2000 Iowa Legislative Summaries

HF 2008 Iowa Residents in Military Filing Iowa Income Tax Returns to Verify Residency for Hunting and Fishing
HF 2027 Interest from Rural Water District Notes Exempt from Income Tax
HF 2136 Abstract of Votes for Local Option Sales Tax and School Infrastructure Local Option Tax
HF 2173 Intestate Succession
HF 2205-A New Power to Abate Unpaid Taxes
HF 2205-B Expanded Exemption for On-Line Computer Service
HF 2206 Waiver and Variance Rule
HF 2218 Mutual Insurance Guaranty Association
HF 2351 Tax Holiday on Clothing and Footwear Sales
HF 2435 Repealing Provisions Authorizing School District Surtax to Fund Asbestos Removal Projects
HF 2518 Divorce and the Will
HF 2540-A Refund of Unused Investment Tax Credit
HF 2540-B Eligible Housing Business
HF 2542 Exemption of Income of Holocaust Victims
HF 2550 Amendments to the Iowa Education Savings Plan Trust
HF 2560-A Alternative Research Activities Tax Credit
HF 2560-B Property Rehabilitation Tax Credit
HF 2560-C Assistive Device Tax Credit--Small Business
HF 2560-D Barn and Schoolhouse Property Tax Exemption
HF 2560-E Increase in Partial Pension/Retirement Income Exclusion
HF 2562-A Director's Increased Powers to Enter Into Agreements
HF 2562-B The Words "Sale" and "Tangible Personal Property" Redefined
HF 2562-C "Information Services" Excluded from Sales and Use Tax
HF 2563 Exemption for Goods and Services Used in Construction Contracts for a Nonprofit Hospital
HF 2565 Tobacco Use Prevention and Control
HF 2569 Exemption for Sales of Livestock Ear Tags By Nonprofit Organizations
HF 2581 Iowa Higher Education Loan Authority
SF 2079 Cigarettes and Tobacco Products Exported from/Manufactured for Use Outside the United States
SF 2253 Property Conveyance Instruments/Mobile Home Reporting
SF 2315 Lemon law
SF 2366 Cigarettes and Tobacco Violations/Department of Health Notification
SF 2420 Replacement Tax
SF 2424-A Update of References to the Internal Revenue Code
SF 2424-B Filing Requirements for Nonresident Taxpayers
SF 2424-C Tax Benefit for Military Personnel Serving in Hazardous Duty Zones
SF 2426 Classification of Condominiums
SF 2439 Credits from Withholding to Fund Accelerated Career Education Program
SF 2444 Tax Exemption for Property Leased by the Iowa National Guard
SF 2447 Vision Iowa Program

 

SALES & USE TAXES

HF 2136 Abstract of Votes for Local Option Sales Tax and School Infrastructure Local Option Tax
HF 2205-A New Power to Abate Unpaid Taxes
HF 2205-B Expanded Exemption for On-Line Computer Service
HF 2351 Tax Holiday on Clothing and Footwear
HF 2562-A Director's Increased Power to Enter Into Agreements
HF 2562-B The Words "Sale" and "Tangible Personal Property" Redefined
HF 2562-C "Information Services" Excluded from Sales and Use Tax
HF 2563 Exemption for Goods and Services Used in Construction Contracts for a Nonprofit Hospital
HF 2569 Exemption for Sales of Livestock Ear Tags by Nonprofit Organizations
SF 2315 Lemon Law

 

CORPORATE & INDIVIDUAL INCOME & FRANCHISE TAXES

HF 2008 Iowa Residents in Military Filing Iowa Income Tax Returns to Verify Residency for Hunting and Fishing
HF 2027 Interest from Rural Water District Notes Exempt from Income Tax
HF 2218 Mutual Insurance Guaranty Association
HF 2435 Repealing Provision Authorizing School District Surtax for Fund Asbestos Removal Projects
HF 2540-A Refund of Unused Investment Tax Credit
HF 2540-B Eligible Housing Business
HF 2542 Exemption of Income of Holocaust Victims
HF 2550 Iowa Education Savings Plan
HF 2560-A Alternative Research Activities Tax Credit
HF 2560-B Property Rehabilitation Tax Credit
HF 2560-C Assistive Device Tax Credit--Small Business
HF 2560-E Increase in Partial Pension/Retirement Income Exclusion
HF 2581 Iowa Higher Education Loan Authority
SF 2424-A Update of references to the Internal Revenue Code
SF 2424-B Filing Requirements for Nonresident Taxpayers
SF 2424-C Tax Benefit for Military Personnel Serving in Hazardous Duty Zones
SF 2439 Accelerated Career Education Changes
SF 2447 Vision Iowa Program

 

PROPERTY TAXES

HF 2560-D Barn and Schoolhouse Property Tax Exemption
SF 2253 Property Conveyance Instruments/Mobile Home Reporting
SF 2420 Replacement Tax
SF 2426 Classification of Condominiums
SF 2444 Tax Exemption for Property Leased by the Iowa National Guard

 

INHERITANCE--FIDUCIARY & ESTATE TAXES

HF 2173 Intestate Succession
HF 2518 Divorce and the Will

 

CIGARETTE AND TOBACCO TAXES

HF 2565 Tobacco Use Prevention and Control
SF 2079 Cigarettes and Tobacco Products Exported from/Manufactured for Use Outside the United States
SF 2366 Cigarettes and Tobacco Violations/Department of Health Notification

MISCELLANEOUS

HF 2206 Waiver and Variance Rule

 

00 HF 2008
IOWA RESIDENTS IN MILITARY FILING IOWA INCOME TAX RETURNS TO VERIFY RESIDENCY FOR HUNTING AND FISHING

Prior Law

An Iowa resident in military service on leave was required to show leave papers while hunting or fishing in Iowa, in lieu of having a hunting or fishing license. The definition of "resident" for purposes of licenses to hunt or fish did not include members of the armed forces of the United States serving on active duty who claimed to be residents of Iowa and who filed Iowa income tax returns or persons who were registered to vote in Iowa.

New Provision

The definition of resident was expanded to include members of the armed forces of the United States on active duty, who claimed to be residents of Iowa and who filed Iowa income tax returns as well as persons who are registered to vote in Iowa. A person on active duty in the armed forces of the United States on leave who is hunting or fishing in Iowa is required to carry a copy of an earnings statement showing a deduction of Iowa income tax as well as a copy of leave papers. However, in lieu of the earnings statement, the military person can verify Iowa residency by showing that the person is registered to vote in Iowa.

Sections Amended

Section one of H. F. 2008 amends Section 483A.1A, subsection 4, by adding new paragraphs d and e. Section six of the Act amends Section 483A.24, subsection 6.

