2005 Iowa Legislative Summaries

Bill Number Description
Special Filing Requirements For Coupling With 50% Bonus Depreciation And Increased Section 179 Expensing
HF 186 Update Of References To The Internal Revenue Code
HF 186 A Military Personnel Tax Provisions-Exclusion From Income For Death Benefit Gratuity And Deduction For Overnight Expenses
HF 186 B Election To Deduct State Sales Tax On State Income Tax As An Itemized Deduction
HF 186 C Foreign Dividend Exclusion
HF 187 Utility Replacement Tax Task Force
HF 197 Joint Account Reporting Requirement-Inheritance Tax
HF 216 Motor Fuel Tax Refund (Urban Transit Systems)
HF 281 Iowa Inheritance Tax Return Changes
HF 310 Toys For Tots Type Organization Exemption Sales And Use Tax
HF 313 Establishment Of The Industrial Processing Exemption Study Committee
HF 339 Tobacco Products Retail Permits
HF 374 Military Service Property Tax Exemption
HF 589 Property Tax Exemption For Nursing Facilities
HF 761 A Child And Dependent Care Credit
HF 761 B Early Childhood Development Tax Credit
HF 801 Deduction For Unreimbursed Expenses Relating To Human Organ Transplants
HF 831 A Tax Credit Cap For Investments In Qualifying Businesses And Community-Based Seed Capital Funds
HF 831 B Tax Credits For Investments In Qualifying Businesses
HF 831 C Tax Credits For Investments In Community-Based Seed Capital Funds
HF 840 Racetrack Rebate Sales And Use Tax Pilot Project
HF 856 Habitat For Humanity Type Organization Sales And Use Tax Exemption
HF 857 Transfer Of The Eligible Housing Business Investment Tax Credit
HF 859 Tax Credits For Cooperatives
HF 868 A Economic Development Region Revolving Fund Tax Credits
HF 868 B Increase In Funding And Eligibility For The Property Rehabilitation Tax Credit
HF 868 C High Quality Job Creation Program
HF 868 D New Jobs Credit Sales And Use Tax Refund
HF 868 E Third-Party Developer Corporate Tax Credit For Sales And Use Tax Paid
HF 868 F Wage-Benefits Tax Credit
HF 868 G Research & Development Tax Credit
HF 868 H Endow Iowa Tax Credit
HF 868 I E-85 Blended Gasoline
HF 868 J Port Authority Property Tax Exemption
HF 868 K Property Assessment Appeal Board
HF 868 L Assessor Compliance
HF 882 A Property Tax Credit Funding
HF 882 B Taxpayers Who May Claim Eligible Housing Investment Tax Credits and Property Rehabilitation Tax Credits
HF 882 C Low-Rent Housing Property Tax Exemption (Refinancing Mortgage)
HF 882 D Property Tax Exemption For Low-Rent Dwelling Units
HF 882 E Manufactured Home Community And Mobile Home Park Storm Shelter Valuation
HF 882 F Wind Energy Production Tax Credit
HF 882 G Wind Energy Conversion Property
SF 78 Exemption From City Taxes (Annexed Property)
SF 114 Contingent Tax Credits For Investments Made In The Iowa Fund Of Funds
SF 265 Partial Payment Of Property Tax/Tax Statement
SF 379 Establishment Of Chapters Of Probate Code-Inheritance Tax
SF 389 Tax Credit For Soy-Based Cutting Tool Oil
SF 390 A Renewable Energy Tax Credit
SF 390 B Renewable Energy Tax Credit Sales And Use Tax Refund
SF 390 C Replacement Tax Reimbursement For Renewable Energy Tax Credits
SF 413 A Transfer of E911 Surcharge Exemptions To Chapter 423
SF 413 B Clarifying The Definition Of “Sales Price”
SF 413 C Redefining Taxable And Exempt Transportation Services And Delivery Charges
SF 413 D Restoring The Food Manufacturer’s Tangible Personal Property Rental Exemption
SF 413 E Changes In The Exemption In Favor Of Contractor’s Equipment Rentals
SF 413 F Revising The Prescription Drug And Medical Device Exemption
SF 413 G Physical Presence No Longer Required To Collect Local Option Taxes
SF 413 H Removal Of Lottery Tickets From Local Option Taxes Exemptions
SF 413 I Moving Room Rental Tax From The Streamlined Sales And Use Tax Law And Creating An Excise Tax On Hotel And Motel Room Rentals
SF 413 J Moving Sales Of Specific Construction Equipment From The Streamlined Sales And Use Tax Law And Creating An Excise Tax On Specific Construction Equipment
SF 413 K Federal Income Tax Deduction And Federal Refund-Tax Benefit Rule For Individuals
SF 413 L Deduction For Registration Fees Paid For Multipurpose Vehicles And Older Vehicles
SF 413 M Withholding Tax Filing And Threshold Changes
SF 413 N New Definition of “Employer”
SF 413 O Certificate Of Sales Tax On State Bids And Contracts
SF 413 P New Exemption-Materials Associated With Agricultural Drainage Tile
SF 413 Q Vehicles, Aircraft And Boats Not Casual Sales-Sales And Use Tax
SF 413 R Exemption For Services Performed On A Vessel-Sales And Use Tax
SF 413 S Change In Beginning And Ending Dates-Hotel/Motel Tax
SF 413 T Change In Estimating Date For School Infrastructure Local Option Tax (SILO)
SF 413 U Homestead Tax Credit Estimate
SF 413 V Environmental Protection Charge
SF 413 W Late Filed Claims For Property Tax Exemption
SF 413 X Assessor Appointment/Continuing Education
SF 413 Y Assessment Protests-Property Tax
SF 413 Z Motor Fuel Definitions, Reports & Inventory Tax
SF 413 AA Declaratory Judgment On Nexus Sales And Use Tax
SF 413 BB Assault Against A Revenue Employee

 

HF 102 - SPECIAL FILING REQUIREMENTS FOR COUPLING WITH 50% BONUS DEPRECIATION AND INCREASED SECTION 179 EXPENSING

Prior Law

In a special session held in September 2004, Iowa law was coupled with the additional 50% first-year depreciation allowance (bonus depreciation) for assets acquired after May 5, 2003, but before January 1, 2005. In addition, Iowa law was coupled with the increase in the Section 179 expensing allowance from $25,000 to $100,000 for tax years beginning on or after January 1, 2003 ($102,000 for tax years beginning on or after January 1, 2004 and $105,000 for tax years beginning on or after January 1, 2005). For taxpayers who filed their 2003 Iowa tax return which reflected the disallowance of 50% bonus depreciation or the disallowance of increased section 179 expensing, amended returns were required for 2003 to reflect this change.

New Provisions

Additional options are allowed for taxpayers to reflect this change regarding 50% bonus depreciation and increased section 179 expensing for the 2003 tax year. Besides filing an amended return for 2003, two other options are available.

First, taxpayers can reflect the change in depreciation and section 179 expensing relating to the 2003 return on the 2004 Iowa return. If a taxpayer filed their 2004 Iowa return prior to February 24, 2005, and did not reflect the “catch-up” adjustment, taxpayers can still choose this option and make this “catch-up” adjustment on the 2005 Iowa return.

The second option allowed is for taxpayers to continue to decouple with the 50% bonus depreciation and increased section 179 expensing. There would be no requirement to either file an amended return for 2003 or make a “catch-up” adjustment on the 2004 Iowa return. The taxpayer would continue to use the depreciation method used on the 2003 Iowa return for assets acquired in 2003. In addition, taxpayer could continue to decouple with 50% bonus depreciation for the 2004 tax year and continue to decouple with the increased section 179 expensing allowance for the 2004 and 2005 tax year.

Section Amended

Section 1 of House File 102 amends section 422.7, subsection 39, paragraph b, Code 2005. Section 2 amends section 422.7 by adding new subsection 44, Code 2005. Section 3 amends section 422.35, subsection 19, paragraph, b, Code 2005. Section 4 amends section 422.35 by adding new subsection 20, Code 2005.

Effective Date

The changes relating to 50% bonus depreciation are retroactive to tax years ending after May 5, 2003. The changes relating to increased section 179 expensing are retroactive to tax years beginning on or after January 1, 2003.

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HF 186 - UPDATE OF REFERENCES TO THE INTERNAL REVENUE CODE

Prior Law

The primary references to the Internal Revenue Code in the various statutes for the determination of income were amended through January 1, 2003. The primary references to the Internal Revenue Code in the various statutes for the research activities credit were amended through January 1, 2004.

New Provisions

The primary references to the Internal Revenue Code were amended to January 31, 2005 to include the federal income tax changes in the following federal legislation:

Some of the major provisions of this federal legislation are set forth below:

Federal tax provisions relating to an election to claim an itemized deduction for state sales tax and certain provisions relating to military personnel are described in detail in other summaries.

The references to the Internal Revenue Code in the various statutes for the Iowa research activities credit are updated to January 31, 2005, so the federal changes in the research activities credit are adopted for Iowa tax purposes.

Section Amended

Section 1 of House File 186 amends section 15.335, subsection 4, Code 2005. Section 2 amends section 15A.9, subsection 8, paragraph e, Code 2005. Section 3 amends section 422.3, subsection 5, Code 2005. Section 6 amends section 422.10, subsection 3, Code 2005. Section 7 amends section 422.32, subsection 7, Code 2005. Section 8 amends section 422.33, subsection 5, paragraph d, Code 2005.

Effective Date

Sections 1 through 3 and sections 7 through 9 are retroactive to January 1, 2003, for tax years beginning on or after that date.

HF 186-A - MILITARY PERSONNEL TAX PROVISIONS - EXCLUSION FROM INCOME FOR DEATH BENEFIT GRATUITY AND DEDUCTION FOR OVERNIGHT EXPENSES

Prior Law

An exclusion for Iowa income tax was allowed, to the extent income was included on the federal return, for the amount of death gratuity payment received by survivors of deceased members of the armed forces for deaths occurring after September 10, 2001.

A deduction in computing net income was allowed of up to $1,500 in overnight travel expenses of individuals in the national guard and military reserve who travel away from home more than one hundred miles for the performance of services for the guard or reserve. If these expenses were deducted for Iowa tax purposes, these same expenses could not be claimed as an itemized deduction for Iowa tax purposes.

New Provisions

The Military Family Tax Relief Act of 2003 allows the exclusion of income for federal tax purposes for the amount of the death gratuity benefit. Since the references to the Internal Revenue Code were updated through January 31, 2005, a separate Iowa exclusion for the death gratuity benefit was not needed.

The Military Family Tax Relief Act of 2003 also allowed a deduction for overnight travel expenses of individuals in the national guard and military reserves who travel away from home more than one hundred miles in the performance of their duties. This deduction was not capped for federal tax purposes. Since the references to the Internal Revenue Code were updated through January 31, 2005, a separate Iowa deduction was not needed. National guard and military reservists are allowed the same deduction for Iowa tax purposes for overnight travel that is allowed for federal tax purposes.

Section Amended

Section 4 of House File 186 amends section 422.7, Code 2005, by striking subsections 41 and 43. Section 5 amends section 422.9, subsection 2, paragraph k, Code 2005.

