entity during any part of the period covered by the tax return.
20The bill enacts new Code section 422.20(3B) specifying the
21information the department is required to redact prior to
22the disclosure of the record in an appeal or contested case.
23The bill specifies the department may also redact other tax
24information from the record in an appeal or contested case, if
25the taxpayer proves by clear and convincing evidence that the
26release of the tax information would disclose a trade secret
27or be an unwarranted invasion of personal privacy. The bill
28permits the department to disclose information that is required
29to be redacted if the department determines such information is
30necessary to the resolution or decision of the case.
31The bill enacts new Code section 422.25(1)(c) (income tax)
32that provides the period of examination and determination is
33unlimited under title X (financial resources) in any action
34by the department to recover or rescind a tax expenditure
35as defined in Code section 2.48, or any other incentive or
-83-1assistance administered by the economic development authority.
2The amendment takes effect upon enactment. The bill also
3provides that it is the intent of the general assembly that the
4amendment to Code section 422.25(1) is a conforming amendment
5consistent with current law, and that the amendment does not
6change the application of current law. This provision takes
7effect upon enactment.
8The amendment to Code section 422.69 requires that all
9fees, taxes, interest, and penalties under Code chapter 422
10(individual income, corporate, and franchise taxes) shall
11be paid to the department of revenue rather than the state
12treasurer.
13The amendment to Code section 422.72(1)(a) adds the intent
14element of “willfully or recklessly” to the criminal offense
15related to the unlawful disclosure by state personnel or
16former state personnel of the business affairs, operations,
17or information obtained through a tax-related investigation.
18A person who unlawfully discloses such information commits a
19serious misdemeanor under Code section 422.72(4). A serious
20misdemeanor is punishable by confinement for no more than one
21year and a fine of at least $315 but not more than $1,875.
22The bill enacts new Code section 422.72(7A), a similar
23provision to new Code section 422.20(3B) in the bill. New Code
24section 422.72(7A) specifies the information the department
25is required to redact prior to the disclosure to the general
26public of the record in an appeal or contested case. The
27bill specifies that the department may also redact other tax
28information from the record in an appeal or contested case, if
29the taxpayer proves by clear and convincing evidence that the
30release of the tax information would disclose a trade secret
31or be an unwarranted invasion of personal privacy. The bill
32permits the department to disclose information that is required
33to be redacted if the department determines such information is
34necessary to the resolution or decision of the case.
35The bill enacts new Code section 423.37(4)(sales and use
-84-1tax) that provides the period of examination and determination
2is unlimited under title X (financial resources) in any action
3by the department to recover or rescind a tax expenditure
4as defined in Code section 2.48 or any other incentive or
5assistance administered by the economic development authority.
6The amendment takes effect upon enactment. The bill also
7provides that it is the intent of the general assembly that the
8amendment to Code section 423.37(4) is a conforming amendment
9consistent with current law, and that the amendment does not
10change the application of current law. This provision takes
11effect upon enactment.
12The amendment to Code section 428A.1 (real estate
13transfer tax) provides that a county recorder shall record
14the declaration of value but is prohibited from charging a
15recording fee for the filing.
16The amendment to Code section 441.48 enhances the
17readability of the Code section by specifying the board of
18supervisors or city council, as applicable, shall provide
19the department with notice of intent to protest prior to the
20expiration of the 10 days’ notice to adjust the valuation of
21any class of property issued by the department.
22The amendments to Code sections 489.706, 490.1422, 501.813,
23and 504.1423, remove the role of the department in the
24application for reinstatement by a limited liability company,
25corporation, cooperative, or nonprofit corporation after the
26dissolution of such an entity.
27The bill enacts new Code section 533.329(03) by specifying
28that a money and credit tax return prepared by a credit union
29shall be on a form prepared by the department of revenue, and
30shall be filed with the department on or before the last day of
31April.
32The bill amends Code section 533.329(3) relating to
33enforcement of the moneys and credits tax paid by credit
34unions.
