House File 715 - IntroducedA Bill ForAn Act 1relating to state and local finance and the
2administration of the tax and related laws by the department
3of revenue, and including effective date, applicability, and
4retroactive applicability provisions.
5BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
1DIVISION I
2IOWA EDUCATIONAL SAVINGS PLAN AND FIRST-TIME HOMEBUYERS DUE
3DATES
4   Section 1.  Section 422.7, subsection 22, paragraph a, Code
52023, is amended to read as follows:
   6a.  Subtract the maximum contribution that may be deducted
7for Iowa income tax purposes as a participant in the Iowa
8educational savings plan trust pursuant to section 12D.3,
9subsection 1. For purposes of this paragraph, a participant
10who makes a contribution on or before the date prescribed in
11section 422.21 for making and filing an individual income tax
12return, excluding extensions, or the date for making and filing
13an individual income tax return determined by the director
14pursuant to an order issued under section 421.17, subsection
1530
, may elect to be deemed to have made the contribution on the
16last day of the preceding calendar year. The director, after
17consultation with the treasurer of state, shall prescribe by
18rule the manner and method by which a participant may make an
19election authorized by the preceding sentence.
20   Sec. 2.  Section 541B.3, subsection 1, paragraph a, Code
212023, is amended to read as follows:
   22a.  Beginning January 1, 2018, an An individual may open an
23interest-bearing savings account with a financial institution
24and designate the entire account as a first-time homebuyer
25savings account for the purpose of paying or reimbursing a
26designated beneficiary’s eligible home costs in connection with
27a qualified home purchase. The first-time homebuyer savings
28account designation shall be made no later than April 30 of the
29year following the tax year during which the account is opened,

30 on forms provided by the department and shall be submitted on
31or before the date prescribed in section 422.21 for making and
32filing an individual income tax return, excluding extensions,
33or the date for making and filing an individual income tax
34return determined by the director pursuant to an order issued
35under section 421.17, subsection 30, applicable to the tax year
-1-1in which the account is opened
.
2   Sec. 3.  Section 541B.3, subsection 2, paragraph a, Code
32023, is amended to read as follows:
   4a.  The account holder shall designate one individual as
5beneficiary of the first-time homebuyer savings account. The
6designation shall be made on forms provided by the department
7and no later than April 30 of the year following the tax year
8during which the account is opened
 and shall be submitted on
9or before the date prescribed in section 422.21 for making and
10filing an individual income tax return, excluding extensions,
11or the date for making and filing an individual income tax
12return determined by the director pursuant to an order issued
13under section 421.17, subsection 30, applicable to the tax
14year in which the designation is made
. The account holder may
15change the designated beneficiary of the first-time homebuyer
16savings account at any time.
17DIVISION II
18BONUS DEPRECIATION AND INCREASED EXPENSING — APPLICABILITY
19   Sec. 4.  2018 Iowa Acts, chapter 1161, section 134, is
20amended to read as follows:
   21SEC. 134.  APPLICABILITY.
   221.  This division of this Act applies to tax years beginning
23on or after the effective date of this division of this Act.
   242.  The repeal of section 422.7, subsections 39, 39B, 43,
25and 53, and section 422.35, subsections 19, 19B, 20, and
2624, relating to bonus depreciation under section 168 of the
27Internal Revenue Code or increased expensing under section 179
28of the Internal Revenue Code, applies to property placed in
29service on or after the effective date of this division of this
30Act.
31   Sec. 5.  EFFECTIVE DATE.  This division of this Act, being
32deemed of immediate importance, takes effect upon enactment.
33   Sec. 6.  RETROACTIVE APPLICABILITY.  This division of this
34Act applies retroactively to January 1, 2023, for tax years
35beginning on or after that date.
-2-
1DIVISION III
2TAX FILING STATUS MODIFICATIONS
3   Sec. 7.  Section 422.5, Code 2023, is amended by adding the
4following new subsection:
5   NEW SUBSECTION.  12.  For tax years beginning on or after
6January 1, 2023, a taxpayer shall use the same filing status
7for Iowa income tax purposes as the taxpayer used for federal
8income tax purposes.
9   Sec. 8.  Section 422.7, subsection 4, Code 2023, is amended
10to read as follows:
   114.  Individual taxpayers and married taxpayers who file a
12joint federal income tax return and who elect to file
a joint
13return or separate returns for Iowa income tax purposes may
14avail themselves of the disability income exclusion and shall
15compute the amount of the disability income exclusion subject
16to the limitations for joint federal income tax return filers
17provided by section 105(d) of the Internal Revenue Code. The
18disability income exclusion provided in section 105(d) of the
19Internal Revenue Code, as amended up to and including December
2031, 1982, continues to apply for state income tax purposes for
21tax years beginning on or after January 1, 1984.
22   Sec. 9.  Section 422.7, subsection 5, paragraph a, Code 2023,
23is amended to read as follows:
   24a.  For tax years beginning in the 2023 calendar year,
25subtract the amount of federal income taxes paid during the tax
26year to the extent payment is for a tax year beginning prior
27to January 1, 2023, and add any federal income tax refunds
28received during the tax year to the extent the federal income
29tax was deducted for a tax year beginning prior to January 1,
302023. Where married persons who have filed a joint federal
31income tax return file separately for state tax purposes, such
32total shall be divided between them according to the portion
33of the total paid by each.
Federal income taxes paid for a tax
34year in which an Iowa return was not required to be filed shall
35not be subtracted.
-3-
1   Sec. 10.  Section 422.12B, subsection 2, Code 2023, is
2amended to read as follows:
   32.  Married taxpayers electing to file separate returns may
4avail themselves of the earned income credit by allocating the
5earned income credit to each spouse in the proportion that each
6spouse’s respective earned income bears to the total combined
7earned income.
Taxpayers affected by the allocation provisions
8of section 422.8 shall be permitted a deduction for the credit
9only in the amount fairly and equitably allocable to Iowa under
10rules prescribed by the director.
11   Sec. 11.  Section 422.12C, subsection 4, Code 2023, is
12amended to read as follows:
   134.  Married taxpayers who have filed joint federal returns
14electing to file separate returns must determine the child and
15dependent care credit under subsection 1 or the early childhood
16development tax credit under subsection 2 based upon their
17combined net income and allocate the total credit amount to
18each spouse in the proportion that each spouse’s respective net
19income bears to the total combined net income.
Nonresidents
20or part-year residents of Iowa must determine their Iowa child
21and dependent care credit in the ratio of their Iowa source
22net income to their all source net income. Nonresidents or
23part-year residents who are married and elect to file separate
24returns must allocate the Iowa child and dependent care credit
25between the spouses in the ratio of each spouse’s Iowa source
26net income to the combined Iowa source net income of the
27taxpayers.

28   Sec. 12.  RETROACTIVE APPLICABILITY.  This division of this
29Act applies retroactively to January 1, 2023, for tax years
30beginning on or after that date.
31DIVISION IV
32Withholding
33   Sec. 13.  Section 99B.8, Code 2023, is amended to read as
34follows:
   3599B.8  Tax on prizes.
-4-
   1All prizes awarded pursuant to a gambling activity under
2this chapter are Iowa earned income and are subject to state
3and federal income tax laws. A person conducting a game of
4skill, game of chance, bingo, or a raffle shall deduct state
5income taxes, pursuant to section 422.16, subsection 1 2, from
6a cash prize awarded to an individual. An amount deducted from
7the prize for payment of a state tax shall be remitted to the
8department of revenue on behalf of the prize winner.
9   Sec. 14.  Section 99D.16, Code 2023, is amended to read as
10follows:
   1199D.16  Withholding tax on winnings.
   12All winnings provided in section 99D.11 are Iowa earned
13income and are subject to state and federal income tax laws.
14An amount deducted from winnings for payment of the state tax,
15pursuant to section 422.16, subsection 1 2, shall be remitted
16to the department of revenue on behalf of the individual who
17won the wager.
18   Sec. 15.  Section 99F.18, Code 2023, is amended to read as
19follows:
   2099F.18  Tax on winnings.
   21All winnings derived from slot machines operated pursuant to
22this chapter are Iowa earned income and are subject to state
23and federal income tax laws. An amount deducted from winnings
24for payment of the state tax, pursuant to section 422.16,
25subsection 1 2, shall be remitted to the department of revenue
26on behalf of the winner.
27   Sec. 16.  Section 99G.31, subsection 3, paragraph i, Code
282023, is amended to read as follows:
   29i.  The proceeds of any lottery prize shall be subject to
30state and federal income tax laws. An amount deducted from the
31prize for payment of a state tax, pursuant to section 422.16,
32subsection 1 2, shall be transferred by the authority to the
33department of revenue on behalf of the prize winner.
34   Sec. 17.  Section 422.16, Code 2023, is amended by striking
35the section and inserting in lieu thereof the following:
-5-   1422.16  Withholding of income tax at source — penalties —
2interest — declaration of estimated tax — bond.