Effective Date

The provisions regarding the death gratuity benefit is retroactive to tax years ending after September 10, 2001. The provision regarding overnight travel expenses is retroactive to January 1, 2003, for tax years beginning on or after that date.

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HF 186-B - ELECTION TO DEDUCT STATE SALES TAX OR STATE INCOME TAX AS AN ITEMIZED DEDUCTION

Prior Law

Only state income taxes were allowed as an itemized deduction for federal and state income tax purposes, and no itemized deduction was allowed for Iowa income taxes.

New Provisions

The American Jobs Creation Act of 2004 allows individuals the option of claiming an itemized deduction of state income tax paid or state sales and use tax paid for the 2004 and 2005 tax year only for federal tax purposes.

For Iowa purposes, the itemized deduction for state sales and use tax paid is allowed only if the taxpayer claimed an itemized deduction for state sales and use tax paid on the federal return. If a taxpayer claimed state income taxes as an itemized deduction on the federal return, or claimed the standard deduction on the federal return, the taxpayer cannot claim an itemized deduction for state sales and use tax paid on the Iowa return. In addition, if taxpayer claims the itemized deduction for state sales and use tax paid on the federal return, taxpayer cannot claim an itemized deduction for the school district surtax and EMS surtax on the Iowa return.

Section Amended

Section 5 of House File 186 amends section 422.9, subsection 2, paragraph, k, Code 2005.

Effective Date

Effective for tax years beginning after December 31, 2003, and before January 1, 2006.

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HF 186-C - FOREIGN DIVIDEND EXCLUSION

Prior Law

While there was no provision in the Iowa Code, a deduction has been allowed for tax years beginning on or after January 1, 1992 for corporation income tax for foreign dividend income based upon the United States Supreme Court decision in Kraft General Foods, Inc. v. Iowa Department of Revenue and Finance, 505 U.S. 71 (1992).

New Provisions

The deduction for Iowa corporation income tax for foreign dividend income is now codified. The deduction is allowed for foreign dividends, including Subpart F Income as defined in section 952 of the Internal Revenue Code, based on the percentage of ownership set forth in Section 243 of the Internal Revenue Code. For foreign dividend income from payors less than 20% owned, the deduction is 70% of the foreign dividend income. For foreign dividends from payors owned 20% or more but less than 80% owned, the deduction is 80% of the foreign dividend income. For foreign dividends from payors 80% or more owned, the deduction is 100% of the foreign dividend income.

Section Amended

Section 9 of House File 186 amends section 422.35, Code 2005, by adding new subsection 20.

Effective Date

Applies retroactive to January 1, 1992, for tax years beginning on or after that date.

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HF 187 - UTILITY REPLACEMENT TAX TASK FORCE

Prior Law

The utility replacement tax task force expired on January 1, 2005.

New Provisions

The legislation extends the utility replacement tax task force through January 1, 2007. The bill designates the director of the department of management and the director of revenue as co-chairpersons of the task force. The department of management is required to transmit any recommendations from the task force for modifications to the replacement tax to the general assembly.

Sections Amended

Section 1 of House File 187 amends section 437A.15, subsection 7, Code 2005.

Effective Date

July 1, 2005.

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HF 197 - JOINT ACCOUNT REPORTING REQUIREMENT INHERITANCE TAX

Prior Law

Banks, credit unions, savings and loan associations, and other persons must notify the Department of Revenue prior to the withdrawal of funds from a joint account by a surviving joint owner. The department is to be notified of the balance in such account at the date of the decedent's death and the name and address of the surviving joint owner. The notice may be mailed to the department. A willful failure to report to the department as required makes the bank, credit union, savings and loan association, or other person liable for any inheritance tax due by the surviving joint owner.

New Provisions

Iowa Code sections 450.97 was repealed. Consequently, financial institutions no longer have the duty to report this information to the department.

Section Amended

House File 197, Code 2005.

Effective Date

Effective July 1, 2005

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HF 216 - MOTOR FUEL TAX REFUND (URBAN TRANSIT SYSTEMS)

Prior Law

An Iowa urban transit system is allowed a refund of tax paid on motor fuel used in the transportation of passengers for an established fare.

New Provisions

The tax refund provision is expanded to include a company operating a taxicab service under contract with an Iowa urban transit system.

Sections Amended

Section 43 of House File 216 amends section 452A.17, subsection 1, paragraph a, subparagraph 2, Code 2005.

Effective Date

July 1, 2005.

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HF 281 - IOWA INHERITANCE TAX RETURN CHANGES

Prior Law

Effective for estates with decedents dying on or after July 1, 2004, Iowa changed its law and provided that if there was no Iowa inheritance tax due in an estate, then it is not necessary to file an Iowa inheritance tax return in certain situations. In addition, the law stated that if a no tax due estate where no inheritance tax return was necessary, but, the estate involved real property, then to effectuate the transfer of the real estate, the person succeeding in interest to the real estate could file an affidavit regarding the transfer of the real property. If a false affidavit is filed regarding real property in the estate, then the personal representative and the affiant are jointly and severally liable for any tax, penalty and interest that may be due and any statute of limitations cannot bar the department’s collection of the tax, penalty and interest.

If an inheritance tax return is not required because the estate meets one of the criteria, the final settlement of account need not contain an inheritance tax receipt (clearance) issued by the department. Instead, the personal representative must file with the settlement an affidavit that an inheritance tax return was not required to be filed pursuant to these amendments. If a false affidavit is filed, then the affiant and the personal representative will be held jointly and severally liable for any tax, penalty and interest due on the estate and any statute of limitations on the assessment and collection of the tax, penalty and interest does not apply.

New Provisions

Iowa Code sections 450.22(4), 450.53(2), and 450.58(2) were amended to eliminate the language that provides that if a false affidavit is filed, the affiant and personal representative are jointly and severally liable for the tax, penalty, and interest since Code section 450.5 provides for this. Code section 450.22(4) is also amended to provide that anyone with or succeeding to an interest in real estate who willfully fails to file an affidavit or files a false affidavit in regard to a return not required to be filed is guilty of a fraudulent practice.

Section Amended

Sections 1, 2, 3, and 4, of House File 281 amend sections 450.22 subsection 4, 450.53 subsection 2, 450.58 subsection 2, and 450.94 subsection 5, respectively, Code 2005.

Effective Date

These amendments apply retroactively to July 1, 2004, for estates of decedents dying on or after that date.

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HF 310 - TOYS FOR TOTS TYPE ORGANIZATION EXEMPTION SALES AND USE TAX

Prior Law

No prior exemption

New Provisions

Iowa Code section 423.3 was amended to provide an exemption from Iowa sales and use tax for sales of toys made to an organization which receive donations for the purchases of the toys. To qualify, the organization must be exempt from federal income tax pursuant to Internal Revenue Code section 501 and the organization must distribute the purchased toys to children at no cost.

Section Amended

House File 310, Code 2005

Effective Date

July 1, 2005

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HF 313 - ESTABLISHMENT OF THE INDUSTRIAL PROCESSING EXEMPTION STUDY COMMITTEE

Prior Law

The Committee was an informally constituted entity. An attempt to establish its existence by statute was declared by the Iowa Supreme Court to have never been enacted into law.

New Provisions

House File 313 directs the Department of Revenue to initiate and coordinate the establishment of an industrial processing exemption study committee and provide staffing assistance to the committee. The committee shall include representatives of the department of revenue, department of management, industrial producers including manufacturers, fabricators, printers and publishers, and an association that specifically represents business tax issues, and other stakeholders. The committee shall study and make legislative and administrative recommendations relating to Iowa's processing exemption to ensure maximum utilization by Iowa's industries. The committee shall annually report to the general assembly by January 1 of each year through January 1, 2013.

Section Amended

None. Not codified.

Effective Date

Upon enactment (04-29-05).

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HF 339 - TOBACCO PRODUCTS RETAIL PERMITS

Prior Law

Retailers of tobacco products were not required to obtain a permit.

New Provisions

Retailers of tobacco products are now required to obtain a permit. The new provisions for tobacco product retailers follow those presently in existence for cigarette retailers.

Sections Amended

Section 1 of House File 339 amends section 453A.3, subsection 1, paragraphs a and b; section 2 amends section 453A.5, subsections 1 and 2; section 3 amends section 453A.22 by adding new subsection 8; and section 4 adds new section 453A.47A. All amendments are to the 2005 Code.

Effective Date

July 1, 2005.

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HF 374 - MILITARY SERVICE PROPERTY TAX EXEMPTION

Prior Law

Former members of the United States reserves and Iowa national guard who had served at least 20 years after January 28, 1973 and who were honorably discharged were eligible for the military service property tax exemption.

Current members of the United States reserves and Iowa national guard were not eligible for the exemption.

With a few exceptions contained in Iowa Code section 35.1(b), it was a requirement that a veteran have performed military service during a specific time period.

New Provisions

Former members of the United States reserves and Iowa national guard who served at least 20 years and were honorably discharged are eligible for the exemption. The January 28, 1973 date is no longer of any significance for eligibility purposes.

Current members of the United States reserves and Iowa national guard who have served at least 20 years are eligible for the exemption.

Former members of the armed forces of the United States who performed at least 3 years of military service, regardless of the time period, and who were honorably discharged are now eligible for the exemption.

Sections Amended

Section 3 of House File 374 amends section 35.1, subsection 2, paragraph b, subparagraphs 1 and 2; Section 4 amends section 35.1, subsection 2, paragraph b, by adding new subparagraphs 6 and 7; Section 5 adds new section 35.2; Section 32 amends section 426A.11 by adding new subsection 2A; Section 33 amends section 426A.12; and section 34 amends section 426A.13, unnumbered paragraphs 1 and 2. All amendments are to Code 2005.

Effective Date

May 5, 2005. Applicable to taxes payable beginning on or after July 1, 2006.

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HF 589 - PROPERTY TAX EXEMPTION FOR NURSING FACILITES

Prior Law

The assessor in arriving at the valuation of property owned or used by certain nonprofit organizations was required to exempt from taxation that portion of the property used for the appropriate objects of the organization and not exempt from taxation any portion of the property used for a commercial purpose.

New Provisions

The assessor is not allowed to deny an exemption on the property of a nursing facility, as defined in Iowa Code section 135C.1(13), which is exempt from income tax under section 501(c)(3) of the Internal Revenue Code, and otherwise qualified, regardless of the fact that the property is occupied by private pay residents or residents for whom the cost of care is paid under Title XIX of the federal social security act.

Sections Amended

Section 1 of House File 589 amends section 427.1, subsection 14, Code 2005.

Effective Date

May 12, 2005. Applies to property taxes due and payable in the fiscal year beginning July 1, 2005. An application for exemption must have been filed in 2004 for the exemption to be allowable against taxes payable in the 2005-2006 fiscal year and an application for exemption must have been filed in 2005 for the exemption to be allowable against taxes payable in the 2006-2007 fiscal year.

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HF 761-A - CHILD AND DEPENDENT CARE CREDIT

Prior Law

The Iowa child and dependent care credit is based upon a percentage of the federal child and dependent care credit. The Iowa credit is not allowed for taxpayers who have net income of $40,000 or more.