Effective Date

Because the Act includes no effective date, the provisions in H. F. 2008 will become effective on July 1, 2000.

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00 HF 2027
INTEREST FROM RURAL WATER DISTRICT NOTES EXEMPT FROM INCOME TAX

Prior Law

Interest from rural water district bonds is not taxable by the state or its political subdivisions tax.

New Provisions

Interest from rural water district bonds and notes is not taxable by the state or its political subdivisions tax for income tax purposes..

Section Amended

Section 2 of House File 2027 amends Code section 357A.15 unnumbered paragraph 1.

Effective Date

Effective July 1, 2000 for interest from notes issued on or after that date.

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00 HF 2136
ABSTRACT OF VOTES FOR LOCAL OPTION SALES TAX AND SCHOOL INFRASTRUCTURE LOCAL OPTION TAX

Prior Law

Under current law, notice must be given within ten days of the election at which a majority of those voting on the question favor the imposition, repeal, or change in the rate of a local option tax by the county auditor by giving a copy of the abstract of the ballot from the favorable election to the director of revenue and finance or, in the case of a local vehicle tax, to the director of the department of transportation, of the result of the election.

New Provisions

Amends this Code provision by changing the reference to the "abstract of ballot" to the term "abstract of votes"

Sections Amended

House File 2136, sections 36 and 37, amends Iowa Code sections 422B.1, subsection 6, paragraph b, Code Supplement 1999 and 422E.2, subsection 4, paragraph b, unnumbered paragraph 1, Code Supplement 1999.

Effective Date

July 1, 2000

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00 HF 2173
INTESTATE SUCCESSION

Prior Law

Provided that when a decedent died without a will, the part of the estate not passing to the surviving spouse, or if there is no surviving spouse, the estate passed to these classes in the following order: issue of the decedent per stirpes; the parents of the decedent; half of the estate to the issue of the decedent's mother and father to be divided per stirpes; or half of the estate to the decedent's paternal and maternal grandparents to be divided per stirpes.

New Provisions

The amendment adds a new section, which provides a new class for distribution that is to take from the estate if neither of the classes under the prior law survive the decedent. The new provision provides that if the decedent is survived by one or more great-grandparents or issue of great-grandparents, then the estate passes equally to each set of great-grandparents, or to their issue, if any survive, per stirpes.

Section Amended

House File 2173 amends Iowa Code section 633.219, by adding a new section 5.

Effective Date

July 1, 2000

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00 HF 2205-A
NEW POWER TO ABATE UNPAID TAXES

Prior Law

No prior law.

New Provision

Under certain circumstances the Director has the power to abate unpaid sales and use taxes. Under certain other conditions the Director has the obligation to do this. The Director is required to abate unpaid sales or use tax owed by a retailer if the retailer's failure to collect the tax results from erroneous written advice issued to the retailer by the Department concerning the taxability of charges paid for access to on-line computer services. The erroneous advice must have been issued prior to July, 1999, and must have been directed to the retailer requesting the abatement.

In circumstances other than those above, the Director may abate unpaid sales or use tax owed by a retailer which the retailer cannot collect from a purchaser if the retailer failed to collect tax from the purchaser as the result of written advice issued by the Department to the retailer. The retailer must present its written request for advice to the Department along with the Department's written reply to the request before the tax, interest and penalties due can be abated. Subsequent contrary written advice and certain other changes in circumstances, e.g. a change in statute law or an applicable department rule, can nullify the Department's obligation to abate unpaid tax, interest or penalty.

The power and obligation to abate tax in favor of a retailer do not prevent the Department from collecting tax, interest, or penalty from a purchaser. The Director's power and right to abate apply to local option sales and services tax as well as state sales and use tax.

Section Amended

Section 28 of House File 2205 amends section 421.60, subsection 2, Code 1999 by adding a new paragraph "m". Section 30 of House File 2205 amends section 422.52, subsection 6, paragraph a. 1999 Code Supplement.

Effective Date

May 15, 2000

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00 HF 2205-B
EXPANDED EXEMPTION FOR ON-LINE COMPUTER SERVICE

Prior Law

Gross receipts from charges paid to a provider for access to on-line computer service (internet access) were exempt from the sales tax imposed on communication services. Charges paid to a provider of other contracted on-line communication services (e.g. access to chat rooms) were not exempt from Iowa sales tax.

New Provision

All gross receipts from charges for providing information made available through a computer server are exempt from Iowa sales tax.

Section Amended

Section 29 of House File 2205 amends section 422.45, subsection 56, of the 1999 Code Supplement.

Effective Date

May 15, 2000

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0 HF 2206
WAIVER AND VARIANCE RULE

Prior Law

On September 13, 1999, the governor issued Executive Order Eleven requiring each agency to provide a system for waiver of non interpretive rules. While the Executive Order provided guidance in some areas as to what was required to constitute a waiver system it did not provide specific uniformity in some aspects.

New Provisions

House File 2206 provides for a uniform basis for a waiver system. A narrow waiver or variance, that is subject to renewal, can be issued by a state agency from a non-interpretive (discretionary) department rule. A variance or waiver is only allowed if certain factors exist and a waiver or variance can only be renewed if the factors continue to be present at the time of the renewal request. The department must keep record of all waivers or variances that have been granted or denied. The department must also provide a report of all waivers and variances to the administrative rules committee.

Section Amended

Iowa Code chapter 17A, by implementing Iowa Code section 17A.9A.

Effective Date

July 1, 2000

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00 HF 2218
MUTUAL INSURANCE GUARANTY ASSOCIATION

Prior Law

None

New Provisions

A mutual insurance guaranty association is exempt from payment of fees and taxes levied by Iowa or a political subdivision of Iowa except for taxes levied on property.

Section Amended

Section 13 of House File 2218 created new Code section 518C.13.

Effective Date

July 1, 2000 for agreements entered into on or after that date.

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00 HF 2351
"TAX HOLIDAY" ON CLOTHING AND FOOTWEAR SALES

Prior Law

No exemptions from sales or use tax existed which were particularly applicable to clothing and footwear.

New Provision

Purchases of items of clothing or footwear designed to be worn on or about the human body are exempt from sales and use tax if: 1) the sale price of an item is less than one hundred dollars; and, 2) the sale of the item takes place during the period beginning at 12:01 a.m. on the first Friday in August and ending at midnight on the following Saturday. This exemption is annual.

Sales of "accessories" such as jewelry, handbags, and similar items and of special clothing or footwear primarily designed for athletic activity or protective use and not normally worn except when used for the athletic activity or protective use for which it is designed are excluded from the exemption. Rentals of clothing and footwear are also excluded from the exemption.

Section Amended

Section 1 of House File 2351 amends section 422.45 of the 1999 Code Supplement by adding a new subsection.