35SALES AND USE TAX. The amendments to Code sections 321G.4
-85-1(snowmobiles) and 321I.4 (all-terrain vehicles) require the
2county recorder to collect sales or use tax if an owner of such
3a vehicle is unable to present satisfactory evidence that the
4sales or use tax has been paid.
5The amendment to Code section 423.2(6)(bs) specifies that
6any services arising from or related to software sold as
7tangible personal property are subject to the sales tax.
8The amendment to Code section 423.2(8)(d)(1) specifies that
9the following is not subject to the sales tax: the retail
10sale of a specified digital product and a service where the
11specified digital product is essential and exclusive to the use
12of the service, and the true object of the transaction is the
13service.
14The amendment to Code section 423.3(3A) provides that the
15sales price from the sale of a commercial recreation service
16offering the opportunity to hunt a preserve whitetail is
17exempt from the sales tax if the sale occurred between July
181, 2005, and December 31, 2015. This provision takes effect
19upon enactment an applies retroactively to July 1, 2005. The
20bill prohibits any refunds resulting from the amendment to Code
21section 423.3(3A).
22The amendment to Code section 423.3(31) specifies that
23the sales price of tangible personal property or specified
24digital products sold to, or of services furnished to a
25tribal government as defined in Code section 216A.161, or the
26instrumentalities of such tribal government are exempt from the
27sales tax under most circumstances.
28The amendments to Code section 423.3(80)(b) and (c) specify
29that services performed pursuant to a written construction
30contract with a designated exempt entity as defined in Code
31section 423.3(80)(a)(1) are exempt from the sales tax.
32Currently, the construction contract is not required to be a
33written contract and only building materials, supplies, and
34equipment used in such a contract are exempt from the sales
35tax. The bill also provides that the building materials,
-86-1supplies, equipment, and services are exempt from the sales
2tax only if the property that is subject to the construction
3project becomes public property or the property of a designated
4exempt entity, in addition to the requirement that the
5exempt items be completely consumed in the performance of the
6construction contract.
7The amendment to Code section 423.4(1), relating to refunds
8of sales or use taxes to tax-exempt entities, enhances the
9readability of the Code section by defining a “designated
10exempt entity” and thus removing repeated references to each
11exempt entity in the Code section. The bill also adds a tribal
12government to the definition of a designated exempt entity.
13The bill strikes the terms “goods, wares, and merchandise” and
14uses the terms “building materials, supplies, and equipment”
15for purposes of claiming the exemption, when a designated
16exempt entity makes an application to the department for the
17refund of the sales or use tax upon the sales price of all
18sales or services related to the performance of a written
19construction contract. Additionally, if the sales price of
20all building materials, supplies, equipment, or services
21related to the performance of a written construction contract
22are to be exempt from the sales or use tax under the bill,
23all of the following must apply: the building materials,
24supplies, equipment, or services are completely consumed in the
25performance of a construction project; the property that is the
26subject of the construction project becomes public property or
27the property of an exempt entity; and the building materials,
28supplies, equipment, or services furnished are not used in
29the performance of a construction contract with a designated
30exempt entity in connection with the construction of certain
31facilities.
32The amendments to Code section 423.4(2)(a) and (b) relate
33to construction contracts for transportation projects by
34specifying the contractor shall pay sales or use tax for the
35services related to such contracts, and by making terminology
-87-1more consistent in the subsection.
2The amendments to Code sections 423.4(2) and 423.4(6) make
3the terminology more consistent with other changes in the bill.
4The amendment to Code section 423.5(1)(b) strikes the
5imposition of a 6 percent excise tax on the use of manufactured
6housing, or the purchase price if such housing is sold in the
7form of tangible personal property, or the installed purchase
8price if such housing is sold in the form of realty.
9The amendment to Code section 423.29(1) provides that a
10retailer maintaining a place of business in this state and
11making taxable sales shall, at the time of making such sales,
12collect the sales tax. The bill also provides that it is
13the intent of the general assembly that the amendment to
14Code section 423.29(1) is a conforming amendment consistent
15with current law, and that the amendment does not change the
16application of current law.