New Provisions

The Iowa child and dependent care credit is allowed for taxpayers with net income of $40,000 or more, but less than $45,000. The credit is equal to 30% of the federal child and dependent care credit. The Iowa credit is not allowed for taxpayers who have net income of $45,000 or more.

Section Amended

Section 23 of House File 761 amends section 422.12C, subsection 1, paragraph f, Code 2005. Section 24 amends section 422.12C, subsection 1, Code 2005, by adding new paragraph g.

Effective Date

Effective for tax years beginning on or after January 1, 2006.

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HF 761-B - EARLY CHILDHOOD DEVELOPMENT TAX CREDIT

Prior Law

None

New Provisions

An early childhood development tax credit is available for individual income tax equal to 25% of the first $1,000 of expenses paid for early childhood development expenses for each dependent from the ages of three to five. The credit is only available to taxpayers whose net income is less than $45,000. If the taxpayer claims the early childhood development tax credit, the taxpayer cannot claim the Iowa child and dependent care credit.

Early childhood development expenses that qualify for the credit include the following:

Early childhood development expenses that do not qualify for the credit include:

Each taxpayer who intends to claim this credit must apply to the department by November 1 of the tax year to which the credit is applicable. The expenses eligible for the credit include those incurred between November 1 of the previous tax year through October 31 of the tax year to which the credit is applicable. The Department must compute the total amount of credits allowable, which cannot exceed $2.5 million. If tax credits exceed this amount, the taxpayer will receive a pro rata amount of the credit. The department must notify the taxpayer of the amount of the tax credit allowed by January 1 following the deadline for the application.

For married taxpayers who elect to file separately on a combined return, the early childhood development tax credit shall be prorated to each spouse in the proportion that each spouse’s respective net income bears to the total combined net income.

Section Amended

Section 25 of House File 761 amends section 422.12C, Code 2005, by adding new subsection 1A. Section 26 amends section 422.12C, subsection 3, Code 2005.

Effective Date

Effective for tax years beginning on or after January 1, 2006.

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HF 801 - DEDUCTION FOR UNREIMBURSED EXPENSES RELATING TO HUMAN ORGAN TRANSPLANTS

Prior Law

None

New Provisions

A deduction in computing Iowa adjusted gross income is allowed for taxpayers for unreimbursed expenses relating to a human organ transplant. The taxpayer, while living, who donates all or part of their liver, pancreas, kidney, intestine, lung or bone marrow to another human being for immediate human organ transplant, can claim a deduction for unreimbursed expenses such as travel expenses, lodging expenses and lost wages.

The deduction is limited to $10,000, and a taxpayer can only claim this deduction once. If a taxpayer claims this deduction for Iowa tax purposes, the taxpayer cannot also claim these same unreimbursed expenses as an itemized deduction for medical expenses on the Iowa return.

Section Amended

Section 1 of House File 801 amends section 422.7, Code 2005, by adding new subsection 44.

Effective Date

Retroactive to January 1, 2005, for tax years beginning on or after that date.

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HF 831-A - TAX CREDIT CAP FOR INVESTMENTS IN QUALIFYING BUSINESSES AND COMMUNITY-BASED SEED CAPITAL FUNDS

Prior Law

Tax credits issued by the Iowa Capital Investment Board for equity investments in a qualifying business and community-based seed capital fund were capped at $3 million for the fiscal year ending June 30, 2003, $3 million for the fiscal year ending June 30, 2004 and $4 million for the fiscal year ending June 30, 2005. There was no provision to issue tax credits after June 30, 2005.

New Provisions

To the extent that the total amount of $10 million of tax credits have not been issued by June 30, 2005, any remaining amount of tax credits can be issued for fiscal years subsequent to the year ending June 30, 2005. The maximum amount of tax credits that can be issued for any one subsequent fiscal year is $3 million.

Section Amended

Section 1 of House File 831 amends section 15E.43, subsection 4, Code 2005.

Effective Date

July 1, 2005

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HF 831-B - TAX CREDITS FOR INVESTMENTS IN QUALIFYING BUSINESSES

Prior Law

For an investment in a qualifying business to be approved by the Iowa Capital Investment Board for a tax credit, the business had to be in operation for three years or less, and could not have a net worth that exceeded $3 million.

New Provisions

For the qualifying business to be approved, the business has to be in operation for six years or less, and cannot have a net worth that exceeds $10 million.

Section Amended

Section 2 of House File 831 amends section 15E.44, subsection 2, paragraphs (b) and (e), Code 2005.

Effective Date

July 1, 2005

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HF 831-C - TAX CREDITS FOR INVESTMENTS IN COMMUNITY-BASED SEED CAPITAL FUNDS

Prior Law

For an investment in a community-based seed capital fund to be approved by the Iowa Capital Investment Board for a tax credit, the fund could not have capital commitments in excess of $3 million unless the fund was a rural business investment company. The fund must also invest at least thirty-three percent of its investment capital in one or more qualifying businesses within thirty-six months after commencing the fund’s investment activities. An investor in a community-based fund did not also receive a tax credit for the investor’s share of investments made by the fund in a qualifying business. The community-based fund could not invest in the Iowa fund of funds.

New Provisions

If the fund is an Iowa-based seed capital fund with at least 40% of its committed capital subscribed by community-based seed capital funds, the fund can have capital commitments in excess of $3 million and still be approved. The fund must invest at least thirty-three percent of its investment capital in one or more qualifying businesses within forty-eight months after commencing the fund’s investment activities. An investor in a community-based fund also does not receive a tax credit for the investor’s share of investments made by the fund in an Iowa-based seed capital fund with at least 40% of its committed capital subscribed by community-based seed capital funds. A community-based seed capital fund may invest up to 60% of its committed capital in an Iowa-based seed capital fund with at least 40% of its committed capital subscribed by community-based seed capital funds.

Section Amended

Section 3 of House File 831 amends section 15E.45, subsection 2, paragraph (b), Code 2005. Section 4 amends section 15E.45, subsections 6, 7 and 8, Code 2005.

Effective Date

July 1, 2005

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HF 840 - RACETRACK REBATE SALES AND USE TAX PILOT PROJECT

Prior Law

No prior exemption

New Provisions

Iowa Code section 423.4 was amended to create a state sales tax rebate provision which provides that a nationally sanctioned automobile racetrack facility may apply for a rebate of sales tax imposed and collected by retailers on the sales of any goods, wares, merchandise, or services to purchasers at the racetrack facility.

To be eligible for the rebate all of the following must occur:

  1. An automobile racetrack facility under this provision must be sanctioned and includes the racetrack, entertainment complex and any museum attached to the racetrack facility. However, any restaurant is excluded from this project.
  2. The facility must be located on a maximum of 232 acres.
  3. The facility must be located in a city with a population of at least 14,500 to a maximum of 16,500 residents.
  4. The facility must be located in an Iowa county of at least 35,000 but not more than 40,000 residents.
  5. Construction of the racetrack facility must begin by July 1, 2006.
  6. Cost of construction of the race track facility upon completion must be at least 35 million dollars.
  7. If there is a change in control of the facility, the rebate sales tax program ceases. The original owners of the facility must consist of residents of Iowa or an Iowa corporation or both with at least 60% of the equity interest in the ownership of the legal entity owning the facility. A change in control occurs if:

a. Any change from original ownership that changes the Iowa ownership percentage of the voting equity interest in any legal entity that is the original owner.

c. Any subsequent legal entity that is owner or operator of the racetrack facility does not meet at least the minimum 60% equity interest by Iowa residents or an Iowa corporation or both.

To obtain a rebate, the racetrack facility must do all of the following:

  1. Must file for the rebate on a department form.
  2. Must file the rebate form with the department in a timely manner with the filing requirement not being any longer than quarterly.
  3. Provide all information on the form as requested.
  4. The rebate requested must be for sales tax collected on or after January 1, 2006 and before January 1, 2016.
  5. Rebates are limited to a total of $12,500,000 for the entire rebate period.
  6. Rebates of sales tax on transactions to the racetrack facility will cease when someone other than the original owner takes over the facility or there is a change of control of the facility.
  7. The racetrack facility is not to receive any grants under community attraction, tourism or vision Iowa;
  8. The racetrack facility must provide the department with the identity of all retailers at the racetrack facility who will be collecting sales tax.

Only state sales tax is subject to rebate and not local option taxes.

This sales tax rebate program is viewed as a pilot project to gauge the feasibility of using this type of project for the other large capital projects that can increase tourism in Iowa.

The Department of Economic Development and Department of Revenue will review and evaluate the projects. A report must be filed by January 15, 2008 regarding the review, evaluation and recommendation of this project.

Section Amended

Iowa Code section 423.4 by adding new subsections (4) (a) through (g), House File 840, Code 2005

Effective Date

July 1, 2005. Rebate period is for sales occurring on or after January 1, 2006, but before January 1, 2016 or earlier if $12,500,000 has been provided in rebates prior to the closing date.

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HF 856 - HABITAT FOR HUMANITY TYPE ORGANIZATION SALES AND USE TAX EXEMPTION

Prior Law

No prior exemption

New Provisions

Iowa Code section 423.3 was amended to create a new subsection which provides a sales and use tax exemption for the sale of building materials, supplies, and services to a nonprofit Iowa affiliate of a nonprofit international organization whose primary activity is the promotion of the construction and repair of one-family or two-family dwellings for the use by low income families. The exemption applies only if the building materials and supplies are used in the construction or repair of such dwellings.

A contractor who has paid tax on building materials, supplies and services for this purpose must inform the organization of the items or services in which tax was paid and within one year of the date of settlement of the contract for the purchase of such items and services, the organization must apply to the department for a refund of sales or use tax that had been paid..

Section Amended

Iowa Code section 423.3 by adding a new subsection, House File 856, Code 2005

Effective Date

Effective July 1, 2005

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HF 857 - TRANSFER OF THE ELIGIBLE HOUSING BUSINESS INVESTMENT TAX CREDIT

Prior Law

The eligible housing investment tax credit may be transferred to any other person or entity only in cases where low-income housing tax credits authorized under Section 42 of the Internal Revenue Code are used to assist in the financing of the housing development. These eligible housing businesses must be approved by the Department of Economic Development.

New Provisions

The eligible housing investment tax credit can also be transferred to another person or entity if the housing development is located in a brownfield site or in a blighted area. No more than $3 million dollars of tax credits for housing developments in a brownfield site or blighted area can be transferred in one calendar year. The Department of Economic Development cannot issue more than $1.5 million in tax credits certificates for transfer to any one eligible housing business located in a brownfield site or blighted area.

If $3 million in tax credit certificates for transfer are not issued by the end of the calendar year, the remaining certificates for transfer may be issued in advance to an eligible business scheduled to receive a tax credit certificate for transfer in a later year. If the entire $3 million of tax credit certificates for transfer are not issued in a given calendar year, the remaining amount may be carried over to a succeeding calendar year.

Section Amended

Section 1 of House File 857 amends section 15E.193B, subsection 8, Code 2005.

Effective Date

Applies to transfers of tax credit certificates for projects that begin on or after July 1, 2005.