   31.  As used in this section, unless the context otherwise
4requires, “withholding agent” means any individual, fiduciary,
5estate, trust, corporation, partnership or association in
6whatever capacity acting and including all officers and
7employees of the state of Iowa, or any municipal corporation
8of the state of Iowa and of any school district or school
9board of the state, or of any political subdivision of the
10state of Iowa, or any tax-supported unit of government that is
11obligated to pay or has control of paying or does pay to any
12resident or nonresident of the state of Iowa or the resident’s
13or nonresident’s agent any wages that are subject to the Iowa
14income tax in the hands of such resident or nonresident, or
15any of the above-designated entities making payment or having
16control of making such payment of any taxable Iowa income
17to any nonresident. The term “withholding agent” shall also
18include an officer or employee of a corporation or association,
19or a member or employee of a partnership, who as such officer,
20employee, or member has the responsibility to perform an act
21under this section and who subsequently knowingly violates the
22provisions of this section. The term “withholding agent” shall
23also include every employer as defined in this subchapter and
24further defined in the Internal Revenue Code.
   252.  a.  (1)  Every withholding agent paying wages to an
26Iowa resident, or nonresident working in Iowa, shall deduct
27and withhold from the wages an amount which will approximate
28the annual tax liability of the person on a calendar year
29basis, calculated on the basis of tables to be prepared by the
30department and schedules or percentage rates, based on the
31wages, to be prescribed by the department.
   32(2)  Every employee or other person shall declare to the
33withholding agent the amount of the employee’s or other
34person’s withholding allowance to be used in applying the
35tables and schedules or percentage rates. However, the amount
-6-1of withholding allowance declared shall not exceed the amount
2to which the employee or other person is entitled except
3as allowed under sections 3402(m)(1) and 3402(m)(3) of the
4Internal Revenue Code and as allowed by rules prescribed by the
5director. The claiming of an amount of withholding allowance
6in excess of entitlement is a serious misdemeanor.
   7b.  (1)  In the case of a nonresident having income subject
8to taxation by Iowa, but not subject to withholding of such
9tax under this subsection or subject to the provisions of
10section 422.16B, a withholding agent shall withhold from such
11income at the same rate as provided in this subsection. A
12withholding agent and nonresident shall be subject to the
13provisions of this section, according to the context, except
14that a withholding agent may be absolved of the requirement to
15withhold taxes from the income of a nonresident upon receipt of
16a certificate from the department issued in accordance with the
17provisions of section 422.17.
   18(2)  In the case of a nonresident having income from a trade
19or business carried on by the nonresident in whole or in part
20within the state of Iowa, the nonresident shall be considered
21to be subject to the provisions of this paragraph unless
22such trade or business is of such nature that the business
23entity itself, as a withholding agent, is required to and does
24withhold Iowa income tax from the distributions made to such
25nonresident from such trade or business.
   26c.  For the purposes of this subsection, at a rate specified
27by the department, state income tax shall be withheld from
28pensions, annuities, other similar periodic payments, and other
29income payments under sections 3402(o), 3402(p), 3402(s),
303405(a), 3405(b), and 3405(c) of the Internal Revenue Code made
31to Iowa residents if the payments are subject to Iowa tax.
   32d.  For the purposes of this subsection, state income tax
33shall be withheld on winnings in excess of six hundred dollars
34derived from gambling activities authorized under chapter
3599B or 99G. State income tax shall be withheld on winnings
-7-1in excess of one thousand dollars from gambling activities
2authorized under chapter 99D. State income tax shall be
3withheld on winnings in excess of one thousand two hundred
4dollars derived from slot machines authorized under chapter
599F.
   6e.  For the purposes of this subsection, state income tax
7shall be withheld at the highest rate described in section
8422.5A from supplemental wages of an employee in those
9circumstances in which the employer treats the supplemental
10wages as wholly separate from regular wages for purposes
11of withholding and federal income tax is withheld from the
12supplemental wages under section 3402(g) of the Internal
13Revenue Code.
   143.  a.  A withholding agent is not required to withhold
15state income tax from payments subject to taxation made
16to a nonresident for commodity credit certificates, grain,
17livestock, domestic fowl, or other agricultural commodities
18or products sold to a withholding agent by a nonresident or
19the nonresident’s representative, if the withholding agent
20provides on forms prescribed by the department information
21relating to the sales required by the department to determine
22the state income tax liabilities of a nonresident. However,
23a withholding agent may elect to make estimated tax payments
24on behalf of a nonresident on the basis of the net income of
25the nonresident from the agricultural commodities or products,
26if the estimated tax payments are made on or before the last
27day of the first month after the end of the tax years of the
28nonresident.
   29b.  Nonresidents engaged in any facet of feature film,
30television, or educational production using the film or
31videotape disciplines in the state are not subject to Iowa
32withholding if the employer has applied to the department for
33exemption from the withholding requirement and the department
34has determined that any nonresident receiving wages would be
35entitled to a credit against Iowa income taxes paid.
-8-
   1c.  Individuals described in section 29C.24 are not subject
2to withholding, as provided in that section.
   34.  a.  A withholding agent required to deduct and withhold
4tax under subsection 2 shall file a return on or before the
5last day of the month following the quarterly period on forms
6prescribed by the director and remit to the department the
7amount of tax due at the following frequencies:
   8(1)  A withholding agent shall remit income tax withheld on
9a quarterly basis if the withholding agent withholds less than
10six thousand dollars annually and no more than five hundred
11dollars in any one month. Payment shall be due on the same day
12as the quarterly return.
   13(2)  A withholding agent shall remit income tax withheld on
14a monthly basis if the withholding agent withholds more than
15five hundred dollars in any one month and not more than five
16thousand dollars in a semimonthly period. Payment shall be
17made on or before the fifteenth day of the month following
18the month of withholding, except that a deposit for the third
19month in a calendar quarter shall be due on the same day as the
20quarterly return.
   21(3)  A withholding agent shall remit income tax withheld on
22a semimonthly basis if the withholding agent withholds more
23than five thousand dollars in a semimonthly period. The first
24semimonthly deposit for the period from the first of the month
25through the fifteenth of the month is due on the twenty-fifth
26day of the month in which the withholding occurs. The second
27monthly deposit for the period from the sixteenth of the month
28through the end of the month is due on the tenth day of the
29month following the month in which the withholding occurs.
   30(4)  A withholding agent may elect to remit on an annual
31basis if the withholding agent employs not more than two
32employees and expects to employ the employees for the full
33calendar year. The electing withholding agent shall remit the
34full amount of income taxes required to be withheld from the
35wages of the employees for the full calendar year with the
-9-1quarterly return for the first calendar quarter. The amount
2to be paid shall be computed as if the employees were employed
3for the full calendar year for the same wages and with the
4same pay periods as prevailed during the first quarter of the
5year with respect to such employees. The electing withholding
6agent shall only remit the lump sum payment with the written
7consent of all employees involved. The withholding agent shall
8be entitled to recover from the employee any part of the lump
9sum payment that represents an advance to the employee. If
10a withholding agent pays a lump sum with the first quarterly
11return, the withholding agent shall be excused from filing
12further quarterly returns for the calendar year involved unless
13the withholding agent hires other or additional employees.
   14b.  Every withholding agent on or before February 15
15following the close of the calendar year in which the
16withholding occurs shall send to the department copies of
17income statements required by subsection 8. At the discretion
18of the director, the withholding agent shall not be required to
19send income statements if the information is available from the
20internal revenue service or other state or federal agencies.
   21c.  If the director has reason to believe that the collection
22of the tax provided for in subsection 2 is in jeopardy, the
23director may require the withholding agent to file a return
24as required in paragraph “a”, and pay the tax at any time, in
25accordance with section 422.30. The director may authorize
26incorporated banks, trust companies, or other depositories
27authorized by law which are depositories or financial agents of
28the United States or of this state, to receive any tax imposed
29under this chapter, in the manner, at the times, and under the
30conditions the director prescribes. The director shall also
31prescribe the manner, times, and conditions under which the
32receipt of the tax by those depositories is to be treated as
33payment of the tax to the department.
   34d.  The director, in cooperation with the department of
35management, may periodically change the filing and remittance
-10-1thresholds by administrative rule if in the best interest of
2the state and the taxpayer.
   35.  Every withholding agent who fails to withhold or pay to
4the department any sums required by this chapter to be withheld
5and paid, shall be personally, individually, and corporately
6liable to the state of Iowa, and any sum withheld in accordance
7with the provisions of subsection 2, shall be deemed to be
8held in trust for the state of Iowa. Notwithstanding section
9489.304, this subsection applies to a member or manager of a
10limited liability company.
   116.  In the event a withholding agent fails to withhold and
12pay over to the department any amount required to be withheld
13under subsection 2, such amount may be assessed against
14such withholding agent in the same manner as prescribed for
15the assessment of income tax under the provisions of this
16subchapter and subchapter VI.
   177.  Whenever the director determines that any withholding
18agent has failed to withhold or pay over to the department sums
19required to be withheld under subsection 2, the unpaid amount
20shall be a lien as described in section 422.26, shall attach
21to the property of that withholding agent, and in all other
22respects the procedure with respect to such lien shall apply
23as set forth in section 422.26.
   248.  a.  Every withholding agent required to deduct and
25withhold tax under subsection 2 shall furnish to each employee,
26nonresident, or other person with respect to the income
27paid by the employer or withholding agent to each employee,
28nonresident, or other person during the calendar year, on or
29before January 31 of the succeeding year, or, in the case of
30an employee, if the employment of the employee is terminated
31before the close of the calendar year, within thirty days from
32the day on which the last payment of wages or other taxable
33income is made, if requested by the employee, but not later
34than January 31 of the following year, an income statement
35showing all of the following:
-11-
   1(1)  The name and address of the employer or withholding
2agent, and the taxpayer identification number of the employer
3or withholding agent.