17The amendment to Code section 423.33(1) enhances the
18readability of the Code section by specifying that if a
19purchaser fails to pay sales tax to a retailer required to
20collect the sales tax, then the purchaser shall pay a use
21tax directly to the department. The bill specifies that the
22retailer and purchaser are jointly liable for the failure
23to pay either the sales or use tax in most circumstances.
24Additionally, the bill provides that it is the intent of the
25general assembly that the addition of “joint liability” is a
26conforming amendment consistent with current law, and that
27the amendment does not change the application of current law.
28The bill provides that if the purchaser pays the use tax,
29the retailer remains liable for any local option sales and
30services tax under Code chapter 423B that the retailer failed
31to collect.
32INCOME TAX. The bill strikes and replaces Code section
33422.9(3)(c). The bill provides that a taxpayer may elect
34to waive the entire carryback period with respect to an
35Iowa net operating loss for any taxable year, in the manner
-88-1prescribed by the department, and by the due date for filing
2the taxpayer’s return, including extensions of time. After the
3election is made for any taxable year, the election shall be
4irrevocable for such taxable year. If an election has been
5properly made, the bill provides that the Iowa net operating
6loss shall be carried forward 20 taxable years.
7The amendment to Code section 422.9(3)(d) modifies the
8election for an Iowa farming loss, which may be carried back
9for five taxable years prior to the taxable year of the loss.
10The bill specifies that a farming business that has an Iowa
11farming loss may make an election to carry back the loss for
12five taxable years, in the manner prescribed by the department,
13and shall be made by the due date for filing the taxpayer’s
14return, including extensions of time. After the election is
15made for any taxable year, the bill provides the election shall
16be irrevocable for such taxable year.
17The division applies to tax years beginning on or after
18January 1, 2020.
19RESEARCH ACTIVITIES TAX CREDIT. The amendments to Code
20sections 15.335, 422.10, and 422.33 update references to the
21Internal Revenue Code relating to the alternative simplified
22credit for increasing research activities.
23The division takes effect upon enactment and applies
24retroactively to January 1, 2019, for tax years beginning on
25or after that date.
26PARTNERSHIP AND PASS-THROUGH ENTITY AUDITS AND REPORTING
27OF FEDERAL ADJUSTMENTS. The amendment to Code section
28421.27(2)(c) specifies that a taxpayer is required to pay
29a penalty of 5 percent of the tax due, unless the taxpayer
30provides written notification to the department of a federal
31audit while it is in progress and voluntarily files an amended
32return which includes the final disposition of the audit
33and final federal adjustments to taxes paid within 180 days
34of the final determination date. The bill defines “final
35determination date” to generally mean the first day on which no
-89-1federal adjustments to taxes arising from the audit or other
2action remain to be finally determined. In cases of a final
3federal partnership adjustment arising from a partnership
4level audit, the taxpayer voluntarily and timely complies with
5reporting and payment requirements under new Code section
6422.25A(4) and (5) created in the bill.
7The bill enacts new Code section 422.7(59) providing that
8any income subtracted from federal taxable income shall be
9added back in computing net income for state individual income
10tax purposes when federal adjustments are made to taxes in the
11adjustment year. The bill defines “adjustment year” to mean
12the year in which the final determination of the adjustment
13occurs.
14The amendment to Code section 422.25 adds definitions to the
15Code section for “federal adjustment”, “federal adjustments
16report”, “final determination date”, and “final federal
17adjustment”.
18The bill enacts new Code section 422.25A which creates a
19process for audited partnerships and their direct and indirect
20partners to report final federal partnership adjustments to
21the department. The bill provides that the state partnership
22representative for the reviewed year shall have sole authority
23to act on behalf of the partnership. The bill creates
24reporting and payment requirements for audited partnerships
25and their partners subject to final federal adjustments.
26The bill permits an audited partnership or a tiered partner
27(partner that is a partnership or pass-through entity) to make
28irrevocable elections about the payment of any adjustments,
29and specifies the consequences of making certain elections.
30The bill permits an audited partnership or tiered partner to
31enter into an agreement with the department to use alternative
32reporting and payment methods. The bill permits the department
33to assess additional Iowa income tax, interest, and penalties
34arising from a federal partnership adjustments in the same
35manner as provided in other tax-related provisions.