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HF 859 - TAX CREDITS FOR COOPERATIVES

Prior Law

For eligible businesses approved under the New Jobs and Income Program, Enterprise Zone Program and the New Capital Investment Program, an investment tax credit is available based on a percentage of the new investment which is directly related to new jobs created by the location or expansion of the eligible business. If the business is a cooperative organized under chapter 501 of the Iowa code and files as a partnership for federal income tax purposes, an individual may claim the investment tax credit based on the pro rata share of the individual’s earnings of the cooperative organized under chapter 501.

New Provisions

House File 859 established a new form of cooperative which is organized under chapter 501A of the Iowa code. This establishes a hybrid organization which combines elements of both cooperative associations and limited liability companies. Its purpose is to allow the formation of these types of cooperatives which will be taxed as a limited liability company for federal income tax purposes. Most limited liability companies are taxed as partnerships for federal tax purposes.

If the business eligible for the investment tax credit is a cooperative organized under chapter 501A of the Iowa code and files as a partnership for federal income tax purposes, an individual may claim the investment tax credit based on the pro rata share of the individual’s earnings of the cooperative organized under chapter 501A.

Section Amended

Section 103 of House File 859 amends section 15.333, subsection 1, Code 2005. Section 136 of House File 882 amends section 15.385, subsection 4, paragraph a, Code 2005.

Effective Date

July 1, 2005

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HF 868-A - ECONOMIC DEVELOPMENT REGION REVOLVING FUND TAX CREDITS

Prior Law

None

New Provisions

An economic development region revolving fund tax credit is available for individual income, corporation income, franchise, insurance premiums and moneys and credits tax.

An economic development region shall consist of no less then three counties, unless two contiguous counties have a combined population of at least 300,000. These economic development regions must establish a focused economic development effort that will include a regional development plan relating to areas such as advanced manufacturing, life sciences and biotechnology, insurance or financial services, and information solutions. These regions may create a revolving fund.

A tax credit equal to 20% of the contribution made to an economic development region revolving fund is available for individual income, corporation income, franchise, insurance premium and moneys and credits tax. If the contribution is made by a partnership, limited liability company, S corporation, estate or trust, the tax credit is claimed by an individual based on the pro rata share of the individual’s earnings from the partnership, limited liability company, S corporation or estate or trust. Any tax credit in excess of the tax liability can be carried forward for the following ten years or until depleted, whichever is the earlier. The tax credit cannot be carried back to a year prior to when a contribution was made, and the credit is not transferable.

A nonprofit organization exempt from federal income tax which makes a contribution to a revolving fund receives from the general fund of the state an amount equal to 20% of their contribution. This is received within thirty days after the end of the fiscal year during which the contribution was made.

The total amount of tax credits and payments to nonprofit organizations authorized during a fiscal year cannot exceed $2 million. Any credit amount less than $2 million that is unused in a fiscal year can be carried forward to the succeeding fiscal year.

The Department of Economic Development is responsible for administering and authorizing these tax credits and payments to nonprofit organizations.

Section Amended

Section 10 of House File 868 creates new section 15E.232. Section 13 creates new section 422.11K. Section 14 amends section 422.33, Code 2005, by adding new subsection 17. Section 15 amends section 422.60, Code 2005, by adding new subsection 9. Section 16 creates new section 432.12F. Section 17 amends section 533.24, Code 2005, by adding new subsection 6.

Effective Date

July 1, 2005.

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HF 868-B - INCREASE IN FUNDING AND ELIGIBILITY FOR THE PROPERTY REHABILITATION TAX CREDIT

Prior Law

A property rehabilitation tax credit was available for individual income, corporation income, franchise and insurance premium tax. The annual appropriation for the property rehabilitation tax credit was limited to $2.4 million per fiscal year, and tax credit certificates are issued by the Department of Cultural Affairs for these tax credits. The projects eligible for the property rehabilitation tax credit were set forth in section 404A.1, Code 2005, and were certified by the Department of Cultural Affairs. Because of the $2.4 million limitation, tax credit certificates are being issued which cannot be claimed on a tax return until the 2015 tax year.

New Provisions

The property rehabilitation tax credit is now available for projects in cultural and entertainment districts that are certified by the Department of Cultural Affairs in accordance with new Code section 303.3B. Also, the property rehabilitation tax credit has been renamed the “Historic Preservation and Cultural and Entertainment District Tax Credits.”

For fiscal years beginning July 1, 2005 and ending June 30, 2015, an additional $4 million of tax credits may be approved for each of these fiscal years for projects located in cultural and entertainment districts. If any portions of the $4 million are not claimed for a fiscal year, the credits can be applied against reserved tax credits for the former property rehabilitation tax credit, in order of the original reservation. With the exception of tax credits issued in accordance with contracts entered into prior to July 1, 2005, the tax credits shall not be reserved for more than five years into the future.

Section Amended

Section 19 of House File 868 creates new section 303.3B. Section 20 amends section 404A.1, subsection 1, Code 2005. Section 21 amends section 404A.1, subsection 2, unnumbered paragraph 1, Code 2005. Section 22 amends section 404A.3, subsection 2, unnumbered paragraph 2, Code 2005. Section 23 amends section 404A.4, subsection 2, Code 2005. Section 24 amends section 404A.4, subsection 3, Code 2005. Section 25 amends section 404A.4, subsection 4, Code 2005.

Effective Date

July 1, 2005.

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HF 868-C - HIGH QUALITY JOB CREATION PROGRAM

Prior Law

Businesses that were approved under the New Jobs and Income Program (NJIP) and the New Capital Investment Program (NCIP) by the Department of Economic Development were eligible for various tax incentives. A business could not be a retail business to be considered an eligible business. Under the NJIP, eligible businesses were entitled to an Investment tax credit of up to 10% of new investment directly related to new jobs created by the location or expansion of the eligible business, an additional research and development (R & D) tax credit, and a refund of sales tax paid to contractors or subcontractors during the construction phase of the project. Under the NCIP, eligible businesses were entitled to an investment credit of 1% to 5% of the new investments (depending on the number of new jobs created), along with the additional research and development credit and a refund of sales tax.

The Investment tax credit could first be taken in the year of project completion, which is the first date in which the business operated at 50% capacity for a preceding ninety-day period. The Investment tax credit could be applied against individual income, corporation income and insurance premiums tax.

New Provisions

The NJIP and NCIP have been replaced effective July 1, 2005 with the High Quality Job Creation Program. Eligible businesses must be approved by the Department of Economic Development in order to qualify for the tax incentives under this program. A business cannot be a retail or service business to be considered an eligible business.

The amount of tax incentives eligible under this program is dependent upon the number of new high quality jobs created and the amount of qualifying investment made. In addition, the new jobs must have annual wage and benefits of at least 130% or more of the average county wage as computed by the Department of Workforce Development in order to be eligible for these tax incentives. Also, the Department of Economic Development cannot approve more than $3.6 million of investment tax credits for projects with qualifying investments of less than $1 million.

The tax incentives for the High Qualify Job Creation Program are as follows:

Pay 130% - 159% of average county wage

• Number of new jobs is zero
Investment less than $100,000 – 1% Investment tax credit
Investment of $100,000 – $499,999 – 1% Investment tax credit and sales tax refund
Investment of $500,000 or more – 1% Investment tax credit, sales tax refund and additional R & D credit

• Number of new jobs is 1-5
Investment less than $100,000 – 2% Investment tax credit
Investment of $100,000 – $499,999 – 2% Investment tax credit and sales tax refund
Investment of $500,000 or more – 2% Investment tax credit, sales tax refund and additional R & D credit

• Number of new jobs is 6-10
Investment less than $100,000 – 3% Investment tax credit
Investment of $100,000 – $499,999 – 3% Investment tax credit and sales tax refund
Investment of $500,000 or more – 3% Investment tax credit, sales tax refund and additional R & D credit

• Number of new jobs is 11-15
Investment less than $100,000 – 4% Investment tax credit
Investment of $100,000 – $499,999 –4% Investment tax credit and sales tax refund
Investment of $500,000 or more – 4% Investment tax credit, sales tax refund and additional R & D credit

• Number of new jobs is 16 or more
Investment less than $100,000 – 5% Investment tax credit
Investment of $100,000 – $499,999 – 5% Investment tax credit and sales tax refund
Investment of $500,000 or more – 5% Investment tax credit, sales tax refund and additional R & D credit

Pay 160% or more of average county wage and investment is at least $10 million

• Number of new jobs is 21-30
6% Investment tax credit, sales tax refund, additional R & D credit and local property tax exemption

• Number of new jobs is 31-40
7% Investment tax credit, sales tax refund, additional R & D credit and local property tax exemption

• Number of new jobs is 41-50
8% Investment tax credit, sales tax refund, additional R & D credit and local property tax exemption

• Number of new jobs is 51-60
9% Investment tax credit, sales tax refund, additional R & D credit and local property tax exemption
• Number of new jobs is 61 or more
10% Investment tax credit, sales tax refund, additional R & D credit and local property tax exemption

The investment tax credit is amortized equally over a five year period, instead of the entire credit being available upon project completion. The investment tax credit in excess of the tax liability can be credited to the tax liability for the following seven years or until depleted, whichever occurs first.

The investment tax credit can be applied against individual income, corporation income, franchise, insurance premiums and moneys and credits tax.

Any eligible businesses approved under the NJIP and NCIP through June 30, 2005 are still eligible for the tax credits earned under these programs. However, the supplemental new jobs credit from withholding is no longer available for businesses approved under the High Quality Jobs Creation program.

Section Amended

Section 42 of House File 868 amends section 15.326, Code 2005. Section 43 amends section 15.327, Code 2005. Section 44 amends section 15.329, Code 2005. Section 45 amends section 15.330, Code 2005. Section 48 amends section 15.333, Code 2005. Section 49 amends section 15.333A, Code 2005. Section 50 creates new section 15.335A. Section 67 repeals sections 15.381 through 15.387.

Effective Date

Upon enactment, June 9, 2005, and applies to projects approved on or after July 1, 2005.

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HF 868-D - NEW JOBS CREDIT SALES AND USE TAX REFUND

Prior Law

Iowa Code section 15.331A provided that an eligible business or supporting businesses are entitled to a refund of sales and use taxes paid to contractors and subcontractors under Iowa Code chapter 423 for gas, electricity, water, or sewer utility services, goods, wares, merchandise or services used for a contractor or subcontractor in the fulfillment of a written contract relating to construction or equipping a facility in an economic development area of the eligible business or supporting business.

New Provisions

Iowa Code section 15.331A was amended to remove the supporting business as being eligible for a refund of taxes paid and the amendment also removed the requirement that the construction or equipping occur in an economic development area of the eligible business. The sales tax refund is now part of the tax incentives available to an eligible business as determined by the Department of Economic Development.

Section Amended

Section 46 of House File 868, amends section 15.331A, Code 2005

Effective Date

Effective July 1, 2005.

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HF 868-E - THIRD-PARTY DEVELOPER CORPORATE TAX CREDIT FOR SALES AND USE TAX PAID

Prior Law

Iowa Code section 15.331C provided that an eligible businesses or supporting businesses are entitled to a corporate tax credit equal to the sales and use taxes paid by third-party developers to contractors and subcontractors under Iowa Code chapters 422 and 423 for gas, electricity, water, or sewer utility services, goods, wares, merchandise or services used for a contractor or subcontractor in the fulfillment of a written contract relating to construction or equipping a facility in an economic development area of the eligible business or supporting business.