   4(2)  The name of the employee, nonresident, or other person
5and the taxpayer identification number of that employee,
6nonresident, or other person, together with the last known
7address of the employee, nonresident, or other person to whom
8wages or other taxable income has been paid during the period.
   9(3)  The gross amount of wages or other taxable income paid
10to the employee, nonresident, or other person.
   11(4)  The total amount deducted and withheld as tax under the
12provisions of subsection 2.
   13(5)  The total amount of federal income tax withheld.
   14b.  An income statement required to be furnished by this
15subsection with respect to any wages or other taxable Iowa
16income or any additional information required to be displayed
17on the income statement shall be in such form or forms as the
18director may prescribe by rule.
   199.  A withholding agent shall be liable for the payment of
20the tax required to be deducted and withheld or the amount
21actually deducted, whichever is greater, under subsection
222. Any amount deducted and withheld as tax under subsection
232 during any calendar year upon the wages of any employee,
24nonresident, or other person shall be allowed as a credit to
25the employee, nonresident, or other person against the tax
26imposed by section 422.5 for the tax year in which it was
27withheld, irrespective of whether or not such tax has been, or
28will be, paid by the withholding agent to the department as
29provided by this chapter.
   3010.  a.  If the amount of income tax withheld by the
31withholding agent on behalf of an employee, nonresident, or
32other person after complying with this section is more than the
33income tax liability of said employee, nonresident, or other
34person as determined under the provisions of this subchapter,
35the overpayment of tax may first be credited against any income
-12-1tax or installment payment then due the state of Iowa by
2the employee, nonresident, or other person for the tax year,
3and any balance of one dollar or more shall be refunded to
4the employee, nonresident, or other person with interest in
5accordance with section 421.60, subsection 2, paragraph “e”.
   6b.  Amounts less than one dollar shall be refunded to the
7taxpayer, nonresident, or other person only upon written
8application, in accordance with section 422.73, and only if the
9application is filed within twelve months after the due date
10of the return.
   11c.  Refunds in the amount of one dollar or more provided
12for by this subsection shall be paid by the treasurer of
13state by warrants drawn by the director of the department of
14administrative services, or an authorized employee of the
15department of administrative services, and the taxpayer’s
16return of income shall constitute a claim for refund for this
17purpose, except in respect to amounts of less than one dollar.
18There is appropriated, out of any funds in the state treasury
19not otherwise appropriated, a sum sufficient to carry out the
20provisions of this subsection.
   2111.  a.  In addition to any other penalty provided by law,
22a withholding agent required to furnish or file an income
23statement required by this chapter is subject to a civil
24penalty of five hundred dollars for each occurrence of the
25following:
   26(1)  Willful failure to furnish an employee, nonresident, or
27other person with an income statement.
   28(2)  Willfully furnishing an employee, nonresident, or other
29person with a false or fraudulent income statement.
   30(3)  Willful failure to file an income statement with the
31department.
   32(4)  Willfully filing a false or fraudulent income statement
33with the department.
   34b.  A withholding agent is subject to the penalty as provided
35in section 421.27. Any penalty assessed under section 421.27
-13-1shall be in addition to the tax or additional tax due under
2this section. The taxpayer shall also pay interest on the tax
3or additional tax at the rate in effect under section 421.7,
4for each month counting each fraction of a month as an entire
5month, computed from the date the semimonthly, monthly, or
6quarterly deposit form was required to be filed. The penalty
7and interest become a part of the tax due from the withholding
8agent.
   9c.  If any withholding agent, being a domestic or foreign
10corporation, required under the provisions of this section
11to withhold on wages or other taxable Iowa income subject to
12this chapter, fails to withhold the amounts required to be
13withheld, make the required returns or remit to the department
14the amounts withheld, the director may, having exhausted
15all other means of enforcement of the provisions of this
16chapter, certify such fact or facts to the secretary of state,
17who shall thereupon cancel the articles of incorporation or
18foreign registration statement, as the case may be, of such
19corporation, and the rights of such corporation to carry on
20business in the state of Iowa shall cease. The secretary of
21state shall immediately notify by registered mail such domestic
22or foreign corporation of the action taken by the secretary of
23state. The provisions of section 422.40, subsection 3, shall
24be applicable.
   25d.  The department shall, upon request of any fiduciary,
26furnish said fiduciary with a certificate of acquittance
27showing that no liability as a withholding agent exists with
28respect to the estate or trust for which said fiduciary acts,
29provided the department has determined that there is no such
30liability.
   3112.  a.  (1)  Taxpayers filing a return shall make estimated
32tax payments if their Iowa income tax liability can reasonably
33be expected to amount to two hundred dollars or more for the
34year.
   35(2)  In the cases of farmers and fishermen, the exceptions
-14-1provided in the Internal Revenue Code with respect to making
2estimated payments apply.
   3b.  (1)  The estimated tax shall be paid in quarterly
4installments. The first installment shall be paid on or before
5the last day of the fourth month of the taxpayer’s tax year for
6which the estimated payments apply. The other installments
7shall be paid on or before the last day of the sixth month of
8the tax year, the last day of the ninth month of the tax year,
9and the last day of the first month after the tax year. A
10taxpayer may elect to pay an installment prior to the due date.
   11(2)  If a taxpayer filing a return has reason to believe that
12the taxpayer’s Iowa income tax may increase or decrease, either
13for purposes of meeting the requirement to make estimated
14tax payments or for the purpose of increasing or decreasing
15estimated tax payments, the taxpayer shall increase or decrease
16any subsequent estimated tax payments accordingly.
   17(3)  Any tax still payable after applying credits for taxes
18paid through withholding, estimated tax, and composite return
19tax, is due and payable on or before the end of the fourth month
20following the close of the tax year.
   21c.  If a taxpayer is unable to make the taxpayer’s estimated
22tax payments, the payments may be made by a duly authorized
23agent, or by the guardian or other person charged with the care
24of the person or property of the taxpayer.
   25d.  (1)  Estimated tax paid is a credit against the amount
26of tax found payable on a final, completed return, as provided
27in subsection 10, relating to the credit for the tax withheld
28against the tax found payable on a return properly and
29correctly prepared under sections 422.5 through 422.25.
   30(2)  Any overpayment of one dollar or more shall be refunded
31to the taxpayer and the return constitutes a claim for refund
32for this purpose. Amounts less than one dollar shall not be
33refunded.
   34(3)  The method provided by section 6654 of the Internal
35Revenue Code for determining what is applicable to the addition
-15-1to tax for underpayment of the tax payable applies to persons
2required to make payments of estimated tax under this section
3except the amount to be added to the tax for underpayment of
4estimated tax is an amount determined at the rate in effect
5under section 421.7. This addition to tax specified for
6underpayment of the tax payable is not subject to waiver
7provisions relating to reasonable cause, except as provided in
8the Internal Revenue Code. Underpayment of estimated tax shall
9be determined in the same manner as provided under the Internal
10Revenue Code and the exceptions in the Internal Revenue Code
11also apply.
   12e.  In lieu of claiming a refund, the taxpayer may elect to
13have the overpayment shown on the taxpayer’s final, completed
14return for the taxable year credited to the taxpayer’s tax
15liability for the following taxable year.
   1613.  The director shall enter into an agreement with the
17secretary of the treasury of the United States with respect to
18withholding of income tax as provided by this chapter, pursuant
19to an Act of Congress, section 1207 of the Tax Reform Act of
201976, Pub.L.No.94-455, amending 5 U.S.C. §5517.
   2114.  a.  The director may, when necessary and advisable
22in order to secure the collection of the tax required to
23be deducted and withheld or the amount actually deducted,
24whichever is greater, require a withholding agent to file with
25the director a bond, issued by a surety company authorized to
26conduct business in this state and approved by the insurance
27commissioner as to solvency and responsibility, in an amount
28as the director may fix, to secure the payment of the tax and
29penalty due or which may become due. In lieu of the bond,
30securities shall be kept in the custody of the department and
31may be sold by the director at public or private sale, without
32notice to the depositor, if it becomes necessary to do so in
33order to recover any tax and penalty due. Upon a sale, any
34surplus above the amounts due under this section shall be
35returned to the withholding agent who deposited the securities.
-16-
   1b.  If the withholding agent fails to file the bond as
2requested by the director to secure collection of the tax, the
3withholding agent is subject to penalty for failure to file the
4bond. The penalty is equal to fifteen percent of the tax the
5withholding agent is required to withhold on an annual basis.
6However, the penalty shall not exceed five thousand dollars.
   715.  The director may allow additional time for filing
8documents required under this section with the department in
9the case of illness, disability, absence, or if good cause is
10shown.
11   Sec. 18.  Section 422.16B, subsection 7, Code 2023, is
12amended to read as follows:
   137.  All powers of the director and requirements of the
14director apply to returns filed under this section including
15but not limited to the provisions of this subchapter and
16subchapter VI. The provisions of section 422.16, subsection 2
17
 4, paragraph “c”, and subsections 6, 10 7, 11, and 14, applying
18to withholding agents, shall apply in the same manner to
19pass-through entities under this section.
20   Sec. 19.  Section 422.17, Code 2023, is amended to read as
21follows:
   22422.17  Certificate issued by department to make payments
23without withholding.