-90- 1The bill enacts new Code section 422.25B that requires
2the state partnership representative acting on behalf of the
3partnership for the reviewed year to be the partnership’s
4federal partnership representative with respect to an action
5required or permitted to be taken by a state partnership
6representative, unless the partnership designates in writing in
7the manner prescribed by the department another person to act
8as the state partnership representative.
9The bill enacts new Code section 422.25C relating to
10partnership or pass-through entity audits and examinations.
11The bill provides that for tax years beginning on or after
12January 1, 2020, any adjustments to a partnership’s or
13pass-through entity’s taxes or an adjustment allocated to a
14partner’s taxes as a result of a department audit shall be
15determined at the partnership or pass-through entity level in
16the same manner as provided by federal law. The bill specifies
17that the state partnership representative shall have the sole
18authority to act on behalf of the partnership or pass-through
19entity with respect to any actions taken due to the audit,
20including appealing decisions to the director of revenue or
21seeking judicial review of the director’s decision. The
22provisions of new Code section 422.25C may be applied to tax
23years beginning before January 1, 2020, if the partnership or
24pass-through entity and the department agree.
25The bill enacts new Code section 422.35(26) providing that
26any income subtracted from federal taxable income shall be
27added back in computing net income for state corporate 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 bill amends Code section 422.39 by specifying that Code
33sections relating to payments of interest, computation of tax,
34liens, and final reports of fiduciaries apply to not just
35payments and collections but to reporting, examinations, and
-91-1assessments with respect to corporations including pass-through
2entities organized as corporations.
3The amendment to Code section 422.73 relates to credits
4against taxes due because of errors. The bill changes the
5period of limitation (statute of limitations) for a claim for
6a refund of or a credit against individual income tax by a
7taxpayer to one year from the final determination date of any
8final adjustment with respect to the particular tax year to
9claim an income tax refund or credit. Currently, a claim for
10a refund of or a credit against the individual income tax by
11a taxpayer is six months from the final disposition of any
12income tax matter between the taxpayer and the internal revenue
13service. The bill makes other changes relating to agreements
14entered into by the department and the internal revenue
15service for the transmission of federal income tax reports on
16individuals who have been involved in an income tax matter with
17the internal revenue service.
18The division applies to federal adjustments and federal
19partnership adjustments that have a final determination date
20after the effective date of the division.
21SETOFF PROCEDURES — RULEMAKING — EFFECTIVE DATE. The
22bill modifies the effective date of either Senate File 2328 or
23House File 2565 (setoff procedures), by providing that either
24Senate File 2328 or House File 2565, if enacted, take effect
25on the later of January 1, 2021, or the effective date of the
26rules adopted by the department of revenue implementing the
27bill other than the adopting of transitional rules by the
28department. This provision takes effect upon enactment, and
29applies retroactively to the effective date of either Act.
30PRO RATA SHARE OF ENTITY-LEVEL INCOME TAX PAID BY
31SHAREHOLDERS OR BENEFICIARIES. The bill provides that a
32resident partner of an entity taxed as a partnership, a
33resident shareholder of an S corporation, or a resident
34beneficiary of an estate or trust shall be deemed to have paid
35the resident partner’s, resident shareholder’s, or resident
-92-1beneficiary’s pro rata share of entity-level income tax paid
2by the partnership, S corporation, estate, or trust to another
3state or foreign country on income that is also subject to
4Iowa personal income tax, but only if the entity provides the
5resident partner, resident shareholder, or resident beneficiary
6a statement that documents the resident partner’s, resident
7shareholder’s, or resident beneficiary’s share of the income
8derived in the other state or foreign country, the income tax
9liability of the entity in that state or foreign country, and
10the income tax paid by the entity to that state or foreign
11country.