New Provisions

Iowa Code section 15.331C was amended to remove the supporting business as being eligible for a corporate tax credit for sales and use taxes paid and the amendment also removed the requirement that the construction or equipping occur in an economic development area of the eligible business. The corporate tax credit for sales and use taxes paid is now part of the tax incentives available to an eligible business as determined by the Department of Economic Development.

Section Amended

Section 47 of House File 868, amends section 15.331C, Code 2005

Effective Date

Effective July 1, 2005.

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HF 868-F - WAGE-BENEFITS TAX CREDIT

Prior Law

None

New Provisions

A wage benefits tax credit is available for individual income, corporation income, franchise, insurance premiums and moneys and credits tax.

Any non-retail, non-service business which creates a new job related to the location or expansion of the business in Iowa is eligible for this credit if certain qualifications are met. The new job must be a full-time job that had not previously existed in the business, the new job must be filled by a resident of Iowa, the job must be filled by the new employee for at least 12 months, and the job is not created as a result of a change of ownership in the business.

If the annual wage and benefits for the qualified new job equals at least 130% of the average county wage but less than 160% of the average county wage as determined by the Department of Workforce Development, the tax credit equals 5% of the wages and benefits paid. If the annual wage and benefits for the qualified new job equals at least 160% of the average county wage, the tax credit equals 10% of the wages and benefits paid. If a qualified job is entitled to the tax credit after the first 12 months of wages paid, the tax credit will be allowed for the next four subsequent years as long as the job is retained.

Any credit in excess of the tax liability may be refunded, or the taxpayer may elect to credit the overpayment to the following tax year. If the business earning the credit is a partnership, limited liability company, S corporation, or estate or trust electing to have the income taxed to an individual, the individual may claim the tax credit based on the pro rata share of the individual’s earnings from the partnership, limited liability company, S corporation, or estate or trust.

To apply for this tax credit, the business must submit an application to the Department of Revenue on forms developed by the Department. The Department has 45 days after receipt to either approve or disapprove the application. If the application is disapproved by the Department, the business may appeal the decision to the Iowa economic development board within 30 days of disapproval.

Upon approval of the application, the Department will issue a tax credit certificate to the taxpayer containing the name, address, tax identification number and the amount of the credit. The total amount of tax credits issued in a fiscal year cannot exceed $10 million. If the approved credits exceed $10 million, the tax credit certificates will be issued on a “first-come, first-serve” basis. If a business created a qualified job but failed to receive the credit due to the $10 million limitation, the business may reapply for the credit for a subsequent year.

A business which receives the wage-benefits tax credit is not eligible to receive any tax incentives under the High Quality Job Creation program.

Section Amended

Section 55 through 59 of House File 868 creates new sections 15H.1 through 15H.5. Section 60 creates new section 422.11L. Section 62 amends section 422.33 by adding new subsection 18. Section 63 amends section 422.60 by adding new subsection 10. Section 65 creates new section 432.12G. Section 66 amends section 533.24 by adding new subsection 7. All amendments are to the 2005 Code.

Effective Date

Upon enactment, June 9, 2005, and applies to qualified new jobs created on or after June 9, 2005.

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HF 868-G - RESEARCH & DEVELOPMENT TAX CREDIT

Prior Law

For eligible businesses approved by the Department of Economic Development (IDED) under the New Jobs and Income Program and New Capital Investment Program (now called the High Quality Job Creation Program) or the Enterprise Zone Program, an additional Iowa research and development credit was available. For those businesses approved by IDED which were eligible for the Iowa research & development tax credit under Code sections 422.10 and 422.33, subsection 5, for individual and corporation income tax, the Iowa research & development tax credit could be doubled. The Iowa research & development tax credit was available only for businesses who qualified for the federal credit for increasing research activities, and “research activities” were defined the same for both the Iowa credit and the federal credit.

New Provisions

For eligible businesses approved by IDED, the research activities eligible for the Iowa research & development tax credit include expenses related to the development and deployment of innovative renewable energy generation components manufactured or assembled in Iowa. These expenses are not eligible for the federal credit for increasing research activities. These innovative renewable energy generation components do not include components with more than 200 megawatts of installed effective nameplate capacity. The Iowa research & development tax credit for innovative renewable energy generation components cannot exceed $1 million in the aggregate.

Section Amended

Section 70 of House File 868 amends section 15.335, subsection 1, unnumbered paragraph 1, Code 2005.

Effective Date

July 1, 2005.

HF 868-H - ENDOW IOWA TAX CREDIT

Prior Law

An endow Iowa tax credit administered by the Department of Economic Development is available for individual income, corporation income, franchise, insurance premiums and money and credits tax. The credit is equal to 20% of a taxpayer’s endowment gift to a qualified community foundation. The total amount of tax credits authorized could not exceed $2 million, and no endow Iowa credits were authorized after December 31, 2005. The maximum amount of tax credits issued to a single taxpayer cannot exceed $100,000.

New Provisions

The amount of endow Iowa tax credits authorized cannot exceed $2 million on an annual basis. The maximum amount of endow Iowa credit issued to a single taxpayer cannot exceed $100,000 per year. The endow Iowa tax credit cannot be authorized after December 31, 2008.

$200,000 of the endow Iowa tax credits authorized per year are reserved for endowment gifts of $30,000 or less. If $200,000 of these credits are not distributed by September 1 of a calendar year, the remaining amount will be available to other endow Iowa tax applicants.

Section Amended

Section 74 of House File 868 amends section 15E.305, subsection 1, Code 2005. Sections 75 and 76 amend section 15E.305, subsection 2, Code 2005. Section 77 amends section 15E.305, subsection 4, Code 2005.

Effective Date

Retroactive to January 1, 2005, for tax years beginning on or after that date.

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HF 868-I - E=85 BLENDED GASOLINE

Prior Law

The tax rate for ethanol blended gasoline (motor fuel containing at least 10% alcohol) varied based on the percentage of ethanol blended gasoline distributed in the state during the preceding calendar year. The tax rate could vary anywhere from a low of 19¢ per gallon to a high of 20¢ per gallon.

New Provisions

The tax rate for E=85 gasoline is set at 17¢ per gallon. The E=85 gasoline must contain at least 85% denatured alcohol from the first day of April through the last day of October for the 17¢ rate to apply and must contain at least 70% denatured alcohol from the first day of November through the last day of March for the 17¢ rate to apply.

The department is to determine the amount of tax paid for E=85 gasoline in the previous calendar year and compare it to the amount of tax that would have been paid on the E=85 gasoline if the variable rate had been applicable. If the difference is $25,000 or more, the tax rate for the period beginning July 1 shall be the variable tax rate for regular ethanol blended gasoline.

Sections Amended

Section 83 of House File 868 amends section 452A.3 by adding new subsection 1B and section 84 amends section 452A.3 by adding new subsection 1C. Both amendments are to the 2005 Code.

Effective Date

January 1, 2006.

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HF 868-J - PORT AUTHORITY PROPERTY TAX EXEMPTION

Prior Law

None.

New Provisions

The property of a port authority when devoted to public use and not held for pecuniary profit is exempt from taxation. A port authority is an entity created pursuant to section 28J.2. A port authority is comprised of political subdivisions. The authorized purposes of a port authority are to promote transportation, economic development, housing, recreation, education, governmental operations, culture, or research within the jurisdiction of the port authority.

Sections Amended

Section 118 of House File 868 amends section 427.1 by adding new subsection 34, Code 2005.

Effective Date

July 1, 2005.

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HF 868-K - PROPERTY ASSESSMENT APPEAL BOARD

Prior Law

None.

New Provisions

A statewide property assessment appeal board is established within the department of revenue. The board shall consist of 3 members appointed for 6 year terms by the Governor and confirmed by the Senate. The term for the initial board shall begin January 1, 2007.

The board shall hear protests of decisions reached by the board of review on assessments or application of equalization orders. The taxpayer may elect to bypass the appeal board and proceed directly to district court. Appeals must be made to the board within 20 days of the board of review’s letter of disposition. No new grounds may be pleaded to the assessment appeal board that was not pleaded to the board of review. The assessor shall have the same right of appeal to the appeal board as the taxpayer. The assessment appeal board shall give 30 days notice of the hearing date for the appeal. Decisions of the appeal board may be taken to district court within 20 days of the appeal board’s decision.

A property assessment appeal board review committee shall be established January 1, 2012 to review the activities of the appeal board and file a report with the general assembly by January 15, 2013.

Sections Amended

Section 121 of House File 868 adds new section 421.1A; section 123 amends section 441.19, subsection 4; section 126 amends section 441.28; section 127 amends section 441.35; section 128 adds new section 441.37A; section 129 amends section 441.38; section 130 amends section 441.39; section 131amends section 441.43; section 132 amends section 441.49; and section 133 amends section 445.60. All amendments are to the 2005 Code.

Effective Date

July 1, 2005.

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HF 868-L - ASSESSSOR COMPLIANCE

Prior Law

None.

New Provisions

Assessors are required to determine the value of property in accordance with rules adopted by the department of revenue and the forms and guidelines contained in the real property appraisal manual.

The department is required to notify the assessor and the conference board by restricted certified mail if it finds that the assessor is not in compliance with the established rules, forms, and guidelines. The notice must specify the areas of noncompliance and the steps necessary to achieve compliance. The notice must also state that a penalty will be imposed if compliance is not achieved.

The conference board must respond to the department within 30 days of receipt of the noncompliance notice. If the board responds that the assessor is in compliance, a hearing will be scheduled before the director of revenue. Otherwise, a plan of action to achieve compliance must be submitted within 60 days of receipt of the noncompliance notice. The department shall review the plan within 30 days of receipt and notify the conference board that it has accepted the plan or that it is necessary to submit an amended plan of action. By January 31 of the assessment year following the year in which the plan was submitted, the department shall notify the assessor and the conference board by restricted certified mail that compliance has been achieved or not achieved. If not achieved, the department shall withhold up to 5% of the county’s homestead credit reimbursement until the director determines that the assessor is in compliance. The conference board may appeal the determination of the department to the state board of tax review.

Sections Amended

Section 124 of House File 868 amends section 441.21, subsection 1, by adding new paragraphs h and i, and section 125 amends section 441.21, subsection 2. Both amendments are to the 2005 Code.

Effective Date

July 1, 2005.

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HF 882-A - PROPERTY TAX CREDIT FUNDING

Prior Law

Section 425.1(1) provides a standing unlimited annual appropriation for reimbursements to counties for homestead property tax credits allowed to qualified homeowners.

Section 426.1 provides a standing limited annual appropriation of $39,100,000 for reimbursement to counties for agricultural land property tax credits and family farm property tax credits allowed to eligible persons. The first $10,000,000 is to be transferred to the family farm tax credit fund (section 425A.1).

Section 426A.1 provides a standing unlimited annual appropriation for reimbursements to counties for military service property tax credits allowed certain military veterans.

Section 425.39 provides a standing unlimited annual appropriation for reimbursements to counties for property tax credits allowed to elderly and disabled homeowners and for reimbursements to elderly and disabled renters for rent paid.