   24Any nonresident whose Iowa income is not subject to section
25422.16, subsection 1 2, paragraph “a”, “c”, “d”, or “e”, in
26whole or in part, and who elects to be governed by section
27422.16, subsection 12 2, paragraph “b”, to the extent that the
28nonresident pays the entire amount of tax properly estimated on
29or before the last day of the fourth month of the nonresident’s
30tax year, for the year, may for the year of the election
31and payment, be granted a certificate from the department
32authorizing each withholding agent, the income from whom the
33nonresident has considered in the payment of estimated tax and
34to the extent the income is included in the estimate, to make
35payments of income to the nonresident without withholding tax
-17-1from those payments. Withholding agents, if payments exceed
2the tax liability estimated by the nonresident as indicated
3upon the certificate, shall withhold tax in accordance with
4section 422.16, subsection 12 2, paragraph “b”.
5DIVISION V
6Future Corresponding Change
7   Sec. 20.  Section 422.16, subsection 2, paragraph e, Code
82023, as amended in this Act, is amended to read as follows:
   9e.  For the purposes of this subsection, state income tax
10shall be withheld at the highest rate described in section
11422.5A 422.5 from supplemental wages of an employee in those
12circumstances in which the employer treats the supplemental
13wages as wholly separate from regular wages for purposes
14of withholding and federal income tax is withheld from the
15supplemental wages under section 3402(g) of the Internal
16Revenue Code.
17   Sec. 21.  EFFECTIVE DATE.  This division of this Act takes
18effect January 1, 2026.
19DIVISION VI
20SETTLEMENT AUTHORITY — NOTICE OF ASSESSMENT — ESTIMATION OF
21TAX
22   Sec. 22.  Section 421.5, Code 2023, is amended by striking
23the section and inserting in lieu thereof the following:
   24421.5  Settling claims for taxes, penalties, and interest —
25abatement.
   261.  As used in this section:
   27a.  “Department” means the department of revenue.
   28b.  “Settle” or “settlement” includes any compromise or
29abatement of any taxes, penalties, or interest.
   302.  In addition to the authority granted to the department
31pursuant to section 17A.10 and notwithstanding section 7D.9,
32the department may, in its sole discretion, settle any taxes,
33penalties, or interest.
   343.  The department may enter into a settlement in the
35case of doubtful liability, doubtful collectability, severe
-18-1economic hardship, or to promote effective tax administration,
2regardless of whether the amount was the subject of a timely
3filed appeal or return.
   44.  Whenever a settlement is made, the department shall
5make a complete record of the case showing the tax assessed or
6claimed due, tax refund claimed, recommendations, reports, and
7audits of departmental personnel if any, the taxpayer’s grounds
8for dispute or contest together with all of the evidence, and
9the amounts, conditions, and settlement of the same.
   105.  A taxpayer shall not have the right to a settlement of
11any tax, penalty, or interest liability under this section.
12Any determination by the department regarding the settlement
13shall be discretionary and shall be final and conclusive except
14in the case of fraud, mutual mistake of material fact, or as
15otherwise stated in a written settlement agreement between the
16taxpayer and the department.
   176.  The department may require an application for relief
18under this section.
   197.  The department shall adopt rules to administer this
20section.
21   Sec. 23.  Section 421.10, Code 2023, is amended to read as
22follows:
   23421.10  Appeal period — applicability.
   24The appeal period for revision of assessment of tax,
25interest, and penalties set out under section 422.28, 423.37,
26437A.9, 437A.22, 437B.5, 437B.18, 452A.64, 453A.29, or 453A.46
27applies to appeals to notices from the department denying
28changes in filing methods, denying refund claims, and denying
29portions of refund claims for the tax covered by that section,
30and notices of any adverse department action directed to a
31specific taxpayer, other than licensing, which involves a
32calculation.
33   Sec. 24.  Section 421.60, subsection 2, paragraphs i and m,
34Code 2023, are amended by striking the paragraphs.
35   Sec. 25.  Section 421B.11, subsection 3, Code 2023, is
-19-1amended to read as follows:
   23.  Judicial review of the actions of the director may be
3sought in accordance with section 422.29 and chapter 17A and
4section 423.38
.
5   Sec. 26.  Section 422.25, subsection 1, paragraph c, Code
62023, is amended to read as follows:
   7c.  (1)  The period for examination and determination of the
8correct amount of tax is unlimited in the case of a false or
9fraudulent return made with the intent to evade tax or in the
10case of a failure to file a return.
   11(2)  If a person required to file a return with the
12department fails to file the return with the department, the
13department may, at any time, estimate the tax due based upon
14information or knowledge the department is able to obtain.
   15(3)  If the department estimates an amount of tax under
16subparagraph (2), the following shall apply:
   17(a)  The department shall issue a notice of assessment
18to the person for which the tax is estimated in accordance
19with section 421.60. The notice of assessment shall not be
20appealable pursuant to section 422.28 or 422.29, except to
21appeal the determination that the person is required to file a
22return.
   23(b)  The department shall include a statement with the
24notice that if the person files a return within three years
25from the date on the notice of assessment, the department
26may replace the assessment with the amount shown due on the
27person’s return, plus any applicable penalty and interest,
28and the department may examine that return and determine the
29tax, penalty, and interest within the period provided in this
30section.
   31(c)  If the person fails to file a return within three years
32from the date on the notice of assessment, the person may pay
33the tax, penalty, and interest and file a refund claim within
34the time period provided in section 422.73, or may request
35relief under section 421.5.
-20-
1   Sec. 27.  Section 422.75, Code 2023, is amended to read as
2follows:
   3422.75  Statistics — publication.
   4The department shall prepare and publish an annual report
5which shall include statistics reasonably available, with
6respect to the operation of this chapter, including amounts
7collected, classification of taxpayers, and such other facts
8as are deemed pertinent and valuable. The annual report shall
9also include the reports and information required pursuant to
10section 421.60, subsection 2, paragraphs “i” and paragraph “l”.
11   Sec. 28.  Section 423.33, subsection 1, paragraphs a and b,
12Code 2023, are amended to read as follows:
   13a.  If a purchaser fails to pay sales tax to the retailer
14required to collect the tax, then in addition to all of the
15rights, obligations, and remedies provided, a use tax is
16payable by the purchaser directly to the department, and
17sections 423.31, 423.37, 423.38, 423.39, 423.40, 423.41, and
18423.42 apply to the purchaser.
   19b.  For failure to pay the sales or use tax as described
20in paragraph “a”, the retailer and purchaser are jointly
21liable, unless the circumstances described in section 29C.24,
22subsection 3, paragraph “a”, subparagraph (2), section 421.60,
23subsection 2, paragraph “m”,
section 423.34A, or section
24423.45, subsection 4, paragraph “b” or “e”, or subsection 5,
25paragraph “c” or “e”, are applicable.
26   Sec. 29.  Section 423.33, subsection 3, Code 2023, is amended
27to read as follows:
   283.  Event sponsor’s liability for sales or use tax.  A person
29sponsoring a flea market or a craft, antique, coin, or stamp
30show or similar event shall obtain from every retailer selling
31tangible personal property, specified digital products, or
32taxable services at the event proof that the retailer possesses
33a valid sales or use tax permit or secure from the retailer
34a statement, taken in good faith, that tangible personal
35property, specified digital products, or services offered for
-21-1sale are not subject to sales tax. Failure to do so renders
2a sponsor of the event liable for payment of any sales tax,
3interest, and penalty due and owing from any retailer selling
4property or services at the event. Sections 423.31, 423.37,
5423.38, 423.39, 423.40, 423.41, and 423.42 apply to the
6sponsors. For purposes of this subsection, a “person sponsoring
7a flea market or a craft, antique, coin, or stamp show or similar
8event”
does not include a marketplace facilitator as defined in
9section 423.14A, subsection 1, an organization which sponsors
10an event determined to qualify as an event involving casual
11sales pursuant to section 423.3, subsection 39, or the state
12fair or a fair as defined in section 174.1.
13   Sec. 30.  Section 423.37, subsection 1, Code 2023, is amended
14to read as follows:
   151.  a.  As soon as practicable after a return is filed and
16in any event within three years after the return is filed,
17the department shall may examine it the return, assess and
18determine the tax due if the return is found to be incorrect,
19and give notice to the person liable for the tax of the
20assessment and determination as provided in subsection 2
21paragraph “b”. If a return, when filed, is incorrect or
22insufficient, the department shall determine the amount of
23tax due from information or knowledge the department is able
24to obtain. The determination may be made using any generally
25recognized valid and reliable sampling technique, whether or
26not the person being audited has complete records, and if
27mutually agreed upon by the department and the person being
28audited
. The period for the examination and determination of
29the correct amount of tax is unlimited in the case of a false or
30fraudulent return made with the intent to evade tax or in the
31case of a failure to file a return
.
   32b.  The department shall issue a notice of assessment in
33accordance with section 421.60. The notice shall be appealable
34pursuant to sections 422.28 and 422.29. If the person fails to
35appeal the notice of assessment, the person may pay the tax,
-22-1penalty, and interest and file a refund claim within the time
2period provided in section 422.73, or may request relief under
3section 421.5.