12The bill also provides that a resident shareholder of a
13regulated investment company shall be deemed to have paid the
14shareholder’s pro rata share of entity-level income tax paid by
15the regulated investment company to another state or foreign
16country and treated as paid by its shareholders pursuant to
17section 853 of the Internal Revenue Code, but only if the
18regulated investment company provides the resident shareholder
19a statement that documents the resident shareholder’s share of
20the income derived in the other state or foreign country, the
21income tax liability of the regulated investment company in
22that state or foreign country, and the income tax paid by the
23regulated investment company to that state or foreign country.
24This division takes effect upon enactment and applies
25retroactively to January 1, 2020, for tax years beginning on
26or after that date.
27BONUS DEPRECIATION. The bill provides that for purposes
28of Iowa taxes, the state will couple with any future changes
29to the increased expensing allowance under section 179 of the
30Internal Revenue Code (bonus depreciation). The change to
31bonus depreciation applies retroactively to January 1, 2020,
32for tax years beginning on or after that date.
33MARRIED TAXPAYERS — JOINT LIABILITY. The bill provides
34that relief from Iowa joint tax liability is available under
35all circumstances that are available under federal law. The
-93-1bill also provides a mechanism for the department of revenue to
2allow the spouse not requesting relief from joint tax liability
3to intervene in the department’s process for deciding whether
4to grant relief. This provision takes effect upon enactment.
5SALES TAX PAID BY THIRD-PARTY DEVELOPERS. The bill allows
6a pass-through entity awarded a refundable tax credit under
7Code section 15.331C (corporate tax credit for sales and use
8tax paid) to pass through the refundable tax credit to the
9owners of the pass-through entity to claim the owner’s share
10of the refundable tax credit. The provision takes effect upon
11enactment, and applies retroactively to January 1, 2020, for
12tax years beginning on or after that date.
13IOWA EDUCATIONAL SAVINGS PLAN TRUST (529 PLANS). The bill
14specifies that funds in a 529 plan may be used to pay expenses
15for the participation in a certified apprenticeship program.
16The bill also allows up to $10,000 of 529 plan funds to be used
17to pay the student loans of the beneficiary of the 529 plan or a
18sibling of the beneficiary, respectively.
19IOWA EDUCATIONAL SAVINGS ACCOUNT — EXTENSION. A
20participant who makes a contribution to the Iowa educational
21savings plan trust pursuant to Code section 12D.3, subsection
221, on or after January 1, 2020, and on or before July 31, 2020,
23may elect to be deemed to have made the contribution on the
24last day of calendar year 2019. This provision takes effect
25upon enactment.
26IOWA FIRST-TIME HOMEBUYER ACCOUNT — EXTENSION. An
27individual who opened a first-time homebuyer account during
28calendar year 2019 and who wishes to participate in the
29Iowa first-time homebuyer savings account program shall
30designate the account as a first-time homebuyer account and the
31beneficiary of such an account on or before July 31, 2020, on
32forms provided by the department of revenue. This provision
33takes effect upon enactment.
34QUALIFYING PERSONAL PROTECTIVE EQUIPMENT (PPE) — DONATION.
35The bill exempts from the use tax qualifying protective
-94-1personal equipment and materials assembled and donated by a
2business during the period beginning with a state of disaster
3emergency proclamation by the governor under Code section 29C.6
4and ending 180 days after the expiration of such proclamation.
5The division takes effect upon enactment and permits refunds of
6taxes, interest, or penalties that arise from claims resulting
7from the enactment of the division for donations occurring
8prior to the effective date of the division. The division
9specifies refund claims shall not be allowed unless claims
10are filed prior to October 1, 2020. The division applies
11retroactively to January 1, 2020, for qualifying personal
12protective equipment and materials assembled and donated on or
13after that date.
14SHORT-TERM RENTAL PROPERTIES. The bill prohibits a county
15or city from adopting or enforcing an ordinance that prohibits
16short-term rental properties within the county or city. The
17bill requires a county or city to consider short-term rental
18properties as a residential land use for zoning purposes.
19The bill authorizes a county or city to enact or enforce an
20ordinance that regulates, prohibits, or otherwise limits
21short-term rental properties if such enforcement is performed
22in the same manner as enforcement applicable to similar
23properties and if such enforcement meets a specified primary
24purpose. The bill also prohibits a county or city from
25adopting or enforcing any regulation, restriction, or other
26ordinance related to distance separation requirements for
27single-family homes and duplexes.