Effective Date

May 26, 2000

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00 HF 2435
REPEALING PROVISIONS AUTHORIZING SCHOOL DISTRICT SURTAX TO FUND ASBESTOS REMOVAL PROJECTS

Prior Law

School districts in Iowa could authorize elections for approval of additional enrichment amounts to fund projects to remove asbestos. The enrichment amount could be raised by an enrichment property tax or by the combination of an enrichment property tax and a school district income surtax.

New Provision

The provisions providing for additional enrichment amounts for the funding of projects for the removal of asbestos in schools, including provisions for a school district surtax for the funding of these projects are repealed. However, there are still provisions in the Code for school district surtaxes to raise funds for other public school projects in Iowa.

Sections Amended

Section 1 of H. F. 2435 amends paragraph 1 of section 279.52. Section 2 of the Act amend paragraphs 1 and 2 of section 298.14. Section 3 of the Act repeals sections 279.53 and 279.54.

Effective Date

Since there is no specific effective date, H. F. 2435 is effective on July 1, 2000.

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00 HF 2518
DIVORCE AND THE WILL

Prior Law

Under current law, if a marriage results in divorce or dissolution, the terms of the will in favor of the spouse are revoked and are reinstated if the testator and the spouse remarry.

New Provisions

This provision was amended to state that the terms in favor of the spouse also include dispositions, appointments relating to property, and nominations to serve in any fiduciary or representative capacity.

Sections Amended

House File 2518, sections 3 and 16, amend Iowa Code sections 633.271 and 633.3107.

Effective Date

July 1, 2000

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00 HF 2540-A
REFUND OF UNUSED INVESTMENT TAX CREDIT

Prior Law

Unused investment tax credit could not be refunded.

No special provisions for projects related to value-added agricultural products.

New Provisions

Subject to prior approval by the Department of Economic Development in consultation with the Department of Revenue, an eligible business whose project primarily involves value-added agricultural products may have unused investment tax credit refunded.

The eligible business may elect to have all or a portion of any unused tax credit refunded.

An eligible business whose project primarily involves the production of value-added agricultural products must apply to the Department of Economic Development for a tax credit certificate. An eligible business whose project primarily involves the production of value-added agricultural products may not claim a tax credit unless the tax credit certificate is attached to the taxpayer's tax return for the year during which the tax credit is claimed. The Department of Economic Development may not issue tax credit certificates for more than $4 million during a fiscal year. If the Department of Economic Development receives applications for more than $4 million during a fiscal year the applicants shall receive certificates on a prorated amount.

Section Amended

Section 1 of House File 2540 amends Code section 15.333, subsection 1 and creates new subsection 1A.

Effective Date

July 1, 2001 for tax years beginning on or after that date.

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00 HF 2540-B
ELIGIBLE HOUSING BUSINESS

Prior Law

A housing developer or housing contractor could qualify as an eligible housing business.

The eligible housing business investment tax credit could be applied against the Iowa individual or corporation income tax liability.

The entire new investment by an eligible housing business qualified for the investment tax credit.

New Provisions

A housing developer, housing contractor, or nonprofit organization can qualify as an eligible housing business.

The eligible housing business investment tax credit may be applied against the Iowa individual, corporation income tax or franchise tax liability.

The eligible housing business may not take an investment tax credit for the amount of new investment in the project which is financed through federal, state, and local government tax credits, grants, and forgivable loans.

Sections Amended

Section 5 of House File 2540 amended Code section 15E.193B, subsection 2. Section 7 of House File 2540 amended Code section 15E.193B, subsection 6, paragraph a. Section 8 of House File 2540 amended Code subsection 15E.193B by adding subsection 9.

Effective Date

Sections 5, 6, and 7 are retroactive to January 1, 2000 for tax years beginning on or after that date and section 8 is effective for projects approved on or after that date.

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00 HF 2542
EXEMPTION OF INCOME OF HOLOCAUST VICTIMS

Prior Law

There was no prior law.

New Provision

Exempts for Iowa income tax purposes, income payments received by victims of persecution for racial, ethnic, or religious reasons by Nazi Germany or by any other Axis regime. Income payments include payments for labor performed during World War II and for labor performed immediately before and immediately after the war by the victims and income paid for assets stolen from, hidden from, or otherwise lost by the victims of persecution. In cases where the victims of persecution are deceased, heirs of the victims can exclude the income payments. However, income from assets acquired from the income payments or from the sale of those assets are subject to Iowa income tax.

Section Amended

Section 2 of House File 2542 amends Iowa Code Section 422.7 by adding new subsection 35.

Effective Date

This provision is retroactively applicable on January 1, 2000, for tax years beginning on or after that date.

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00 HF 2550
AMENDMENTS TO THE IOWA EDUCATION SAVINGS PLAN TRUST

Prior Law

The maximum contribution by a participant to the Iowa Education Savings Plan Trust on behalf of a beneficiary was $2,000 per beneficiary per year, as adjusted annually for inflation. Thus, the participant could not claim a deduction on the Iowa return for a contribution per beneficiary of greater than $2,000 as adjusted for inflation. However, in the case of a particular beneficiary, there was no limitation on the aggregate amount per year that could be contributed to the trust on behalf of that beneficiary by all participants.

New Provision

The maximum deduction that a participant may claim on the Iowa individual return for a contribution per beneficiary for each tax year remains at $2,000 as adjusted by inflation. However, the aggregate contribution for a particular beneficiary for a tax year can not exceed what is called an "account balance limit" which is an amount beyond which contributions will not be permitted in order to maintain compliance with section 529 of the Internal Revenue Code.

Sections Amended

Section 1 of H. F. 2550 amends section 12D.1, by adding a new subsection. Sections 2, 3 and 4 of the Act amend section 12D.3, subsection 1, paragraph a, section 12D.3, subsection 2 and section 12D.3, subsection 5, paragraph a. Section 5 of the Act amends section 422.7, subsection 32, paragraph a.

Effective Date

The Act was effective upon enactment. Therefore, the bill was effective on May 3, 2000, when the governor signed H.F. 2550.

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00 HF 2560-A
ALTERNATIVE RESEARCH ACTIVITIES TAX CREDIT

Prior Law

The Iowa research activities tax credit was 6 1/2% of the apportioned share of the qualifying expenditures for increasing research activities as determined under section 41 of the Internal Revenue Code.