4   Sec. 31.  Section 423.37, subsection 2, Code 2023, is amended
5by striking the subsection and inserting in lieu thereof the
6following:
   72.  a.  If a return required by this subchapter is not filed,
8the period for examination and determination of the correct
9amount of tax is unlimited. The department may, at any time,
10estimate the tax due from the information or knowledge the
11department is able to obtain.
   12b.  If the department estimates an amount of tax under this
13subsection, the following shall apply:
   14(1)  The department shall issue a notice of assessment
15to the person for which the tax is estimated in accordance
16with section 421.60. The notice of assessment shall not be
17appealable pursuant to sections 422.28 and 422.29, except to
18appeal the determination that the person is required to file
19the return.
   20(2)  The department shall include a statement with the
21notice that if the person files a return within three years
22from the date on the notice of assessment, the department
23may replace the assessment with the amount shown due on the
24person’s return, plus any applicable penalty and interest,
25and the department may examine that return and determine the
26tax, penalty, and interest within the period provided in this
27section.
   28(3)  If the person fails to file a return within three years
29from the date on the notice of assessment, the person may pay
30the tax, penalty, and interest and file a refund claim within
31the time period provided in section 422.73, or may request
32relief under section 421.5.
33   Sec. 32.  Section 423.45, subsection 4, paragraph b, Code
342023, is amended to read as follows:
   35b.  The sales tax liability for all sales of tangible
-23-1personal property and specified digital products and all sales
2of services is upon the seller and the purchaser unless the
3seller takes from the purchaser a valid exemption certificate
4stating under penalty of perjury that the purchase is for a
5nontaxable purpose and is not a retail sale as defined in
6section 423.1, or the seller is not obligated to collect tax
7due, or unless the seller takes a fuel exemption certificate
8pursuant to subsection 5. If the tangible personal property,
9specified digital products, or services are purchased tax free
10pursuant to a valid exemption certificate and the tangible
11personal property, specified digital products, or services are
12used or disposed of by the purchaser in a nonexempt manner, the
13purchaser is solely liable for the taxes and shall remit the
14taxes directly to the department and sections 423.31, 423.37,
15423.38, 423.39, 423.40, 423.41, and 423.42 shall apply to the
16purchaser.
17   Sec. 33.  Section 423.45, subsection 5, paragraphs c and d,
18Code 2023, are amended to read as follows:
   19c.  The seller may accept a completed fuel exemption
20certificate, as prepared by the purchaser, for three
21years unless the purchaser files a new completed exemption
22certificate. If the fuel is purchased tax free pursuant to a
23fuel exemption certificate which is taken by the seller, and
24the fuel is used or disposed of by the purchaser in a nonexempt
25manner, the purchaser is solely liable for the taxes, and shall
26remit the taxes directly to the department and sections 423.31,
27423.37, 423.38, 423.39, 423.40, 423.41, and 423.42 shall apply
28to the purchaser.
   29d.  The purchaser may apply to the department for its
30review of the fuel exemption certificate. In this event, the
31department shall review the fuel exemption certificate within
32twelve months from the date of application and determine the
33correct amount of the exemption. If the amount determined
34by the department is different than the amount that the
35purchaser claims is exempt, the department shall promptly
-24-1notify the purchaser of the determination. Failure of the
2department to make a determination within twelve months from
3the date of application shall constitute a determination that
4the fuel exemption certificate is correct as submitted. A
5determination of exemption by the department is final unless
6the purchaser appeals to the director for a revision of the
7determination within sixty days after the date of the notice
8of determination. The director shall grant a hearing, and
9upon the hearing, the director shall determine the correct
10exemption and notify the purchaser of the decision by mail.
11The decision of the director is final unless the purchaser
12seeks judicial review of the director’s decision under section
13423.38 422.29 within sixty days after the date of the notice
14of the director’s decision. Unless there is a substantial
15change, the department shall not impose penalties pursuant
16to section 423.40 both retroactively to purchases made after
17the date of application and prospectively until the department
18gives notice to the purchaser that a tax or additional tax is
19due, for failure to remit any tax due which is in excess of a
20determination made under this section. A determination made by
21the department pursuant to this subsection does not constitute
22an audit for purposes of section 423.37.
23   Sec. 34.  Section 423.57, Code 2023, is amended to read as
24follows:
   25423.57  Statutes applicable.
   26The director shall administer this subchapter as it relates
27to the taxes imposed in this chapter in the same manner and
28subject to all the provisions of, and all of the powers,
29duties, authority, and restrictions contained in sections
30423.14, 423.14A, 423.14B, 423.15, 423.16, 423.17, 423.19,
31423.20, 423.21, 423.22, 423.23, 423.24, 423.25, 423.29, 423.31,
32423.33, 423.34, 423.34A, 423.35, 423.37, 423.38, 423.39,
33423.40, 423.41, and 423.42, section 423.43, subsection 1, and
34sections 423.45, 423.46, and 423.47.
35   Sec. 35.  NEW SECTION.  452A.23  Motor fuel tax —
-25-1administration by department.
   2The department shall administer the taxes imposed by this
3chapter in the same manner as and subject to section 422.25,
4subsection 4, section 423.35, and section 423.37.
5   Sec. 36.  Section 452A.66, Code 2023, is amended to read as
6follows:
   7452A.66  Statutes applicable to motor fuel tax.
   81.  The appropriate state agency shall administer the taxes
9imposed by this chapter in the same manner as and subject to
10section 422.25, subsection 4, and section 423.35.
   112.  All the provisions of section 422.26 shall apply in
12respect to the taxes, penalties, interest, and costs imposed
13by this chapter excepting that as applied to any tax imposed
14by this chapter, the lien provided in section 422.26 shall
15be prior and paramount over all subsequent liens upon any
16personal property within this state, or right to such personal
17property, belonging to the taxpayer without the necessity of
18recording as provided in section 422.26. The requirements for
19recording shall, as applied to the tax imposed by this chapter,
20apply only to the liens upon real property. When requested to
21do so by any person from whom a taxpayer is seeking credit,
22or with whom the taxpayer is negotiating the sale of any
23personal property, or by any other person having a legitimate
24interest in such information, the director shall, upon being
25satisfied that such a situation exists, inform such person as
26to the amount of unpaid taxes due by such taxpayer under the
27provisions of this chapter. The giving of such information
28under such circumstances shall not be deemed a violation of
29section 452A.63 as applied to this chapter.
30   Sec. 37.  Section 453A.28, subsection 1, Code 2023, is
31amended to read as follows:
   321.  a.  If after any audit, examination of records, or
33other investigation the department finds that any person has
34sold cigarettes without stamps affixed or that any person
35responsible for paying the tax has not done so as required by
-26-1this subchapter, the department shall fix and determine the
2amount of tax due, and shall assess the tax against the person,
3together with a penalty as provided in section 421.27. The
4taxpayer shall pay interest on the tax or additional tax at the
5rate determined under section 421.7 counting each fraction of
6a month as an entire month, computed from the date the tax was
7due. If any person fails to furnish evidence satisfactory to
8the director showing purchases of sufficient stamps to stamp
9unstamped cigarettes purchased by the person, the presumption
10shall be that the cigarettes were sold without the proper
11stamps affixed. Within three years after the report is filed
12or within three years after the report became due, whichever is
13later, the department shall examine the report and determine
14the correct amount of tax. The period for examination and
15determination of the correct amount of tax is unlimited in the
16case of a false or fraudulent report made with the intent to
17evade tax, or in the case of a failure to file a report, or if a
18person purchases or is in possession of unstamped cigarettes.
   19b.  If the department issues an estimated assessment due to
20failure to file a report, the procedures described in section
21423.37, subsections 1 and 2, shall apply to taxes, fees, and
22interest imposed under this subchapter in the same manner and
23with the same effect as the provisions apply to the taxes
24imposed under chapter 423.
25   Sec. 38.  Section 453A.46, subsection 1, paragraph a, Code
262023, is amended to read as follows:
   27a.  (1)  On or before the twentieth day of each calendar
28month every distributor with a place of business in this state
29shall file a return with the director showing for the preceding
30calendar month the quantity and wholesale sales price of each
31tobacco product brought, or caused to be brought, into this
32state for sale; made, manufactured, or fabricated in this state
33for sale in this state; and any other information the director
34may require. Every licensed distributor outside this state
35shall in like manner file a return with the director showing
-27-1for the preceding calendar month the quantity and wholesale
2sales price of each tobacco product shipped or transported to
3retailers in this state to be sold by those retailers and any
4other information the director may require. Returns shall
5be made upon forms furnished or made available in electronic
6form and prescribed by the director and shall contain other
7information as the director may require. Each return shall be
8accompanied by a remittance for the full tax liability shown
9on the return, less a discount as fixed by the director not to
10exceed five percent of the tax. Within three years after the
11return is filed or within three years after the return became
12due, whichever is later, the department shall examine it,
13determine the correct amount of tax, and assess the tax against
14the taxpayer for any deficiency. The period for examination
15and determination of the correct amount of tax is unlimited in
16the case of a false or fraudulent return made with the intent
17to evade tax, or in the case of a failure to file a return.
   18(2)  If the department issues an estimated assessment due to
19failure to file a return, the procedures described in section
20423.37, subsections 1 and 2, shall apply to taxes, fees, and
21interest imposed under this subchapter in the same manner and
22with the same effect as the provisions apply to the taxes
23imposed under chapter 423.