28FUTURE TAX CHANGES. The bill amends 2018 Iowa Acts,
29chapter 1161, section 133 (trigger), by striking the two
30conditions necessary for the trigger to occur, and specifies
31the provisions in 2018 Iowa Acts, chapter 1161, sections 99-132
32simply go into effect January 1, 2023.
33BUSINESS INTEREST EXPENSE DEDUCTION. The federal Tax Cuts
34and Jobs Act (TCJA) created a new limitation on the deduction
35of business interest expense for tax years beginning on or
-95-1after January 1, 2018. Currently, the state couples with
2federal law limiting the deduction of business interest expense
3for tax years beginning on or after January 1, 2019.
4The bill decouples, for Iowa individual and corporate income
5tax purposes, from the federal limitation on deduction of
6business interest expenses for tax years beginning on or after
7January 1, 2019.
8The decoupling from the federal limitation on deduction
9of business interest expense does not apply during any tax
10year in which the additional first-year depreciation allowance
11authorized in section 168(k) of the Internal Revenue Code
12(bonus depreciation) applies in computing net income for state
13tax purposes.
14For any tax year in which a taxpayer is not permitted to
15deduct any amount of interest expense paid or accrued in a
16previous taxable year due to the allowance of the additional
17first-year depreciation, the bill prohibits the deduction of
18any amount of interest expense paid or accrued in a previous
19taxable year in the current taxable year by reason of the
20carryforward of disallowed business interest provisions of
21section 163(j)(2) of the Internal Revenue Code, if either of
22the following apply: the interest expense was originally paid
23or accrued during a tax year in which there was a decoupling
24from the federal limitation on business expense, or the
25interest expense was originally paid or accrued during a tax
26year in which the taxpayer was not required to file an Iowa
27return.
28GLOBAL INTANGIBLE LOW-TAXED INCOME (GILTI). Federal
29law includes in a taxpayer’s gross income global intangible
30low-taxed income (GILTI) as defined in section 951A of the
31Internal Revenue Code, subject to a deduction equal to 50
32percent of the corporation’s GILTI under section 250(a)(1)(B)
33of the Internal Revenue Code. The bill enacts new Code section
34422.35(27) that allows a corporate taxpayer to deduct GILTI
35under section 951A of the Internal Revenue Code.
-96- 1RESCISSION OF RULES. The division rescinds rules relating
2to GILTI under section 951A of the Internal Revenue Code.
3The division takes effect upon enactment, and applies
4retroactively to January 1, 2019, for tax years beginning on
5or after that date.
6REINVESTMENT ACT. Code chapter 15J, the “Iowa Reinvestment
7Act”, authorizes municipalities (a city or a county) to
8establish reinvestment districts and receive remittances of
9specified amounts of state sales tax and state hotel and
10motel tax revenues collected in those districts for use in
11undertaking projects in the district. Eligible municipalities
12must seek approval from the economic development authority
13board to establish a reinvestment district. Code chapter
1415J currently prohibits the board from approving a proposed
15district plan on or after July 1, 2018, and imposes a $100
16million aggregate limit of state sales tax revenues and state
17hotel and motel tax revenues that may be approved by the board
18for remittance to all municipalities.
19The bill establishes an additional period of time for the
20board to approve reinvestment districts, beginning July 1,
212020, and ending July 1, 2025, and establishes an additional
22$100 million aggregate limit of state sales tax revenues and
23state hotel and motel tax revenues that may be approved by the
24board for remittance to all municipalities for those districts
25approved on or after July 1, 2020, but before July 1, 2025.
26The bill also expands the definition of “municipality”
27to include a joint board or other legal entity established
28or designated in an agreement between two or more contiguous
29cities or counties pursuant to Code chapter 28E. The bill also
30makes corresponding changes to other provisions of Code chapter
3115J to reflect such municipalities’ authority under the Iowa
32reinvestment Act.