New Provisions

In addition to the above provision, there is an alternative method of computing the research activities tax credit. The alternative is that a taxpayer may elect to compute the credit in a manner consistent with the alternative incremental credit described in section 41(c)(4)(A) of the Internal Revenue Code. The percentages applied to qualified research expenses described in clauses (i), (ii), and (iii) of section 41(c)(4)(A) of the Internal Revenue Code are 1.65%, 2.20%, and 2.75% for purposes of Code sections 15.333, 422.10, and 422.33 subsection 5. The percentages applied to qualified research expenses described in clauses (i), (ii), and (iii) of section 41(c)(4)(A) of the Internal Revenue Code are 3.30%, 4.40%, and 5.50% for purposes of Code section 15A.9. The taxpayer may elect to use the alternative regardless of the method used for federal income tax purposes, and the election may be changed from year to year. The method used to compute the research activities tax credit in section 422.33, subsection 5 or 422.10 must be used in computing the credit in section 15.335 or 15A.9 subsection 8.

Sections Amended

Section 1 of House File 2560 amended Code section 15.335. Section 2 of House File 2560 amended Code section, 15A.9, subsection 8. Section 9 of House File 2560 amended section 422.10. Section 12 of House File 2560 amended Code section 422.33, subsection 5.

Effective Date

Retroactive to January 1, 2000 for tax years beginning on or after that date.

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00 HF 2560-B
PROPERTY REHABILITATION TAX CREDIT

Prior Law

None

New Provisions

Eligible property for which a taxpayer may receive the property rehabilitation tax credit computed under this chapter includes all of the following: a) Property listed on the national register of historic places or is eligible for such listing. b) Property designated as of historic significance to a district listed in the national register of historic places or is eligible for such designation. c) Property or district designated a local landmark by a city or county ordinance, and d) A barn constructed prior to 1937.

The amount of the credit equals twenty-five percent of the qualified rehabilitation costs made to eligible property. In the case of commercial property, rehabilitation costs must equal at least fifty percent of the assessed value of the property, excluding the land, prior to the rehabilitation. In the case of residential property or barns, the rehabilitation costs must equal at least $25,000 or 25% of the fair market value, excluding the land, prior to the rehabilitation, whichever is less. In computing the tax credit for eligible property that is classified as residential or as commercial with multifamily residential units, the rehabilitation costs used shall not exceed $100,000 per residential unit. In computing the tax credit, the only costs which may be included are the rehabilitation costs incurred between the period ending on the project completion date and beginning on the later of either the date of issuance of the approval of the project as provided in Iowa Code section 404A.3 or two years prior to the project completion date.

Qualified rehabilitation costs include amounts if they are properly includable in computing the basis for tax purposes of the eligible property. Amounts treated as an expense and deducted in the tax year in which they are paid or incurred and amounts that are otherwise not added to the basis for tax purposes of the eligible property are not qualified rehabilitation costs. Amounts incurred for architectural and engineering fees, site survey fees, legal expenses, insurance premiums, development fees, and other construction-related costs are qualified rehabilitation costs to the extent they are added to the basis for tax purposes of the eligible property. Costs of sidewalks, parking lots, and landscaping do not constitute qualified rehabilitation costs. Any rehabilitation costs used in the computation of the tax credit under this chapter shall not be deductible for purposes of individual and corporate income taxes.

In order for costs of a rehabilitation project to qualify for a tax credit, the rehabilitation project must receive approval from the State Historical Preservation Office of the Department of Cultural Affairs.

Upon completion of the rehabilitation project, a certification of completion must be obtained from the State Historical Preservation Office of the Department of Cultural Affairs. A completion certificate shall identify the person claiming the tax credit under this chapter and the rehabilitation costs incurred up to the two years preceding the completion date.

A person receiving a property rehabilitation tax credit which is in excess of the person's tax liability for the tax year is entitled to a refund of the excess at a discounted value. The discounted value of the tax credit refund, as calculated by the Department of Economic Development, in consultation with the Department of Revenue and Finance, is based on the discounted value of the tax credit five years after the tax year of the project completion at an interest rate equivalent to the prime rate plus two percent. The refunded tax credit shall not exceed seventy-five percent of the allowable tax credit. The total amount of tax credits that may be approved for a fiscal year may not exceed $2.4 million.

An individual may claim a property rehabilitation tax credit allowed a partnership, limited liability company, S corporation, estate, or trust electing to have the income taxed directly to the individual. The amount claimed by the individual shall be based upon the pro rata share of the individual's earnings of a partnership, limited liability company, S corporation, estate, or trust.

The taxpayer must file the tax credit certificate with the taxpayer's income tax return in order to claim the tax credit.

Sections Amended

Sections 3, 4,5, 6, and 7 of House File 2560 created a new chapter, 404A, section 10 of House File 2560 created Code section 422.11D, and section 14 of House File 2560 created Code 422.33, subsection 9.

Effective Date

Applies to qualified rehabilitation costs incurred on or after July 1, 2000.

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00 HF 2560-C
ASSISTIVE DEVICE TAX CREDIT--SMALL BUSINESS

Prior Law

None

New Provisions

A small business purchasing, renting, or modifying an assistive device or making workplace modifications for an individual with a disability who is employed or will be employed by the small business is eligible, subject to availability of credits, to receive a assistive device tax credit which is equal to fifty percent of the first $5,000 paid during the tax year for the purchase, rental, or modification of the assistive device or for making the workplace modifications. Any credit in excess of the tax liability shall be refunded with interest computed under section 422.25. In lieu of claiming a refund, a taxpayer may elect to have the overpayment shown on the taxpayer's final, completed return credited to the tax liability for the following tax year. If the small business elects to take the assistive device tax credit, the small business shall not deduct for Iowa tax purposes any amount of the cost of an assistive device or workplace modifications which is deductible for federal tax purposes.

To receive the assistive device tax credit, the eligible small business must submit an application to the Department of Economic Development. If the taxpayer meets the criteria for eligibility, the Department of Economic Development shall issue to the taxpayer a certification of entitlement for the assistive device tax credit. However, the combined amount of tax credits that may be approved for a fiscal year may not exceed $500,000. Tax credit certificates shall be issued on an earliest filed basis. The certification shall contain the taxpayer's name, address, tax identification number, the amount of the credit, and tax year for which the certificate applies. The taxpayer must file the tax credit certificate with the taxpayer's income tax return in order to claim the tax credit.

An individual may claim an assistive device tax credit allowed a partnership, limited liability company, corporation, estate, or trust electing to have the income taxed directly to the individual. The amount claimed by the individual shall be based upon the pro rata share of the individual's earnings of the partnership, limited liability company, S corporation, estate, or trust.

Sections Amended

Section 11 of House File 2560 created Code section 422.11E, and section 13 of House File 2560 amended Code section 422.33 by adding new subsection 8A.

Effective Date

Retroactive to January 1, 2000 for tax years beginning on or after that date.

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00 HF 2560-D
BARN & SCHOOLHOUSE PROPERTY TAX EXEMPTION

Prior Law

None.

New Provisions

Exempts from taxation the increase in assessed value resulting from improvements made to barns constructed prior to 1937 and one-room schoolhouses.