24   Sec. 39.  REPEAL.  Section 423.38, Code 2023, is repealed.
25   Sec. 40.  EFFECTIVE DATE.  This division of this Act takes
26effect January 1, 2024.
27DIVISION VII
28TAX RETURN PREPARERS AND PERSONS AUTHORIZED TO ACT FOR
29TAXPAYERS
30   Sec. 41.  Section 421.59, subsections 1 and 2, Code 2023, are
31amended to read as follows:
   321.  a.  A taxpayer may authorize an individual to act on
33behalf of the taxpayer by filing a power of attorney with
34the department, on a form prescribed by the department. The
35department may prescribe a separate form or integrate the
-28-1requirements of the form into a return when feasible.

   2b.  A taxpayer may at any time revoke a power of attorney
3filed with the department pursuant to this subsection. Upon
4processing of the taxpayer’s revocation of a power of attorney,
5the department shall cease honoring the power of attorney.
   62.  Unless otherwise prohibited by law, the department may
7authorize the following persons to act and receive information
8on behalf of and exercise all of the rights of a taxpayer, and
9may establish by rule the documentation required to verify
10authorization to act,
regardless of whether a power of attorney
11has been filed pursuant to subsection 1:
   12a.  A guardian, conservator, or custodian appointed by a
13court, if a taxpayer has been deemed legally incompetent by a
14court. The authority of the appointee to act on behalf of the
15taxpayer shall be limited to the extent specifically stated in
16the order of appointment.
   17(1)  Upon request, a guardian, conservator, or custodian of
18a taxpayer shall submit to the department a copy of the court
19order appointing the guardian, conservator, or custodian.
   20(2)  The department has standing to petition the court that
21appointed the guardian, conservator, or custodian to verify the
22appointment or to determine the scope of the appointment.
   23b.  A receiver appointed pursuant to chapter 680. An
24appointed receiver shall be limited to act on behalf of the
25taxpayer by the authority stated in the order of appointment.
   26(1)  Upon the request of the department, a receiver shall
27submit to the department a copy of the court order appointing
28the receiver.
   29(2)  The department has standing to petition the court
30that appointed the receiver to verify the appointment or to
31determine the scope of the appointment.
   32c.  An individual who has been named as an authorized
33representative on a fiduciary return of income filed under
34section 422.14 or a tax return filed under chapter 450.
   35d.    c.  An individual holding the following title or position
-29-1within a corporation, association, partnership, or other
2business entity:
   3(1)  An officer or employee of the corporation or association
4who is authorized to act on behalf of the corporation or
5association in tax matters.
   6(2)  A designated partner or employee of the partnership
7who is authorized to act on behalf of the partnership in tax
8matters.
   9(3)  A person authorized to act on behalf of the limited
10liability company in tax matters pursuant to a valid statement
11of authority or employee of the company who is authorized to
12act on behalf of the company in tax matters.
   13e.    d.  A licensed attorney who has appeared on behalf of
14the taxpayer or the probate estate in a court proceeding.
15Authorization under this paragraph is limited to those matters
16within the scope of the representation.
   17f.    e.  A parent or guardian of a taxpayer who has not
18reached the age of majority where the same parent or guardian
19has signed the taxpayer’s return on behalf of the taxpayer.
20Authorization under this paragraph is limited to those matters
21relating to the return signed by the parent or guardian
.
22Authorization under this paragraph automatically terminates
23when the taxpayer reaches the age of majority pursuant to
24section 599.1.
   25g.    f.  A representative of a government entity. An
26individual seeking to act on behalf of a government entity
27pursuant to this paragraph shall affirm the authority of
28the individual to act on behalf of the government entity in
29a manner designated by the department. The department may
30require evidence to demonstrate the individual has authority to
31act on behalf of the government entity.

   32h.    g.  An executor or personal representative of an estate.
   33(1)  Upon request, the executor or personal representative
34shall submit to the department a copy of the will or court
35order appointing the executor or personal representative.
-30-
   1(2)  The department has standing to petition the court that
2appointed the executor or personal representative to verify the
3appointment or to determine the scope of the appointment.
   4i.    h.  A trustee.
   5(1)  Upon request a trustee shall submit a certification of
6trust, or in the absence of a certification of trust a copy of
7the court order appointing the trustee if one has been issued,
8or a copy of the trust.
   9(2)  The department has standing to petition the court that
10appointed the trustee to verify the appointment or to determine
11the scope of the appointment.
   12j.    i.  A person named as an agent in a general or durable
13power of attorney document that is currently in force and such
14document has not been prescribed by the department of revenue.
   15k.    j.  A successor as defined in section 633.356, subsection
162, of a very small estate.
17   Sec. 42.  Section 421.62, subsection 2, Code 2023, is amended
18by adding the following new paragraph:
19   NEW PARAGRAPH.  c.  Notwithstanding subsection 1, paragraph
20“d”, subparagraph (2), for purposes of this subsection, “tax
21return preparer”
includes any of the following:
   22(1)  An individual licensed as a certified public accountant
23or a licensed public accountant under chapter 542 or a similar
24law of another state.
   25(2)  An individual admitted to practice law in this state or
26another state.
   27(3)  An enrolled agent enrolled to practice before the
28federal internal revenue service pursuant to 31 C.F.R. §10.4.
29DIVISION VIII
30Setoff
31   Sec. 43.  2020 Iowa Acts, chapter 1064, section 16,
32subsection 6, is amended to read as follows:
   336.  Fees. The department shall may establish fees for use of
34the setoff system to be paid by participating public agencies
35to the department.
-31-
1   Sec. 44.  CONTINGENT EFFECTIVE DATE.  This division of this
2Act takes effect on the effective date of the rules adopted by
3the department of revenue pursuant to chapter 17A implementing
42020 Iowa Acts, chapter 1064, other than transitional rules.
5DIVISION IX
6HOMESTEAD PROPERTY TAX CREDIT
7   Sec. 45.  Section 425.11, subsection 1, paragraph e, Code
82023, is amended by striking the paragraph and inserting in
9lieu thereof the following:
   10e.  (1)  “Owner” means the person who holds the fee simple
11title to the homestead. “Owner” also includes the following:
   12(a)  The person occupying as a surviving spouse.
   13(b)  The person occupying under a contract of purchase which
14contract has been recorded in the office of the county recorder
15of the county in which the property is located.
   16(c)  The person occupying the homestead under devise or by
17operation of the inheritance laws where the whole interest
18passes or where the divided interest is shared only by persons
19related or formerly related to each other by blood, marriage,
20or adoption.
   21(d)  The person occupying the homestead is a shareholder of a
22family farm corporation that owns the property.
   23(e)  The person occupying the homestead under a deed which
24conveys a divided interest where the divided interest is shared
25only by persons related or formerly related to each other by
26blood, marriage, or adoption.
   27(f)  Where the person occupying the homestead holds a
28life estate with the reversion interest held by a nonprofit
29corporation organized under chapter 504, provided that the
30holder of the life estate is liable for and pays property tax
31on the homestead.
   32(g)  Where the person occupying the homestead holds an
33interest in a horizontal property regime under chapter
34499B, regardless of whether the underlying land committed to
35the horizontal property regime is in fee or as a leasehold
-32-1interest, provided that the holder of the interest in the
2horizontal property regime is liable for and pays property tax
3on the homestead.
   4(h)  Where the person occupying the homestead is a member
5of a community land trust as defined in 42 U.S.C. §12773,
6regardless of whether the underlying land is in fee or as a
7leasehold interest, provided that the member of the community
8land trust is occupying the homestead and is liable for and
9pays property tax on the homestead.
   10(i)  The person occupying the homestead regardless of
11whether the underlying land is in fee or as a leasehold
12interest, provided that the person is occupying the homestead
13and is liable for and pays property tax on the homestead.
   14(2)  For the purpose of this subchapter, the word “owner”
15shall be construed to mean a bona fide owner and not one for
16the purpose only of availing the person of the benefits of this
17subchapter. In order to qualify for the homestead tax credit,
18evidence of ownership shall be on file in the office of the
19clerk of the district court or recorded in the office of the
20county recorder at the time the owner files with the assessor
21a verified statement of the homestead claimed by the owner as
22provided in section 425.2.
23   Sec. 46.  EFFECTIVE DATE.  This division of this Act, being
24deemed of immediate importance, takes effect upon enactment.
25   Sec. 47.  APPLICABILITY.  This division of this Act applies
26to claims under chapter 425, subchapter I, for credits against
27property taxes due and payable in fiscal years beginning on or
28after July 1, 2024.
29DIVISION X
30PROPERTY TAX CREDITS AND RENT REIMBURSEMENT
31   Sec. 48.  Section 425.17, subsection 7, Code 2023, is amended
32to read as follows:
   337.  “Income” means the sum of Iowa net income as defined
34in section 422.7, plus all of the following to the extent not
35already included in Iowa net income: capital gains,; alimony,;
-33-1 child support money,; cash public assistance and relief,
2except property tax relief granted under this subchapter,;
3 amount of in-kind assistance for housing expenses, the gross
4amount of any pension or annuity, including but not limited
5to
; total amounts received from a governmental or other
6pension or retirement plan, including defined benefit or
7defined contribution plans; annuities; individual retirement
8accounts; plans maintained or contributed to by an employer,
9or maintained or contributed to by a self-employed person
10as an employer; deferred compensation plans or any earnings
11attributable to the deferred compensation plans; income
12received pursuant to a farm tenancy agreement covering real
13property;
railroad retirement benefits,; payments received
14under the federal Social Security Act, except child insurance
15benefits received by a member of the claimant’s household;, and
16all
military retirement and veterans’ disability pensions,;
17 interest received from the a state or federal government
18or any of its instrumentalities,; workers’ compensation;
19 and the gross amount of disability income or “loss of time”
20insurance. “Income” does not include gifts from nongovernmental
21sources, or surplus foods or other relief in kind supplied by
22a governmental agency. In determining income, net operating
23losses and net capital losses shall not be considered.