33As part of the criteria for establishing a district, current
34law requires the district to consist of contiguous parcels not
35to exceed 25 acres in total. For districts approved under the
-97-1bill on or after July 1, 2020, the area comprising the district
2may consist of contiguous parcels not to exceed 75 acres in
3total.
4Part of the approval criteria for a district includes the
5requirement that the amount of proposed capital investment
6within the proposed district related to retail businesses does
7not exceed 50 percent of the total capital investment for all
8proposed projects in the proposed district plan, excluding “new
9lessors”, as defined in Code section 15J.2, from the definition
10of “retail business”. The bill adds businesses engaged in an
11activity subject to the sales tax under Code section 423.2(3)
12to that exclusion from the definition of “retail business”.
13Code section 15J.7 prohibits revenues received by a
14municipality from being used for a project that includes
15relocation of a commercial or industrial enterprise not
16presently located within the municipality. “Relocation”
17is defined in Code section 15J.7 to mean the closure or
18substantial reduction of an enterprise’s existing operations
19in one area of the state and the initiation of substantially
20the same operation in the same county or a contiguous county in
21the state. The bill provides, however, that if the initiation
22of operations includes an expanded scope or nature of the
23enterprise’s existing operations, the new operation shall not
24be considered to be “substantially the same operation”.
25Code section 15J.8 provides that as of the date 20 years
26after the district’s commencement date, the department of
27revenue shall cease to deposit state sales tax revenues and
28state hotel and motel tax revenues into the district’s account
29within the fund, unless the municipality dissolves the district
30prior to that date. The bill provides that, upon request of
31the municipality prior to the dissolution of the district,
32and following a determination by the economic development
33authority board that the amounts of new state sales tax revenue
34and new state hotel and motel tax revenue deposited in the
35municipality’s reinvestment project fund are substantially
-98-1lower than the amounts established by the board when the
2district was approved, the board may extend the district’s
320-year period of time for depositing and receiving revenues by
4up to five additional years if such an extension is in the best
5interest of the public.
6The bill relates to certain tax credits awarded by the
7economic development authority for equity investments in a
8qualifying business or innovation fund. The bill directs
9the economic development authority to determine on or before
10June 30 of each year the amount of tax credits that will be
11issued for the following fiscal year for equity investments in
12qualifying businesses pursuant to Code section 15E.43 and in
13innovation funds pursuant to Code section 15E.52. The bill
14caps the aggregate amount of these tax credits at $10 million.
15The bill changes the maximum amount of tax credits that may
16be issued in a year to a natural person and the person’s spouse
17or dependant, or for equity investments in any one qualifying
18business, from a calendar year basis to a fiscal year basis.
19The division takes effect upon enactment.
20CAPITAL GAINS. The bill provides a capital gains deduction
21for tax years beginning on or after January 1, 2020, in the
22amount of 15 percent of the taxpayer’s net capital gain as
23defined in section 1222 of the Internal Revenue Code.
24LOCAL ASSESSORS. This division of the bill relates to the
25appointment and duties of local assessors.
26Code section 441.6 establishes the process for filling the
27office of county or city assessor. When a vacancy occurs, the
28examining board requests the director of revenue to forward
29a register containing the names of all individuals eligible
30for appointment as assessor. The examining board then makes
31a written report of the examination and submits the report
32together with the names of those individuals certified by the
33director of revenue to the conference board. Upon receipt
34of the report of the examining board, the conference board
35appoints an assessor from the register of eligible candidates
-99-1and gives written notice to the director of revenue of the
2appointment.
3Under the bill, the appointee selected by the conference
4board shall not assume the office of city or county assessor
5until the appointment is confirmed by the director of revenue.
6If the director of revenue rejects the appointment, the
7examining board must conduct a new examination and submit a new
8report to the conference board.
9The bill also provides that an assessor or deputy assessor
10shall not personally assess a property if the person or a
11member of the person’s immediate family owns the property,
12has a financial interest in the property, or has a financial
13interest in the entity that owns the property.
14Code section 441.41 authorizes the conference board to
15employ special counsel to assist the city legal department or
16the county attorney in litigation dealing with assessments.