Application for the exemption must be filed with the assessing authority by February 1 only in the first year the exemption is requested. The exemption for a barn is to continue as long as the structure is used for the storage of farm products or feed or for the housing of farm animals or farm equipment. The exemption for a schoolhouse is to continue as long as the structure is not used for dwelling purposes.

Sections Amended

Section 15 of House File 2560 amends § 427.1, Code Supplement 1999, by adding new subsection 31 and section 17 amends § 427.1, Code Supplement 1999, by adding new subsection 32.

Effective Date

July 1, 2000. Applies to the assessment year beginning after completion of the improvements.

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00 HF 2560-E
INCREASE IN PARTIAL PENSION/RETIREMENT INCOME EXCLUSION

Prior Law

Eligible married taxpayers could exclude up to $10,000 in pension/retirement income benefits received in the tax year. Eligible single taxpayers could exclude up to $5,000 in pension/retirement income benefits received in the tax year. To be eligible for the exclusion individuals had to have been either disabled, 55 years of age or older, a surviving spouse of a pensioner or annuitant or other survivor who had an insurable interest in a pensioner or annuitant who would have been eligible for the exclusion for the tax year.

New Provision

The partial pension/retirement income exclusion is increased up to $12,000 for married taxpayers and is increased to up to $6,000 for single taxpayers.

Section Amended

Section 8 of House File 2560 amends section 422.7, subsection 31.

Effective Date

Section 8 is effective on January 1, 2001, for tax years beginning on or after that date.

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00 HF 2562-A
DIRECTOR'S INCREASED POWERS TO ENTER INTO AGREEMENTS

Prior Law

The Director of the Department had a limited authority to enter into agreements with foreign retailers to voluntarily collect Iowa use tax. However, the Director had no statutory power to enter into agreements with "third party-providers (as opposed to conventional retailers) or to enter into agreements to collect Iowa sales tax as opposed to Iowa use tax. There was no statutorily stated power to enter into multistate compacts.

New Provision

The Director's power to enter into agreements with foreign retailers to collect Iowa tax is expanded. The Director can enter into agreements with "third-party providers" as well as conventional retailers and can enter into agreements to collect sales tax as well as use tax. The Director can now enter into multistate compacts that provide for the voluntary collection of Iowa sales and use tax in addition to the power to enter into agreements with individual retailers. These new powers are granted retroactive to March 15, 1995.

Section Amended

Section 1 of House File 2562 amends section 421.17 of the 1999 Code Supplement by adding a new subsection.

Effective Date

May 15, 2000 retroactive to March 15, 1995.

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00 HF 2562-B
'THE WORDS "SALE" AND "TANGIBLE PERSONAL PROPERTY" REDEFINED

Prior Law

The word "sale" (for the purposes of sales tax law) and the phrase "tangible personal property" (for the purposes of use tax law) were not defined to exclude transactions the substance of which was transferred electronically.

New Provision

The word "sale" for the purposes of sales tax law and the phrase "tangible personal property" for the purposes of use tax law are defined to exclude transactions the substance of which is delivered to the purchaser digitally, electronically, or utilizing cable, or by radiowaves, microwaves, satellites, or fiber optics. The amended definitions apply retroactively to March 15, 1995. However, the sections of the bill which amend the definitions of "sale" and "tangible personal property" are repealed as of December 31, 2002.

Section Amended

Section 2 of House File 2562 amends section 422.43 of the 1999 Code Supplement by adding a new subsection. Section 4 amends section 423.1 of the 1999 Code Supplement by adding a new subsection.

Effective Date

May 15, 2000 retroactive to March 15, 1995.

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00 HF 2562-C
"INFORMATION SERVICES" EXCLUDED FROM SALES AND USE TAX

Prior Law

No exemption from sales and use tax specifically related to "information services" existed.

New Provision

The sale or rental of "information services" is exempted from tax. An "information service" is defined to be "every business activity, process, or function by which a seller or its agent accumulates, prepares, organizes, or conveys data, facts, knowledge, procedures, and like services to a buyer or its agent of such information through any tangible or intangible medium." Database files, mailing lists, subscription files, market research, credit reports, surveys, real estate listings, bond rating reports, abstracts of title, bad check lists, broadcasting rating services, wire services, and scouting reports, are nonexclusive examples of information services. The exemption is retroactive to March 15, 1995.

Refunds of tax, interest, and penalties which arise from sales, rentals or other services occurring between March 15, 1995 and May 14, 2000 inclusive, are limited to twenty-five thousand dollars in the aggregate. Refund claims for this period must be filed prior to October 1, 2000. If the claims for refund for this period total more than twenty-five thousand dollars in the aggregate, the Department shall prorate those claims.

Section Amended

Section 2 of House File 2562 amends section 422.43 of the 1999 Code Supplement by adding a new subsection.

Effective Date

May 15, 2000 retroactive to March 15, 1995.

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00 HF 2563
EXEMPTION FOR GOODS AND SERVICES USED IN CONSTRUCTION CONTRACTS FOR A NONPROFIT HOSPITAL

Prior Law

No law existed explicitly exempting gross receipts from sales of goods and services used in the fulfillment of a construction contract with a nonprofit hospital from sales or use tax. Sales of services used in connection with new construction, reconstruction, remodeling, expansion or alteration of real property or structures was exempt from tax. Additionally, sales of property to and the performance of services for a nonprofit hospital licensed under chapter 135B of the Code were exempt from tax if the property or services were "to be used in the operation of the hospital." The quoted phrase was interpreted to exclude materials used in the performance of a construction contract from exemption. A nonprofit hospital was not entitled to claim a refund of tax paid by a contractor for the purchase of materials for use in the performance of a construction contract.

New Provision

The gross receipts from sales or use of tangible personal property or the performance of services used in the fulfillment of a written construction contract with a nonprofit hospital licensed under chapter 135B are exempt from tax if: 1) the sale of the tangible personal property or the performance of the service occurred between July 1, 1998 and December 31, 2001; and 2) the written construction contract was entered into prior to December 31, 1999 or bonds to fund the construction were issued prior to December 31, 1999; and 3) the sales or services were purchased by the hospital, either directly or by using a contractor as an agent.

Refunds of tax resulting from the enactment of this legislation are limited to twenty-five thousand dollars in the aggregate. Claims for refund must be filed prior to April 1, 2002.

If claims total more than twenty-five thousand dollars, the department shall prorate the twenty-five thousand dollars among all claimants based on the amounts of their valid claims.

Section Amended

Section 1 of House File 2563 amends section 422.45 of the 1999 Code Supplement by adding a new subsection.

Effective Date

May 19, 2000 retroactive to July 1, 1998.