24   Sec. 49.  EFFECTIVE DATE.  This division of this Act, being
25deemed of immediate importance, takes effect upon enactment.
26   Sec. 50.  APPLICABILITY.
   271.  This division of this Act applies to claims under chapter
28425, subchapter II, for credits against property taxes due and
29payable in fiscal years beginning on or after July 1, 2024.
   302.  This division of this Act applies to claims under chapter
31425, subchapter II, for reimbursement for rent constituting
32property taxes paid in base years beginning on or after January
331, 2023.
   343.  This division of this Act applies to claims under section
35435.22 for a credit for manufactured and mobile home taxes due
-34-1and payable in fiscal years beginning on or after July 1, 2024.
2DIVISION XI
3ELECTRONIC COMMUNICATIONS — RULES
4   Sec. 51.  Section 421.60, subsection 11, paragraph c,
5subparagraph (1), Code 2023, is amended to read as follows:
   6(1)  Notwithstanding any provision of law to the contrary,
7when an electronic communication is posted to the department’s
8electronic portal for a person who has made such an election,
9the posting of the electronic communication shall satisfy any
10requirement of mailing or personal service in this title,
 11chapter 17A, chapter 272D, or sections 321.105A and 533.329.
12DIVISION XII
13TRANSFERS FROM 529 ACCOUNT TO ROTH IRA
14   Sec. 52.  Section 422.7, subsection 22, paragraph c,
15subparagraph (1), Code 2023, is amended by adding the following
16new subparagraph division:
17   NEW SUBPARAGRAPH DIVISION.  (g)  A direct trustee-to-trustee
18transfer to a Roth individual retirement account in accordance
19with section 529(c)(3)(E) of the Internal Revenue Code, as
20enacted by the federal Consolidated Appropriations Act, 2023,
21Pub.L. No.117-328.
22   Sec. 53.  APPLICABILITY.  This division of this Act applies
23to tax years beginning on or after January 1, 2024.
24DIVISION XIII
25COMPOSITE RETURN FILING EXCLUSION FOR FINANCIAL INSTITUTIONS
26AND CERTAIN FINANCIAL HOLDING COMPANIES
27   Sec. 54.  Section 422.16B, subsection 5, Code 2023, is
28amended by adding the following new paragraph:
29   NEW PARAGRAPH.  0c.  The pass-through entity meets any of the
30following requirements for the tax year:
   31(1)  The pass-through entity is a financial institution
32subject to the franchise tax under section 422.60 and files a
33franchise tax return required under section 422.62 and pays any
34franchise tax shown due on the return.
   35(2)  The pass-through entity wholly owns one or more
-35-1financial institutions subject to the franchise tax under
2section 422.60 that are treated as disregarded entities for
3federal and Iowa income tax purposes, and at least ninety
4percent of the gross income of the pass-through entity for the
5tax year is also reportable income on the franchise tax return
6of the financial institutions wholly owned by the pass-through
7entity, and such financial institutions file the franchise tax
8returns required under section 422.62 and pay any franchise tax
9shown due on the franchise tax return.
10   Sec. 55.  EFFECTIVE DATE.  This division of this Act, being
11deemed of immediate importance, takes effect upon enactment.
12   Sec. 56.  RETROACTIVE APPLICABILITY.  This division of this
13Act applies retroactively to January 1, 2023, for tax years
14beginning on or after that date.
15DIVISION XIV
16RETIRED FARMER INCOME EXCLUSIONS
17   Sec. 57.  Section 422.7, subsection 13, paragraph a,
18subparagraph (4), Code 2023, is amended to read as follows:
   19(4)  “Materially participated” means the same as “material
20participation”
in section 469(h) of the Internal Revenue Code,
21except that section 469(h)(3) of the Internal Revenue Code
22shall not apply
.
23   Sec. 58.  Section 422.7, subsection 14, paragraph f,
24subparagraph (5), Code 2023, is amended to read as follows:
   25(5)  “Materially participated” means the same as “material
26participation”
in section 469(h) of the Internal Revenue Code,
27except that section 469(h)(3) of the Internal Revenue Code
28shall not apply
.
29   Sec. 59.  EFFECTIVE DATE.  This division of this Act, being
30deemed of immediate importance, takes effect upon enactment.
31   Sec. 60.  RETROACTIVE APPLICABILITY.  This division of this
32Act applies retroactively to January 1, 2023, for tax years
33beginning on or after that date.
34DIVISION XV
35INSTRUCTIONAL SUPPORT INCOME SURTAX
-36-
1   Sec. 61.  Section 257.24, Code 2023, is amended to read as
2follows:
   3257.24  Deposit of instructional support income surtax.
   41.  The director of revenue, by the last day of each month,
5 shall deposit all moneys received as collected and determined
6by the department of revenue to be
instructional support income
7surtax to the in the preceding month, and shall credit of each
8district from which the moneys are received collected, in the
9school district income surtax fund which is established in
10section 298.14.
   112.  a.  The director of revenue shall deposit instructional
12support income surtax moneys received on or before November 1
13of the year following the close of the school budget year for
14which the surtax is imposed to the credit of each district from
15which the moneys are received in the school district income
16surtax fund.
   17b.  Instructional support income surtax moneys received or
18refunded after November 1 of the year following the close of
19the school budget year for which the surtax is imposed shall be
20deposited in or withdrawn from the general fund of the state
21and shall be considered part of the cost of administering the
22instructional support income surtax.
23   Sec. 62.  Section 257.25, Code 2023, is amended to read as
24follows:
   25257.25  Instructional support income surtax certification.
   261.  On or before October 20 November 15 each year,
27the director of revenue shall make an accounting of the
28instructional support income surtax collected under this
29chapter applicable to tax returns for the last preceding
30calendar year, or for a taxpayer’s fiscal year ending during
31the second half of that calendar year and after the date the
32board adopts a resolution to participate in the program, or the
33first half of the succeeding calendar year,
 since January 1 of
34the same calendar year
from taxpayers in each school district
35in the state which has approved the instructional support
-37-1program, and shall certify to the department of management and
2the department of education the amount of total instructional
3support income surtax credited from the taxpayers of each
4school district.
   52.  On or before January 15 of each year, the director of
6revenue shall make an accounting of the instructional support
7income surtax collected under this chapter during the preceding
8calendar year from taxpayers in each school district in the
9state which has approved the instructional support program,
10and shall certify to the department of management and the
11department of education the amount of total instructional
12support income surtax credited from the taxpayers of each
13school district.
14EXPLANATION
15The inclusion of this explanation does not constitute agreement with
16the explanation’s substance by the members of the general assembly.
   17This bill relates to state and local finance and the
18administration of the tax and related laws by the department
19of revenue (department).
   20DIVISION I — IOWA EDUCATIONAL SAVINGS PLAN AND FIRST-TIME
21HOMEBUYERS DUE DATES. The bill makes changes to the Iowa
22educational plan trust (529 plans) and the first-time home
23buyer savings account program.
   24The bill provides that if the director of revenue (director)
25extends the date for making and filing an individual income
26tax return in the case of a natural disaster as is currently
27permitted in Code section 421.17(30), the taxpayer may elect
28that a contribution made to a 529 plan during the extended time
29to file such a return may be deemed to have been made for the
30prior calendar year.
   31The bill provides that the first-time homebuyers savings
32account designations must be provided to the department on
33or before the date to file an individual income tax return,
34excluding extensions, or on or before the extended filing date
35if the director extends the date for making and filing an
-38-1individual income tax return in the case of a natural disaster.
   2DIVISION II — BONUS DEPRECIATION AND INCREASED EXPENSING
3— APPLICABILITY. The “trigger” (2018 Iowa Acts, chapter
41161, sections 99 through 134) went into effect on January 1,
52023. The bill provides that the repeal of bonus depreciation
6and increased expensing provisions in the trigger applies to
7tax years beginning on or after January 1, 2023, for property
8placed in service on or after January 1, 2023.
   9DIVISION III — TAX FILING STATUS MODIFICATIONS. For tax
10years beginning on or after January 1, 2023, the bill requires
11a taxpayer to use the same filing status for Iowa individual
12income tax purposes as the taxpayer used for federal individual
13income tax purposes. The bill also strikes provisions implying
14that a taxpayer may elect to use a different tax filing status
15on the taxpayer’s Iowa and federal income tax returns.
   16The division applies to tax years beginning on or after
17January 1, 2023.
   18DIVISION IV — WITHHOLDING. The bill rewrites Code section
19422.16 relating to withholding agents withholding Iowa tax from
20the wages or other income of a resident or nonresident. The
21bill defines “withholding agent” similarly to the definition
22in Code section 422.4.