17The bill provides that such authority is subject to review
18and prior approval by the city legal department or the county
19attorney, as applicable.
20RURAL IMPROVEMENT ZONES. Under Code chapter 357H, the board
21of supervisors of a county with less than 20,000 residents
22and with a private lake development may designate an area
23surrounding the lake, if it is an unincorporated area of the
24county, a rural improvement zone upon receipt of a qualifying
25petition and upon the board’s determination that the area is in
26need of improvements. The bill modifies that provision in Code
27section 357H.1 to provide that the board of supervisors of such
28a county with a private real estate development adjacent to or
29abutting in part a lake may designate an area surrounding the
30lake a rural improvement zone upon the receipt of the petition
31and a determination that the area is in need of improvements.
32This division of the bill takes effect upon enactment
33and applies to rural improvement zones in existence on or
34established on or after the effective date of the division of
35the bill.
-100- 1SCHOOL TUITION ORGANIZATION TAX CREDITS. Beginning January
21, 2022, the bill allows the total approved school tuition
3tax credits, currently set at $15 million for calendar year
42020, to increase each calendar year, if the amount of awarded
5tax credits from the preceding calendar year are equal to or
6greater than 90 percent of the total approved school tuition
7tax credits for the current calendar year, until reaching a
8maximum of amount of $20 million per calendar year.
9Currently, the maximum amount of school tuition organization
10tax credits that may be approved for corporations in the
11aggregate shall not exceed 25 percent of the total amount of
12school tuition organization tax credits allowable in a calendar
13year in Code section 422.11S(8). The bill permits corporations
14in the aggregate to be awarded more than the 25 percent of the
15allowable school tuition organization tax credits in a calendar
16year by striking the 25 percent limitation.
17PAYCHECK PROTECTION PROGRAM. The bill excludes from the
18calculation of Iowa income tax for certain fiscal filers the
19federal paycheck protection program loan proceeds that were
20forgiven and excluded from federal gross income. This division
21takes effect upon enactment.
22INCOME TAX EXCLUSION — EMERGENCY STUDENT GRANT MONEY. The
23bill excludes from Iowa net income federal Coronavirus Aid,
24Relief, and Economic Security Act funds received by a student
25through a higher education institution to support the student’s
26financial needs as a result of the COVID-19 pandemic pursuant
27for any tax year ending after March 27, 2020. This provision
28takes effect upon enactment, and applies retroactively to March
2927, 2020, for tax years ending on or after that date.
30IOWA INCOME EXCLUSION — STIMULUS CHECKS. In determining
31the amount of deduction for federal income tax under Code
32section 422.9 for tax years beginning in the 2020 calendar
33year, the amount of the deduction for the tax year shall not
34be adjusted by the amount received during the tax year of the
35income tax rebate provided pursuant to the federal Recovery
-101-1Rebates and Coronavirus Aid, Relief, and Economic Security Act,
2and the amount of such income tax rebate shall not be subject
3to taxation.
4HUNTING DEER AND TURKEY ON A FARM UNIT. Current law allows
5an owner or tenant of a farm unit or a member of that person’s
6family who receives a wild turkey license for use on that
7person’s farm unit to use the license during any bow or firearm
8turkey hunting season. An owner or tenant of a farm unit or
9a member of that person’s family who receives a deer hunting
10license for use on that person’s farm unit may use the license
11during any bow or firearm deer hunting season. Current law
12requires the payment of a $1 fee that shall be appropriated
13to the help us stop hunger (HUSH) program for each free deer
14hunting license issued for use on a farm unit.
15The bill allows an owner or tenant of a farm unit or a member
16of that person’s family to use on the farm unit a wild turkey
17hunting license during any established turkey hunting season
18and a deer hunting license during any established deer hunting
19season using the method of take authorized by rule for the
20respective season being hunted. A tag filled during one of the
21seasons will not be valid in subsequent seasons. An owner,
22tenant, or family member who receives a free deer hunting
23license for use on a farm unit shall pay a fee of $1.25 for each
24license issued that shall be appropriated to the HUSH program.
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