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00 HF 2565
TOBACCO USE PREVENTION AND CONTROL

Prior Law

Iowa Code § 453A.39 permits the giving away of cigarettes and tobacco products with certain restrictions and § 421B.4 permits that gifts be given and coupons can be used in conjunction with the sale of cigarettes. These sections of the Code were not amended by House File 2565 and, thus, are still in place.

New Provisions

A manufacturer, distributor, wholesaler, or retailer is prohibited from giving away cigarettes or tobacco products and from providing free articles, products, commodities, gifts, or concessions in any exchange for the purchase of cigarettes or tobacco products. There are no penalties provided in the bill for violations of these prohibitions. The department of public health is responsible for administering this new statute.

A lawsuit has been filed in federal court challenging the constitutionality of this new law. The state has agreed not to enforce the new law pending resolution of the matter in court. The department of revenue and finance will not make any changes in its enforcement procedures until the matter is resolved.

Sections Amended

Section 6 of House File 2565 creates a new § 142A.6.

Effective Date

May 15, 2000.

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00 HF 2569
EXEMPTION FOR SALES OF LIVESTOCK EAR TAGS BY NONPROFIT ORGANIZATIONS

Prior Law

The sale or use of livestock eartags was not exempt from tax.

New Provision

Gross receipts from sales or use of livestock eartags are exempt from tax if the eartags are sold by a section 501(c)(3) nonprofit organization which uses the proceeds in bovine research programs selected or approved by that organization.

Section Amended

Section 1 of House File 2569 amends section 422.45 of the 1999 Code Supplement by adding a new subsection.

Effective Date

July 1, 2000

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00 HF 2581
IOWA HIGHER EDUCATION LOAN AUTHORITY

Prior Law

None

New Provisions

Obligations issued by the Higher Education Loan Authority on or after July 1, 2000, their transfer, and income therefrom are exempt from taxation of any kind by the state or any political subdivision of the state which includes income tax and estate and inheritance tax. The income from these bonds is subject to the state franchise tax.

Section Amended

Section 1 of House File 2581 amended Code section 261A.27 by adding a new unnumbered paragraph.

Effective Date

Effective for bonds issued on or after July 1, 2000.

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00 SF 2079
CIGARETTES & TOBACCO PRODUCTS EXPORTED FROM OR MANUFACTURED FOR USE OUTSIDE THE U.S.

Prior Law

There was no prohibition against the distribution of cigarettes or tobacco products previously exported or manufactured for use outside the United States.

New Provision

It is unlawful to ship or import into the state, or to offer for sale, sell, distribute, transport, or possess within the state, cigarettes or tobacco products previously exported from or manufactured for use outside the United States. The permit of a distributor, wholesaler, or manufacturer may be revoked for a violation of this law. Other violators are guilty of a fraudulent practice.

Section Amended

Section 1 of Senate File 2079 amends § 453A.36, Code 1999, by adding new subsection 8.

Effective Date

April 17, 2000.

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00 SF 2253
PROPERTY CONVEYANCE INSTRUMENTS / MOBILE HOME REPORTING

Prior Law

All instruments conveying an interest in real property were required to include a mailing address for the property tax statement.

The mobile home park owner, manager, or tenant was required to report to the county treasurer any homes sited in the park.

New Provisions

A mailing address is not required to be included on mortgages, mortgage releases, or assignments.

The mobile home park owner or manager is required to report by June 1 to the county treasurer a listing containing the owner and address of each home sited in the park. An additional report is required to be submitted by December 1 showing any movements in or out of the park.

Sections Amended

Section 2 of Senate File 2253 amends § 331.602(1)(d), Code Supplement 1999, and section 5 amends § 435.24(3), Code Supplement 1999.

Effective Date

July 1, 2000.

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00 SF 2315
LEMON LAW

Prior Law

It was the department's practice not to impose Iowa use tax on the return of a vehicle to a manufacturer based on Iowa Code chapter 321G (Iowa’s Lemon Law). Tax is not imposed because the vehicle is transferred to the manufacturer with no intent to "use" the vehicle in Iowa.

New Provisions

This amendment provides by statute that the return of a vehicle to a manufacturer based on Iowa Code chapter 321G is not a "use" pursuant to Iowa Code section 423.1

Consequently, the transfer of the vehicle from a purchaser to a manufacturer pursuant to Iowa Code chapter 322G and the titling and registration of that vehicle by the manufacturer is not subject to Iowa use tax. A refund of use tax paid by a purchaser of a vehicle that is returned under Iowa Code section 322G, still remains the same and is governed by Department rule 701--34.3

Section Amended

Senate File 2315, section 3 amends Iowa Code section 322G.12.

Effective Date

January 1, 2001

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00 SF 2366
CIGARETTE & TOBACCO VIOLATIONS / DEPARTMENT OF HEALTH NOTIFICATION

Prior Law

Persons under 18 years of age were, technically, in violation of the cigarette and tobacco laws if in possession of cigarettes or tobacco products as part of their employment or as a result of a compliance effort by law enforcement personnel.

A person under the age of 18 in possession of cigarettes or tobacco products was subject only to a civil penalty.

A retailer did not have the authority to seize what was believed to be a false or altered driver's license when shown as identification by a person attempting to purchase cigarettes or tobacco products.

No information was required to be submitted to the department of health by the permit issuing authority.

New Provisions

Permits individuals under 18 years of age to be in possession of cigarettes and tobacco products as part of their employment or part of a compliance effort conducted under the supervision of law enforcement personnel without being in violation of the law.

A person under 18 years of age in possession of cigarettes or tobacco products is, in addition to being subject to a civil penalty, required to perform community work.

A retailer may seize the driver's license of a person attempting to purchase cigarettes or tobacco products if the retailer believes the license to be false or altered.

The permit issuing authority is required to submit duplicates of applications for retail permits and permits issued and report suspensions and revocations to the department of public health within 30 days.

The penalties for a retailer's third and fourth violations of the cigarette and tobacco laws are increased by decreasing from 5 to 3 years the period of time that must elapse from a previous violation for harsher penalties to apply.

The suspension or revocation of a retail permit applies only to the place of business where the violation occurred.

Sections Amended

Section 2 of Senate File 2366 amends § 453A.2, Code 1999, by adding new subsections 2A and 5; section 3 amends § 453A.3, Code 1999; section 4 adds new § 453A.4; section 5 amends § 453A.13(2), Code 1999, by adding new paragraph c; section 6 amends § 453A.22(2), Code 1999; and section 7 amends § 453A.22, Code 1999, by adding new subsections 4 and 5.

Effective Date

July 1, 2000.