   23Under current law, most retirement income is no longer
24subject to Iowa income tax. The bill strikes provisions
25requiring the withholding of state income tax from retirement
26income made to Iowa residents if the retirement income is no
27longer subject to Iowa income tax.
   28The bill excludes some pass-through entity income for
29purposes of calculating whether a taxpayer is required to make
30estimated tax payments.
   31DIVISION V — FUTURE CORRESPONDING CHANGE. Commencing with
32tax years beginning on or after January 1, 2026, the highest
33individual Iowa income tax rate becomes a flat tax rate and the
34individual income tax rate is moved from Code section 422.5A
35to Code section 422.5. The bill strikes a reference to the
-39-1highest individual income tax rate in Code section 422.5A and
2replaces that reference with Code section 422.5.
   3The division takes effect January 1, 2026.
   4DIVISION VI — SETTLEMENT AUTHORITY — NOTICE OF ASSESSMENT
5— ESTIMATION OF TAX. Under current law, the director may
6compromise and settle doubtful claims for taxes or refunds.
7The bill defines “settle” or “settlement” to include any
8compromise or abatement of tax, penalties, and interest. The
9bill specifies that the department may settle any taxes,
10penalties, and interest in the case of doubtful liability,
11doubtful collectability, economic hardship, or to promote
12effective tax administration. The bill requires the department
13to make a complete record of the settlement. A taxpayer shall
14not have the right to a settlement under the bill, and any
15determination by the department regarding a settlement shall be
16discretionary and final, except in the case of fraud, mutual
17mistake, or stated in a written settlement agreement. The
18bill strikes Code section 421.60(2)(i) and (m) which relate to
19the settlement of taxes owed the state and makes conforming
20changes.
   21The bill amends Code section 421.10 relating to the appeal
22period for the revision of the assessment of tax. The bill
23specifies that the appeal period provisions apply to notices
24from the department involving adverse department actions
25directed at a specific taxpayer, other than licensing, which
26involves a calculation. Under current law, the appeal period
27provisions relate to all agency actions regardless if the
28action is adverse, if any department action is directed at
29a specific taxpayer, other than licensing, and involves a
30calculation.
   31The bill amends Code section 422.25 to specify that if a
32taxpayer required to file a return with the department fails
33to file the return or files a false or fraudulent return, the
34department may, at any time, estimate the tax due based upon
35information or knowledge the department is able to obtain. If
-40-1the department estimates the tax due, the bill requires the
2department to issue a notice of assessment to the taxpayer
3and creates procedures for the department to follow if the
4taxpayer files a return within three years from the date of
5the assessment, and creates procedures if the taxpayer fails
6to file such a return within three years from the date of the
7assessment.
   8The bill amends Code section 423.37(1) (sales and use tax)
9to specify that the department may examine a sales tax return
10within three years after the return is filed. Under current
11law, the department is required to examine such a return
12within three years. The bill establishes procedures for when
13a sales tax return is incorrect or insufficient when filed.
14The bill requires the department to determine the amount of
15tax due from information or knowledge the department is able
16to obtain including using any generally recognizable sampling
17technique to determine the tax owed, if the sampling technique
18is mutually agreed upon by the department and the person
19being audited. The bill requires the department to issue a
20notice of assessment if the return is found to be incorrect,
21and establishes procedures for the taxpayer to appeal the
22assessment, or pay the tax, penalty, and interest, and file a
23refund claim on the estimated tax if necessary.
   24The bill amends Code section 423.37(2) establishing the
25procedures for when a sales or use tax return is not filed. The
26bill states the period for examination and determination of the
27correct amount of tax is unlimited, and allows the department
28to estimate the amount of tax due. The bill requires the
29department to issue a notice of assessment, and establishes
30procedures for the taxpayer to appeal the assessment, or pay
31the tax, penalty, and interest, and file a refund claim on the
32estimated tax if necessary.
   33The bill specifies the department of revenue shall
34administer the taxes in Code chapter 452A (motor fuel and
35special fuel taxes) in the same manner as Code sections
-41-1422.25(4) (payments first credited to penalty and interest),
2423.35 (posting a bond), and 423.37 (procedures for when a
3return is filed incorrectly or not filed), which is also
4amended in the bill.
   5The bill specifies the department of revenue shall
6administer the taxes in Code chapter 453A (cigarette and
7tobacco taxes) in the same manner as Code section 423.37
8(procedures when return is filed incorrectly or not filed),
9which is also amended in the bill.
   10The bill repeals Code section 423.38 relating to provisions
11that are applicable to the judicial review of the actions
12of the department involving sales and use taxes, and makes
13conforming changes.
   14The division takes effect January 1, 2024.
   15DIVISION VII — TAX RETURN PREPARERS AND PERSONS AUTHORIZED
16TO ACT FOR TAXPAYERS. The bill requires additional tax return
17preparers to include the preparer’s personal identification
18number on any return prepared by the preparer and filed with
19the department if the preparer is licensed as a certified
20public accountant or a licensed public accountant under Code
21chapter 542 or a similar law of another state, if the preparer
22is admitted to practice law in this state, or if the preparer
23is an enrolled agent enrolled to practice before the Internal
24Revenue Service.
   25The bill modifies provisions relating to the authority
26of a person to act on behalf of a taxpayer in Code section
27421.59, including striking the authority of an individual to
28act on behalf of a taxpayer who has been named as an authorized
29representative on a fiduciary return or an inheritance tax
30return.
   31DIVISION VIII — SETOFF. The bill allows but does not
32require the department to establish a fee for use of the setoff
33system. Currently, the department is required to charge a
34fee for use of the setoff system. The setoff system is a
35centralized system designed to collect debt owed to public
-42-1agencies. The setoff system operated by the department is
2currently not operational until the department adopts rules.
   3DIVISION IX — HOMESTEAD PROPERTY TAX CREDIT. The bill
4amends Code section 425.11 relating to the homestead credit.
5The bill expands the definition of “owner” to allow a person
6occupying a homestead to receive the homestead credit
7regardless of whether the underlying land is held in fee or as
8a leasehold interest, provided that the person is occupying
9the homestead and is liable for and pays property tax on the
10homestead.
   11The division takes effect upon enactment and applies to
12claims under Code chapter 425, subchapter I, for credits
13against property taxes due and payable in fiscal years
14beginning on or after July 1, 2024.
   15DIVISION X — PROPERTY TAX CREDITS AND RENT REIMBURSEMENT.
16 The bill modifies the definition of “income” to include
17certain retirement, deferred, or rental income for purposes of
18calculating eligibility for the elderly and disabled property
19tax credit or for reimbursement of rent constituting property
20taxes paid under Code chapter 425, subchapter II.
   21The division applies to claims under Code chapter 425
22for credits due and payable in fiscal years beginning on or
23after July 1, 2024, and for rent reimbursement in base years
24beginning on or after January 1, 2023. The division also
25applies to claims for a credit for manufactured and mobile home
26taxes due in fiscal years beginning on or after July 1, 2024.
   27DIVISION XI — ELECTRONIC COMMUNICATION — RULES. The
28bill provides that if the department posts a rule to the
29department’s electronic portal, the posting of the electronic
30communication shall satisfy any requirement of mailing or
31personal service for purposes of Code chapter 17A (Iowa
32administrative procedure Act).
   33DIVISION XII — TRANSFERS FROM 529 ACCOUNT TO ROTH IRA.
34 Under the federal Consolidated Appropriations Act, 2023, Pub.
35L.No.117-328, transfers from a 529 educational account to a
-43-1Roth Individual Retirement Account beneficiary are exempt from
2federal taxation, subject to Roth contribution limits and the
3aggregate lifetime limit of $35,000, and if the 529 educational
4account has existed for at least 15 years. The bill also makes
5such a transfer exempt from state individual income taxation.
   6DIVISION XIII — COMPOSITE RETURN FILING EXCLUSION FOR
7FINANCIAL INSTITUTIONS AND CERTAIN FINANCIAL INSTITUTIONS.
8 Under the bill, a pass-through entity is not required to remit
9Iowa income or franchise tax on behalf of a nonresident member
10if either of the following apply: the pass-through entity
11is a financial institution subject to the franchise tax and
12files a franchise tax return and pays any franchise tax owed;
13or the pass-through entity wholly owns one or more financial
14institutions subject to the franchise tax, and at least 90
15percent of the gross income of the pass-through entity for the
16tax year is also reportable income on the franchise tax return
17of the wholly owned financial institutions and any franchise
18tax owed is paid.
   19DIVISION XIV — RETIRED FARMER INCOME EXCLUSIONS. The
20bill modifies the definition of “materially participated” for
21purposes of the retired farmer tenancy income exclusion and
22the retired farmer capital gain exclusion by excluding section
23469(h)(3) of the Internal Revenue Code from the definition of
24“materially participated” in section 469(h) of the Internal
25Revenue Code.
   26This division takes effect upon enactment and applies
27retroactively to tax years beginning on or after January 1,
282023.
   29DIVISION XV — INSTRUCTIONAL SUPPORT INCOME SURTAX. The
30bill modifies the manner in which the instructional support
31income surtax is deposited into the school district income
32surtax fund by requiring monthly deposits into the fund and
33prohibiting certain income surtax moneys from being deposited
34into the general fund of the state. The bill also modifies the
35instructional support income tax certification and accounting
-44-1dates by the department of revenue to the department of
2management.
-45-
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