New Provisions

The following limited appropriations are made to these funds for the 2005-2006 fiscal year:

If the appropriation for the homestead credit, military exemption, or elderly and disabled credit is insufficient to fully fund the credit or exemption, the political subdivision is required to extend to the taxpayer only that portion of the credit or exemption estimated by the department to be funded by the appropriation. The department has estimated that the homestead credit will be funded to the extent of 78% and the others fully funded.

Sections Amended

Section 4 of House File 882.

Effective Date

June 16, 2005.

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HF 882-B - TAXPAYERS WHO MAY CLAIM ELIGIBLE HOUSING INVESTMENT TAX CREDITS AND PROPERTY REHABILITATION TAX CREDITS

Prior Law

Eligible housing businesses approved by the Department of Economic Development may claim an eligible housing investment tax credit, and persons approved by the Department of Cultural Affairs may claim a property rehabilitation tax credit. If the businesses or persons are partnerships, limited liability companies, S corporations, estates, or trusts electing to have income taxed directly to an individual, the amount of the tax credit claimed by the individual is based upon the pro rata share of the individual’s earnings from the partnership, limited liability company, S corporation, estate or trust.

New Provisions

In cases where low-income housing tax credits authorized under Section 42 of the Internal Revenue Code are used to assist in the financing of housing developments under either the eligible housing program and the property rehabilitation program, the tax credit earned by the partnership, limited liability company or S corporation can be claimed by individuals based on the amounts designated by the eligible partnership, limited liability company or S corporation to these individuals. When Section 42 credits are used, the credit does not have to be based upon the individual’s pro rata share of earnings from the partnership, limited liability company or S corporation.

For credits earned by estates or trusts, the credit is still claimed by the individual based on the pro rata share of earnings from the estate or trust.

Section Amended

Section 53 of House File 882 amends section 15E.193B, subsection 5, Code 2005, by adding new paragraph f. Section 54 amends section 15E.193B, subsection 6, paragraph a, Code 2005. Section 55 amends section 15E.193B, subsection 8, unnumbered paragraph 1, Code 2005. Section 64 amends section 422.11D, subsection 2, Code 2005.

Effective Date

July 1, 2005

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HF 882-C - LOW-RENT HOUSING PROPERTY TAX EXEMPTION (REFINANCING MORTGAGE)

Prior Law

The tax exemption for properties owned and managed by nonprofit organizations providing low-rent housing for elderly and disabled persons applied only until the terms of the original development mortgage were paid in full or expired.

New Provisions

The legislation adds property controlled by a nonprofit organization and requires that the organizations be recognized by the Internal Revenue Service. The legislation permits refinancing of the original mortgage providing the length of the refinanced mortgage does not extend beyond the final payment due date of the original mortgage.

Sections Amended

Section 67 of House File 882 amends section 427.1, subsection 21, Code 2005.

Effective Date

June 16, 2005. Applies retroactively to assessment years beginning on or after January 1, 2005.

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HF 882-D - PROPERTY TAX EXEMPTION FOR LOW-RENT DWELLING UNITS

Prior Law

None.

New Provisions

The legislation provides a tax exemption to property owned and managed by a nonprofit organization if the organization owns and manages more than 40 dwelling units in a city with a population of more than 110,000 if the city has a public housing authority that does not own or manage housing stock for purposes of low-rent housing.

Sections Amended

Section 68 of House File 882 amends section 427.1, Code 2005, by adding new subsection 21A.

Effective Date

June 16, 2005. Applies retroactively to assessment years beginning on or after January 1, 2005.

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HF 882-E - MANUFACTURED HOME COMMUNITY AND MOBILE HOME PARK STORM SHELTER VALUATION

Prior Law

A storm shelter in a manufactured home community or mobile home park that was not used exclusively as a storm shelter was to be assessed for taxation at 75% of its value as commercial property.

New Provisions

A storm shelter in a manufactured home community or mobile home park that is not used exclusively as a storm shelter is to be assessed for taxation at 50% of its value as commercial property.

Sections Amended

Section 69 of House File 882 amends section 427.1, subsection 30, Code 2005.

Effective Date

July 1, 2005. Applies to assessments made on or after January 1, 2006.

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HF 882-F - WIND ENERGY PRODUCTION TAX CREDIT

Prior Law

A wind energy production tax credit was available for individual income, corporation income, franchise and insurance premiums tax. An owner of an electrical production facility that produces electricity from wind that is located in Iowa and placed in service between July 1, 2004 and July 1, 2007 had to receive approval from the board of supervisors of the county in which the facility was located. If approved, the owner then applied to the Iowa Utilities Board for a tax credit certificate, and these certificates were issued by the Utilities Board. The credit could not be used for a tax year beginning prior to July 1, 2005.

If the tax credit was issued to a partnership, limited liability company, S corporation, estate or trust, the tax credit may be issued directly to the equity owners or beneficiaries based on the pro rata share of the income of the entity. The tax credit certificate could also be transferred once to any person or entity, with the transferee submitting the transferred credit to the Utilities Board, and the Utilities Board would then issue a replacement certificate.

The credit was equal to one cent multiplied by the number of kilowatt-hours of qualified electricity sold by the owner during the tax year. The maximum amount of credit for a tax year was one cent multiplied by 32% of the total number of kilowatts of nameplate generating capacity. Because the maximum amount was not multiplied by the number of hours in a year, this credit was of very limited value, and there were no applications for this credit.

New Provisions

The electrical production facility must be placed in service on or after July 1, 2005, but before July 1, 2008, to qualify for the tax credit. The facility must still get approval from the local board of supervisors before commencing construction of the facility, but the facility must also apply to the Utilities Board for a written determination on whether the facility meets the qualifications for the tax credit. The credit cannot be used for a tax year beginning prior to July 1, 2006. The maximum amount of nameplate capacity for all qualified facilities for the tax credit cannot exceed 450 megawatts.

Upon approval of the qualified facility, the owner will notify the Utilities Board of the amount of kilowatt-hours generated and purchased from the facility, and the Utilities Board will then notify the Department. The Department will calculate the amount of the tax credit and will issue the tax credit certificate to the owner of the qualified facility.

If the tax credit was issued to a partnership, limited liability company, S corporation, estate or trust, the tax credit must be issued directly to the equity owners or beneficiaries based on the pro rata share of the income of the entity. The tax credit certificate can still be transferred once to any person or entity, with the transferee submitting the transferred credit to the Department, and the Department would then issue a replacement certificate. The tax credit certificate must be attached to the taxpayer’s tax return for the year in which it is used.

The credit is still equal to one cent multiplied by the number of kilowatt-hours of qualified electricity sold by the owner during the tax year. There are no longer any provisions relating to the maximum amount of credit allowed. Any tax credit in excess of the tax liability can be carried forward for the following seven years or until depleted, whichever is the earlier.

Section Amended

Section 163 of House File 882 amends section 476B.1, subsection 4, paragraph c, Code 2005. Section 164 amends section 476B.3, Code 2005. Section 165 amends section 476B.4, subsection 1, Code 2005, by striking paragraph b. Section 166 amends section 476B.5, Code 2005. Section 167 amends section 476B.6, Code 2005. Section 168 amends section 476B.7, unnumbered paragraph 1, Code 2005. Section 169 amends section 476B.8, Code 2005. Section 170 amends section 476B.9, Code 2005. Section 171 creates new section 476B.10.

Effective Date

Effective for tax years beginning on or after July 1, 2006, for facilities placed in service after July 1, 2005, but before July 1, 2008. For property tax purposes, the law will apply to assessment years 2006 through 2017.

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HF 882-G - WIND ENERGY CONVERSION PROPERTY

Prior Law

A qualified facility was one that was originally placed in service on or after July 1, 2004 but before July 1, 2007.

New Provisions

A qualified facility is one that was originally placed in service on or after July 1, 2005 but before July 1, 2008.

Sections Amended

Section 163 of House File 882 amends section 476B.1, subsection 4, paragraph c, Code 2005.

Effective Date

July 1, 2005. Applies to assessment years 2006-2017.

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SF 78 - EXEMPTION FROM CITY TAXES (ANNEXED PROPERTY)

Prior Law

A city council by resolution could authorize an exemption from city taxes for annexed property. The exemption was for a period of 5 years with a 75% exemption in the first year and a 15% exemption in the last year.

New Provisions

The exemption is extended from 5 to 10 years with the previous exemption percentages remaining the same for 2 years each.

Sections Amended

Section 4 of Senate File 78 amends section 368.11, subsection 3, paragraph m, Code 2005.

Effective Date

May 5, 2005.

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SF 114 - CONTINGENT TAX CREDITS FOR INVESTMENTS MADE IN THE IOWA FUND OF FUNDS

Prior Law

Contingent tax credits were issued by the Iowa Capital Investment Board at the time that investments were made into the Iowa fund of funds. The fund of funds would then make investments in private seed and venture capital funds that have made a commitment to consider equity investments in businesses located in Iowa. The contingencies to redemption of the tax credit certificates were tied to the scheduled rate of return and scheduled redemptions, which assumed that the fund of funds would liquidate, and the certificate could not be redeemed until five years after it was issued. The tax credit certificates could only be redeemed on June 30 of the calendar year maturity date stated on the certificate.

New Provisions

The contingent tax credit is issued at the time a commitment to invest is made, instead of the time when the actual investment is made. The requirement that the contingencies to redemption be tied to actual redemption is eliminated, so the fund of funds would not necessarily liquidate. The requirement that the certificate could not be redeemed until five years after it was issued has also been eliminated. A tax credit certificate issued by the Iowa Capital Investment Board may have more than one maturity date. The certificates can be redeemed on the maturity date, which does not have to be June 30.

Section Amended

Section 1 of Senate File 114 amends section 15E.63, subsections 6 and 7, Code 2005. Section 2 amends section 15E.65, subsection 2, paragraph a, Code 2005. Section 3 amends section 15E.66, subsections 1, 2, 3 and 5, Code 2005.

Effective Date

Upon enactment, which was March 14, 2005.

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SF 265 - PARTIAL PAYMENT OF PROPERTY TAX / TAX STATEMENT

Prior Law

If the county treasurer elected to accept partial payment of property taxes, the treasurer was required to establish a minimum payment amount. If a partial payment for delinquent taxes was made, the minimum payment was required to equal or exceed the interest, fees, and costs attributed to the oldest delinquent installment.

The treasurer was required to deliver the tax statement to the titleholder of the property.

New Provisions

The requirement that the treasurer establish a minimum payment amount for the partial payment of property taxes was removed. If a partial payment for delinquent taxes is made, the payment must equal or exceed the interest, fees, and costs of the installment being paid.

The treasurer may deliver the property tax statement to another person at the written request of the titleholder.

Sections Amended

Section 11 of Senate File 265 amends section 435.24, subsection 6; Section 13 amends section 445.5 by adding new subsection 3A; and section 14 amends section 445.36A. All amendments are to the 2005 Code.

Effective Date

April 19, 2005.

SF 379 - ESTABLISHMENT OF CHAPTERS OF PROBATE CODE - INHERITANCE TAX

Prior Law

Iowa Code chapter 633 contained divisions within the chapter which govern probate, intestacy and trusts.