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00 SF 2420
REPLACEMENT TAX

Prior Law

There was no established time period for appealing refunds of replacement tax paid; The "base year assessed value" for a municipal utility was January 1, 1997; No exemption from the replacement tax was provided for natural gas delivered to certain persons by a pipeline not permitted under Code chapter 479; The number of kilowatt-hours of electricity subject to the replacement generation tax for a jointly owned or leased generation facility was equal to the taxpayer's percentage interest in the facility multiplied by the number of kilowatt-hours generated; The number of kilowatt-hours of electricity generated by a generation facility did not exclude from the replacement generation tax the kilowatt hours used to operate the facility; It was not clear which party the director of revenue and finance or the county treasurer was to enforce collection of the tax against if either the distribution electric cooperative member or municipal utility purchasing member or the generation and transmission electric cooperative did not timely pay the replacement tax or the special utility property tax levy; Accrued interest could not be collected on unpaid replacement taxes and special utility property tax levies; The county treasurer was not authorized to collect the special utility property tax levy by the tax sale process; The issuance of a tax deed extinguished tax liens and judgment liens for replacement taxes attached to the property; the statute did not address who could file a claim for refund or credit for an overpayment of replacement tax attributable to excess property tax liability; The statute did not provide for the allocation of the electric delivery replacement tax attributable to excess property tax liability assigned under Code section 437A.4; Penalty and interest did not accrue on delinquent special utility property tax levy payments; The director was required to report 1999 assessed values to the department of management and county auditors by October 31, 1999; Returns were required to be filed and the statewide property tax paid regardless of the amount due; The county auditor was not required to include on the tax list the statewide property tax in computing the debt-incurring capacity of the county or political subdivision; The statute did not specify to what fund interest and penalties on delinquent replacement taxes and the special utility property tax levies were to be deposited.

New Provisions

Permits a 60-day period of time to appeal a denial of a refund of replacement tax paid; Provides that the "base year assessed value" for a municipal utility is January 1, 1998; Exempts from the replacement tax, natural gas delivered by a pipeline not permitted under Code chapter 479 to a person other than an electric company, natural gas company, electric cooperative, or municipal utility, who consumes the gas for the purpose of bypassing the local natural gas company or municipal utility; Provides that a taxpayer participating in a jointly owned or leased generation facility is to pay replacement tax on the number of kilowatt-hours of electricity generated and dispatched by the facility to the account of the taxpayer and that the number of hours generated by a generation facility excludes any hours used in the operation of the facility; Provides that a generation and transmission electric cooperative is not liable for unpaid replacement tax or special utility property tax levy due from a distribution electric cooperative member or municipal utility purchasing member; The county treasurer or director are to enforce collection of the taxes against the cooperative member or municipal utility purchasing member; If the electric cooperative does not timely pay the replacement tax or special utility property tax levy attributable to the excess property tax liability after receiving payment from a distribution electric cooperative member or municipal utility purchasing member, the taxes are to be enforced solely against the generation and transmission electric cooperative; Authorizes the collection of accrued interest on replacement taxes and special utility property tax levies; Authorizes the county treasurer to enforce payment of the special utility property tax levy by the tax sale process; provides that a tax deed issued does not extinguish a tax lien or judgment lien for replacement taxes attached to the property; .provides that a refund or credit can only be made to the person who made the payment for overpaid replacement tax attributable to excess property tax liability; Provides for the allocation of electric delivery replacement tax attributable to excess property tax liability if excess property tax liability has been assigned under Code section 437A.4; Provides for the accrual of penalty and interest on delinquent payments of the special utility property tax levy; The director is to report to the department of management and county auditors before May 1, 2000, the 1999 assessed value for any taxpayer whose base year was changed from 1997 to 1998; A taxpayer is not required to file a return or pay the statewide property tax for any year the tax liability is $1 or less; Property subject to the statewide property tax is to be listed by the county auditor for purposes of computing the debt-incurring capacity of the county or political subdivision; Interest and penalties collected on delinquent replacement taxes and special utility property tax levies are to be deposited in the county general fund; The director is required to recompute the electric replacement delivery tax rate and if it differs from that published in the administrative bulletin in 1999, the director is required to publish the recomputed tax rate in the bulletin within 90 days of the effective date of this bill.

Sections Amended

Section 1 of Senate File 2420 amends § 421.10, Code 1999; section 2 amends § 437A.3(1), unnumbered paragraph 1, Code Supplement 1999; section 3 amends § 437A.5(7), unnumbered paragraph 2, Code 1999; section 4 amends § 437A.5(7), Code 1999, by adding a new unnumbered paragraph; section 5 amends § 437A.6(2), Code 1999; section 6 amends § 437A.6, Code 1999, by adding new subsection 3; section 7 amends § 437A.8(4), Code 1999, by adding 3 new unnumbered paragraphs; section 8 amends § 437A.11, unnumbered paragraph 6, Code 1999; section 9 amends § 437A.14(1)(b), Code Supplement 1999, by adding a new unnumbered paragraph; section 10 amends § 437A.15(3), Code Supplement 1999; section 11 amends § 437A.15(4), unnumbered paragraph 1, Code Supplement 1999; section 12 amends § 437A.19(2)(f), unnumbered paragraph 3, Code Supplement 1999; section 13 amends § 437A.21, Code 1999, by adding new subsection 6; section 14 amends .§ 443.2, unnumbered paragraph 2, Code 1999; section 15 amends § 445.57, Code 1999, by adding a new unnumbered paragraph; section 16 provides for the recomputation of the electric replacement delivery tax rate; and section 17 provides for retroactive applicability to January 1, 1999 for certain sections of the bill.

Effective Date

April 19, 2000. Sections 3-7, 9 and 10 apply retroactively to January 1, 1999, for tax years beginning on or after that date.

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00 SF 2424-A
UPD
ATE OF REFERENCES TO THE INTERNAL REVENUE CODE

Prior Law

The major references to the Internal Revenue Code and the references to the Internal Revenue Code in the various statutes for the research activities credit were amended through January 1, 1999.

New Provision

The major references to the Internal Revenue Code and the references to the Internal Revenue Code in the statutes for the research activities credit are updated through January 1, 2000 so the federal income tax changes made in the 1999 calendar year are adopted for Iowa income tax purposes. Therefore, all the provisions of the Taxpayer Refund And Relief Act Of 1999 are considered to be adopted for Iowa income tax purposes to the extent the provisions affected net incomes for individual taxpayers and to the extent the federal changes affected taxable incomes of corporate taxpayers. The statute for the earned income credit is amended to remove some extraneous language from the statute.

Sections Amended

Sections 1 and 2 of Senate File 2424 amend section 15.335, unnumbered paragraph 1 and section 15A.9, subsection 8, unnumbered paragraph 2. Section 3 of the Act amends section 422.3, subsection 4. Section 4 of the Act amends section 422.10, unnumbered paragraph 1. Section 5 of the Act amends section 422.12B, subsection 1. Section 8 of the Act amends section 422.33, subsection 5, unnumbered paragraph 1.

Effective Date

The sections of Senate File 2424 described above are all retroactively applicable to January 1,1999, for tax years beginning on or after that date.

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00 SF 2424-B
FILING REQUIREMENTS FOR NONRESIDENT TAXPAYERS

Prior Law

A nonresident of Iowa who had an Iowa income tax liability for Iowa minimum tax was not required to file an Iowa individual income tax return if the nonresident had an Iowa net income of less than one thousand dollars.

New Provision

A nonresident who has an Iowa net income of less than one thousand dollars is required to file an Iowa individual income tax return if the nonresident has a liability for Iowa minimum tax.

Section Amended

Section 6 of Senate File 2424 amends section 422.13, subsection 1, paragraph c.

Effective Date

Section 6 of Senate File 2424 is retroactively applicable to January 1, 2000, for tax years beginning on or after that date.

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00 SF 2424-C
TAX BENEFITS FOR MILITARY PERSONNEL SERVING IN HAZARDOUS DUTY ZONES

Prior Law

Iowa residents in the armed forces of the United States who were serving in a hazardous duty zone were not entitled to the same tax benefits as Iowa residents who served in an area designated as a combat zone.

New Provision

Iowa residents in the armed forces of the United States who serve in an area designated as a qualified hazardous duty zone are entitled to the same tax benefits as Iowa residents who serve in a combat zone. Therefore, Iowa residents who serve in a hazardous duty zone will be given additional time to file returns, make tax payments other than withholding payments, filing appeals on tax matters, and perform other acts described in the rules of the Department of Revenue & Finance.

Section Amended

Section 7 of Senate File 2424 amends section 422.21, unnumbered paragraph 2.

Effective Date

Section 7 of Senate File 2424 is retroactively effective to January 1, 1999, for tax years beginning on or after that date.

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00 SF 2426
CLASSIFICATION OF CONDOMINIUMS

Prior Law

Administrative rule 701-71.1, subrules (4) & (5), required that horizontal property regimes be classified according to the majority use of the condominiums within the regime. If a majority of the condominiums within the regime were used as commercial ventures, the regime was to be classified as commercial real estate. The rental of condominiums was considered a commercial venture. If a majority of the condominiums within the regime were used for human habitation by the owner-occupants, the regime was to be classified as residential real estate. However, those condominiums used for human habitation, including rental condominiums for which a declaration was recorded prior to January 1, 1999, were required to be classified as residential real estate through the January 1, 2004 assessment year.

New Provisions

The department's rules pertaining to the classification of condominiums was nullified by Senate File 2005. New rules will be drafted to require that each condominium be classified according to its use. If the condominium is used for human habitation, it is to be classified as residential real estate. If the condominium is used as a business, it is to be classified as commercial real estate.

City, county, or state building code requirements, whichever applicable, must be met before an existing structure can be converted to a horizontal property regime.

Sections Amended

Section 1 of Senate File 2426 amends § 499B.3, Code 1999, by adding a new unnumbered paragraph; section 2 amends § 499B.10, Code 1999; section 3 amends § 499B.11, subsection 1, Code Supplement 1999; and section 4 adds new § 499B.20.

Effective Date

April 25, 2000.

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00 SF 2439
CREDITS FROM WITHHOLDING TO FUND ACCELERATED CAREER EDUCATION PROGRAM

Prior Law

Under the prior law funding for the accelerated career education program, also known as the Ace Program, authorized in Chapter 260G was provided by cash or in-kind contributions by the employer participating in the program of a minimum of 20% of the cost of the program. Funding was also provided by tuition, student fees or special charges fixed by the board of directors of the community college conducting the accelerated training program.

The maximum from all employers which was to be transferred to the workforce development fund in any year was ten million dollars. Under this provision, when a training project authorized under Chapter 260E, or a training project authorized under sections 15A.8, 15A.7 or 15.331 which was funded by credits to withholding was completed, the amounts of withholding tax paid in the final 12 months by an employer involved in the training project was to be reported to the department of economic development by the community college conducting the training program. The department of economic development was to notify the department of revenue and finance of the amount of withholding which was to be transferred to the workforce development fund on a quarterly basis for ten years after completion of the training project.

New Provision

In addition to the previous sources of funding, funding for the Ace Program was to be provided by credits from the withheld state income tax from the employee's wages to be made to the Department of Revenue & Finance by the employer. An amount of up to ten percent of the gross program job wage as certified by the employer in the agreement is to be credited from the total withholding payments made by the employer until all the costs of the program to be funded by withholding credits have been satisfied. The total withholding credits for the accelerated career education program from all employers is not to exceed three million dollars in the fiscal year beginning July 1, 2000. The total withholding credits is not to exceed six million dollars in the fiscal years starting on July 1, 2001, July 1, 2002 and in each fiscal year starting on July 1st in those fiscal years beginning after the year ending on June 30, 2003.

The maximum of state income tax withholding from all employers which was to be transferred to the workforce development fund by the department of revenue and finance in any year is reduced from ten million dollars to nine million dollars.

Note that when a community college has completed an agreement with an employer for an Ace training program, the community college is to send the department of revenue and finance relevant information about the program so the department will be aware that the employer will be taking credits on withholding tax returns for funding of the training program as well as the amounts of the credits.

Section Amended

Section 1 of S.F. 2439 amends section 15.342A. Section 2 of the Act amends section 260G.2 and section 3 of the Act amends section 260G.3, subsection 2. Sections 4 and 5 of the Act amend Chapter 260G by adding new sections 260G.4A and 260G.4B.

Effective Date

Senate File 2439 is effective upon enactment. Thus, this Act became effective on May 18, 2000, when the governor signed the Act. However, it appears that the funding of Ace programs by withholding credits will not start until July 1, 2000.

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00 S F 2444
TAX EXEMPTION FOR PROPERTY LEASED BY THE IOWA NATIONAL GUARD

Prior Law

Property was required to be owned by the Iowa National Guard for the tax exemption to be applicable.

New Provision

Property leased from a city or county by the Iowa National Guard or by a federal agency for the benefit of the Iowa National Guard is exempt from taxation if devoted to public use and not for profit.

Section Amended

Section 1 of Senate File 2444 amends § 427.1(2), Code Supplement 1999.

Effective Date

July 1, 2000. Applicable to assessment years beginning January 1, 2001.

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00 SF 2447
VISION IOWA PROGRAM

Prior Law

None

New Provisions

Bonds issued under Iowa Code section 12.71(8) are exempt from taxation by the state and the interest on the bonds is exempt from the state income, inheritance, and estate tax.

Section Amended

Section 15 of Senate File 2447 created Code subsection 12.71(8).

Effective Date

Effective July 1, 2000 for bonds issued on or after that date.