New Provisions

This new law has amended the Iowa Code chapter 633 and established separate chapters 633A (Trust Code), 633B (Powers of Attorney), 633C (Medical Assistance Trusts), 633D (Transfer on Death Security Registration), and 633E (Uniform Disclaimer of Property Act) of Iowa Code chapter 633 instead of the divisions.

This bill also implements new definitions of “estate” “fiduciary” and “trustee” to include a trust as defined under the new trust definition as set forth in Iowa Code section 633.10.

A minor entitled to a bequest, legacy or share of an estate that does not exceed the sum or $25,000 may pay the amount to a custodian under the “Uniform Transfers to Minors Act.”

In addition, this new law has also made many substantive changes to a spouse’s elective share under Iowa Code sections 633.236-633.246 and trust provisions. New subsections were also made into law governing order of abatement for trusts and simultaneous deaths.

633.4703-ORDER OF ABATEMENT WHEN A TRUST IS INVOLVED:

When necessary to abate shares of a trust for the payment of debts and charges, federal and state estate taxes, bequests, and the shares of children born or adopted after the execution of the trust, abatement shall occur in the following order:

  1. Shares allocated to the residuary beneficiaries of the trust shall be abated first, on a pro rata basis.
  2. Shares defined by a dollar amount, on a pro rata basis.
  3. Shares described as specific items of property whether tangible or intangible shall be abated last, and such abatement shall be done as equitably by the trustee among the various beneficiaries as circumstances reasonably allow.
  4. Notwithstanding subsections 1, 2, or 3, a disposition in favor of the grantor's surviving spouse shall not be abated where such abatement would have the effect of increasing the amount of federal estate or federal gift taxes payable by a person or an entity.

In the cases of simultaneous death involving a trust, the new statute states the following:

633.4704 SIMULTANEOUS DEATH WHEN A TRUST IS INVOLVED

If the determination of the successor of a beneficial interest in a trust is dependent upon whether a beneficiary has survived the death of a settlor, of another beneficiary, sections 633.523 through 633.528, shall govern the determination of who shall be considered to have died first.

Section Amended

Iowa Code chapter 633 was amended and broken into subchapters 633A-633E, Senate File 379, Code 2005

Effective Date

Effective July 1, 2005.

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SF 389 - TAX CREDIT FOR SOY-BASED CUTTING TOOL OIL

Prior Law

None

New Provisions

A soy-based cutting tool oil tax credit is available for individual and corporation income tax.

A manufacturer is eligible to receive a credit equal to the costs incurred during the tax year for the purchase and replacement costs relating to the transition from using nonsoy-based cutting tool oil to using soy-based cutting tool oil. The costs must be incurred after June 30, 2005, and before January 1, 2007, and the costs must be incurred during the first twelve months of the transition. The costs of the purchase and replacement cannot exceed two dollars per gallon of soy-based cutting tool oil, and the number of gallons eligible for the credit cannot exceed 2,000 gallons.

If the manufacturer elects to take the tax credit, any costs incurred in the transition that are deductible for federal income tax purposes cannot be deducted for Iowa tax purposes. Any credit in excess of the tax liability can be refunded, or credited to the next year’s estimated tax. Any credit earned by a partnership, limited liability company, S corporation, estate or trust can be claimed by an individual based on the pro rata share of earnings of the partnership, limited liability company, S corporation, estate or trust.

Section Amended

Section 1 of Senate File 389 creates new section 422.11K. Section 2 amends section 422.33, Code 2005, by adding new subsection 17.

Effective Date

Applies to tax years ending after June 30, 2005, and beginning before January 1, 2007.

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SF 390-A - RENEWABLE ENERGY TAX CREDIT

Prior Law

None

New Provisions

A renewable energy tax credit is available for individual income, corporation income, franchise and insurance premium tax. A renewable energy facility includes a wind energy conversion facility, a biogas recovery facility, a biomass conversion facility, a methane gas recovery facility or a solar energy conversion facility.

A purchaser or producer of a renewable energy facility that is located in Iowa and placed in service on or after July 1, 2005, but before January 1, 2011, must receive approval from the Iowa Utilities Board to determine if the facility is eligible for the tax credits. If the facility is approved, a producer or purchaser of renewable energy may receive renewable energy tax credits under this chapter in an amount equal to one and one-half cents per kilowatt-hour of electricity, or four dollars and fifty cents per million British thermal units of heat for a commercial purpose, or four dollars and fifty cents per million British thermal units of methane gas or other biogas used to generate electricity, or one dollar and forty-four cents per one thousand standard cubic feet of hydrogen fuel generated by and purchased from an eligible renewable energy facility. A power-purchase agreement is signed between the purchaser and producer which sets forth which party will receive the tax credit.

The maximum amount of nameplate generating capacity of all wind energy conversion facilities that the Utilities Board may find eligible shall not exceed ninety megawatts of nameplate generating capacity. The maximum amount of energy production capacity equivalent of all other facilities that the Utilities Board may find eligible shall not exceed a combined output of ten megawatts of nameplate generating capacity. A single eligible facility cannot have more than 2.5 megawatts of nameplate generating capacity.

The purchaser or producer will notify the Utilities Board of the amount of eligible renewable energy generated and purchased, and the Utilities Board will then notify the Department. The Department will issue tax credit certificates to the purchaser or producer setting forth the amount of tax credit.

The tax credit certificate must be attached to the taxpayer’s tax return for the year in which it is used. The tax credit certificate may also be used to obtain a sales and use tax refund or a replacement tax reimbursement (see additional summaries). The certificate must contain the taxpayer’s name, address, tax identification number, the type of tax for which the credit will be applied, and the amount of tax credits. Any tax credit in excess of the tax liability can be carried forward for the following seven years or until depleted, whichever is the earlier. If the tax credit application is filed by a partnership, limited liability company, S corporation, estate or trust, the tax credit certificate shall be issued directly to the equity owners or beneficiaries based on the pro rata share of the income from the entity.

A producer or purchaser of renewable energy may receive renewable energy tax credit certificates for a ten-year period for each eligible renewable energy facility. A tax credit certificate shall not be used or attached to a return filed for a taxable year beginning prior to July 1, 2006.

The tax credit certificate may be transferred once to any person or entity. However, the decision on whether the purchaser or producer is entitled to the tax credit certificate does not count as a transfer. Within thirty days of transfer, the transferee must submit the transferred tax credit certificate to the Department. The Department then has thirty days to issue a replacement tax credit certificate to the transferee. Any consideration received for the transfer of the tax credit shall not be included in income for Iowa tax purposes, and any consideration paid for the transfer of the tax credit shall not be deductible for Iowa tax purposes.

Section Amended

Section 1 of Senate File 390 amends section 422.11J, Code 2005. Section 2 amends section 422.33, subsection 16, Code 2005. Section 3 amends section 422.60, subsection 8, Code 2005. Section 5 amends section 432.12E, Code 2005. Sections 7 through 13 create new chapter 476C.

Effective Date

Effective for tax years beginning on or after July 1, 2006, for facilities placed in service on or after July 1, 2005, but before January 1, 2011.

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SF 390-B - RENEWABLE ENERGY TAX CREDIT SALES AND USE TAX REFUND

Prior Law

None

New Provisions

This bill implements a new tax credit in Iowa for renewable energy under Iowa Code chapter 476. This bill also allows a person in possession of a renewable energy tax credit certificate to obtain a refund of sales and use tax paid by the original applicant for the certificate. To obtain a refund, all of the following must occur:

  1. All refund requests must be on forms furnished by the department;
  2. All refund requests must be filed by January 31 after the end of the calendar year in which the tax credit certificate is to be applied;
  3. The applicant shall report to the department the total amount of sales and use tax paid during the reporting period on purchases made during the reporting period;
  4. The applicant shall separately list the amounts of sales and use tax paid during the reporting period;
  5. If required by the department, the applicant shall prove that the person making the sales has included the tax amount in the computation of the sales price and that the sales tax has been paid;
  6. The applicant shall provide the tax credit certificates issued pursuant to chapter 476C to the department with the forms required; and
  7. The amount of sales tax to be refunded by the department is limited to the amount of tax credits issued in tax credit certificates pursuant to chapter 476C.

Section Amended

Section 4 of Senate File 390 amends Iowa Code section 423.4 by adding a new subsection (4), Code 2005

Effective Date

June 15, 2005

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SF 390-C - RELACEMENT TAX REIMBURSEMENT FOR RENEWABLE ENERGY TAX CREDITS

Prior Law

None.

New Provisions

A reimbursement of replacement tax paid is allowed to the producer or purchaser of renewable energy in an amount equal to the renewable energy tax credit certificates issued to the producer or purchaser pursuant to chapter 476C. The tax credit certificates are required to be attached to the return filed pursuant to section 437A.8. Any credit in excess of the taxpayer’s tax liability may be carried forward for up to 7 years.

Sections Amended

Section 6 of Senate File 390 adds new section 437A.17B and section 12 adds new section 476C.6, Code 2005.

Effective Date

June 15, 2005.

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SF 413-A - TRANSFER OF E911 SURCHARGE EXEMPTIONS TO CHAPTER 423

Prior Law

The amount of any regular E911 emergency telephone service surcharge and of any wireless E911 service surcharge was excluded from sales and use tax; however, the two exemptions were set out in Chapter 34A of the Code, “Enhanced 911 Emergency Telephone Systems.”

New Provisions

The amount of any E911 emergency telephone service surcharge or of any wireless E911 service surcharge continues to be excluded from sales or use tax; however, the exemptions are moved from Chapter 34A to Section 3 of Chapter 423, thus placing them with other exemptions from sales and use tax.

Section Amended

Section 1 of Senate File 413 amends section 34A.7, subsection 2, paragraph b, Code 2005. Section 2 of Senate File 413 amends section 34A.7A, subsection 1, paragraph c, subparagraph (1), Code 2005. Section 10 of Senate File 413 amends section 423.3, Code 2005, by adding a new subsection.

Effective Date

July 1, 2005.

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SF 413-B - CLARIFYING THE DEFINITION OF “SALES PRICE”

Prior Law

Excluded from the definition of “sales price” were amounts received for certain charges, e.g. delivery, installation, any other services necessary to complete a sale, and credit for trade-ins, if those amounts were separately contracted for and separately stated on the invoice, billing, or similar document given to a purchaser.

New Provisions

The above-described amounts received for certain charges continue to be excluded from the definition of “sales price” but only if , in addition to existing requirements, the amounts represent charges which are not the sales price of a taxable sale or the sales price of the furnishing of a taxable service.

Section Amended

Section 3 of Senate File 413 amends Section 423.1, subsection 47, paragraph b,
subparagraph (4), Code 2005, by striking the subparagraph. Section 4 of Senate file 413 amends Section 423.1, subsection 47, Code 2005, by adding a new paragraph “c” and re-lettering the following paragraph.

Effective Date

July 1, 2005.

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SF 413-C - REDEFINING TAXABLE AND EXEMPT TRANSPORTATION SERVICES AND DELIVERY CHARGES

Prior Law

The furnishing of “transportation service” was exempted from tax by section 423.3 of the Code. As an exception to this exemption, certain transportation services were taxed, e.g. the rental of recreational vehicles, recreational boats, and certain aircraft and vehicles subject to registration. “Delivery charges” were excluded from the definition of a taxable “Sales price” but were not exempted from tax by section 423.3 of the Code.

New Provisions

The language which imposes tax on the furnishing of certain transportation services is moved from the tax exemption section of Chapter 423 (section 423.3) to the tax imposition section (423.2) of the Chapter. The exemption in favor of “Transportation service” is repealed and an exemption in favor of “Delivery charges” is put in its place.

Section Amended

Section 5 of Senate File 413 amends section 423.2, subsection 6, unnumbered paragraph 1, Code 2005. Section 11 of Senate File 413 amends Section 423.3, subsection 70, Code 2005.

Effective Date

July 1, 2005.

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SF 413-D - RESTORING THE FOOD MANUFACTURER’S TANGIBLE PERSONAL PROPERTY RENTAL EXEMPTION

Prior Law

An exemption existed in favor of manufacturers of food products for human consumption. The exemption excluded from tax electricity, steam, and other taxable services used by such a manufacturer in certain types of processing but not sales of tangible personal property (except CO2) to a food manufacturer. Prior to July 1, 2004, the exemption excluded from tax a food manufacturer’s rental of tangible personal property used in an exempt manner because the rental of tangible personal property was a taxable service. The lessor’s purchase of the property for subsequent lease was not an exempt purchase for resale. On and after July 1, 2004, the rental of property was defined as a sale of that property and not as the performance of a service. The service exemption no longer applies to the leasing of property, but a lessor’s purchase for subsequent lease was an exempt purchase for resale.

New Provisions

The legislation essentially restores the exemption as it existed prior to July 1, 2004. A food manufacturer’s rental or leasing of eligible property is again exempt from tax while a lessor’s purchase for subsequent rental to a food manufacturer is excluded from the sale for resale exemption and thus subject to the tax at the time of purchase.

Section Amended

Section 6 of Senate File 413 amends section 423.3, subsection 2, Code 2005. Section 8 of Senate File 413 amends section 423.3, subsection 49, 2005 Code.

Effective Date

Upon enactment (06-03-2005) retroactive to July 1, 2004.

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SF 413-E - CHANGES IN THE EXEMPTION IN FAVOR OF CONTRACTOR’S EQUIPMENT RENTALS

Prior Law

The lease or rental of self- propelled building equipment, self-constructed cranes, pile drivers, structural concrete forms, regular and motorized scaffolding, generators, or attachments customarily drawn or attached to self-propelled building equipment, self-constructed cranes, pile drivers, structural concrete forms, regular and motorized scaffolding, and generators, including auxiliary attachments that were directly and primarily used by contractors, subcontractors, and builders for new construction, reconstruction, alterations, expansion, or remodeling of real property or structures was exempt from state and both local option sales taxes. However, the sale of this equipment for subsequent lease was excluded from the resale exemption.

New Provisions

The new exemption in favor of the rental of construction equipment is in favor of all machinery, equipment, and replacement parts directly and primarily used by owners, contractors, subcontractors, and builders for new construction, reconstruction, alteration, expansion, or remodeling of real property or structures and of all machinery, equipment, and replacement parts which improve the performance, safety, operation, or efficiency of the machinery, equipment, and replacement parts. The sales price of this machinery, equipment, and replacement parts for subsequent lease or rental continues to be excluded from the sale for resale exemption and thus subject to the tax at the time of purchase.

Section Amended

Section 7 of House File 413 amends section 423.3, subsection 37, Code 2005.

Effective Date

Upon enactment (06-03-05) retroactive to July 1, 2004. As of July 1, 2005 the taxation of this equipment is completely removed from the state sales and use and the local option sales taxes (LOST & SILO). See the summary entitled “Removing Sales of Certain Contractors’ Equipment from the Streamlined Sales and Use Tax Agreement” for more information.

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SF 413-F - REVISING THE PRESCRIPTION DRUG AND MEDICAL DEVICE EXEMPTION

Prior Law

The sales price of prescription drugs, prosthetic devices and certain other “medical devices” sold for human use or consumption was exempt from Iowa tax.

New Provisions

The exemption in favor of prescription drugs, prosthetic devices, and other medical devices is considerably revised. It is revised to insure that Iowa’s definitions set out in its human health care exemption do not conflict with definitions relating to health care exemptions which have been agreed to by states attempting to enter into the Streamlined Sale and Use Tax Agreement. The applicable Code section is amended by exempting “durable medical equipment”, “mobility enhancing equipment”, and “prosthetic devices” separately from “medical devices”, and defining those first three terms as they are defined for the purposes of the Streamlined Sales Tax Agreement. The term “medical devices” thus becomes a “catchall phrase” for medical exemptions not defined by the Streamlined Sales Tax Agreement. The word “prescription’ is also defined in the manner required by the Agreement.

Section Amended

Section 9 of Senate File 413 amends 423.3, subsection 60, Code 2005.

Effective Date

July 1, 2005.

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SF 413-G - PHYSICAL PRESENCE NO LONGER REQUIRED TO COLLECT LOCAL OPTION TAXES

Prior Law

A retailer had to have a physical presence within a jurisdiction imposing the local option sales tax (LOST) or the school infrastructure local option tax (SILO) before that retailer could be required to collect either local option tax on transactions delivered within the area where the local option tax was imposed.

New Provisions

The requirement of physical presence within the taxing jurisdiction is repealed with regard to both LOST and SILO taxes.

Section Amended

Section 14 of Senate File 413 amends section 423B.5, unnumbered paragraph 1, Code 2005. Section 15 of Senate File 413 amends section 423E.3, subsections 2 and 3, Code 2005.

Effective Date

Upon enactment (06-03-05) retroactive to July 1, 2004.

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SF 413-H - REMOVAL OF LOTTERY TICKETS FROM LOCAL OPTION TAXES EXEMPTIONS

Prior Law

At one time the sales price of a lottery ticket or of a share in a lottery game was subject to Iowa state sales tax. Thus, to exempt the sales price of a lottery ticket or share from either local option tax (LOST or SILO) while keeping that same sales price subject to the state sales tax, it was necessary to specifically mention that the sales price of a lottery ticket or share was exempted from that local option tax. Recently, the law was changed so that the sales price of a lottery ticket or share is no longer subject to state sales tax.

New Provisions

The language exempting lottery tickets and game shares from local option sales taxes (LOST & SILO) is stricken because it is now mere surplusage. The sales price of a lottery ticket or of a share in the lottery game is still exempt from the state sales tax and the local option taxes.

Section Amended

Section 14 of Senate File 413 amends section 423B.5, unnumbered paragraph 1, Code 2005. Section 15 amends section 423E.3, subsection 2, Code 2005.

Effective Date

Upon enactment (06-03-05) retroactive to July 1, 2004.

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SF 413-I - MOVING ROOM RENTAL TAX FROM THE STREAMLINED SALES AND USE TAX LAW AND CREATING AN EXCISE TAX ON HOTEL AND MOTEL ROOM RENTALS

Prior Law

The short-term rental of rooms in hotels, motels, inns and certain other establishments providing lodging was subject to the state sales tax, the local option sales tax, the school infrastructure local option sales tax, and the hotel and motel tax. Provisions of the chapters that impose those taxes are subject to the Streamlined Sales and Use Tax Agreement.

New Provisions

All provisions relating to the taxation of short-term room rental are moved from existing Iowa sales and use tax statutes. Chapter 423A which imposed the hotel-motel tax is repealed. In its place a new Chapter 423A is created and is entitled the “Hotel and Motel Tax Act.” Short-term room rentals which were previously subject to the state sales tax, both local option taxes, and the old hotel-motel tax are now taxed under the provisions of the new Chapter 423A. The Director is to administer new Chapter 423A “as nearly as possible in conjunction with the administration of the state sales tax law, except that portion of the law which implements the streamlined sales and use tax agreement.”

Section Amended

Section 18 of Senate File 413 amends section 423.2, subsection 1, paragraph a, subparagraph (5), Code 2005 by striking the subparagraph. Sections 19 through 25 of Senate File 413 amend the Code 2005 by enacting new chapter 423A. Section 26 amends section 423B.5, unnumbered paragraph 1, Code 2005. Section 27 amends
Section 423E.3, subsection 2, Code 2005. Section 28 amends Chapter 423A of the Code 2005 by repealing the Chapter. Section 29 creates a transition to continue the locally imposed hotel and motel tax.

Effective Date

July 1, 2005. However, Section 29 of Senate File 413 states that a hotel and motel tax imposed by a city or county under chapter 423A prior to July 1, 2005 shall continue to be imposed and shall be considered a locally imposed hotel and motel tax under new chapter 423A.

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SF 413-J - MOVING SALES OF SPECIFIC CONSTRUCTION EQUIPMENT FROM THE STREAMLINED SALES AND USE TAX LAW AND CREATING AN EXCISE TAX ON SPECIFIC CONSTRUCTION EQUIPMENT

Prior Law

Sales, which were not leases, of self-propelled building equipment, pile drivers, and motorized scaffolding, certain attachments to that equipment, and certain qualifying replacement parts to lessors were subject to state sales tax. The leasing of that equipment to contractors, subcontractors, and builders for direct and primary use in new construction, reconstruction, alteration, expansion, or remodeling of real property or structures was exempt from Iowa state sales tax. Neither the sale nor the leasing of this equipment was subject to either local option sales tax (LOST or SILO).

New Provisions

Both the sale and the leasing of the above-described equipment are moved from the state sales and use tax statutes. An entirely new chapter of the Code is created (423D) which subjects lessors’ purchases of the equipment to an excise tax and exempts lessee’s payments from that tax. The rate of the tax is 5 percent. The Director is to administer this tax “as nearly as possible in conjunction with the administration of the state sales and use tax law except that portion of the law which implements the streamlined sales and use tax agreement.” The sale and leasing of this equipment continues to be exempt from both local option taxes. The purchase of the equipment for the purpose of leasing the equipment is subject to the excise tax. The sale of the equipment is subject to the excise tax

Section Amended

Section 30 of Senate File 413 amends section 423.3, Code 2005 by adding a new subsection. Section 31 amends Section 423B.5, unnumbered paragraph 1, Code 2005. Section 32 amends section 423E.3, subsection 2, Code 2005. Sections 33 through 36 amend the Code 2005 by adding a new Chapter 423D.

Effective Date

July 1, 2005.

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SF 413-K - FEDERAL INCOME TAX DEDUCTION AND FEDERAL REFUND TAX BENEFIT RULE FOR INDIVIDUALS

Prior Law

None. In practice, a federal refund was not added back if it related to federal tax paid in a prior year when an Iowa return was not filed. However, a federal tax deduction was allowed for taxes paid in a prior year even when an Iowa return was not filed for that prior year.

New Provisions

Iowa Code Section 422.9 has been amended to codify the so-called “tax benefit rule” as it relates to the federal tax deduction for individuals. Federal tax refunds received from a tax year in which an Iowa return was not required to be filed will not be added back to income on the Iowa return. Similarly, federal income taxes paid for a tax year in which an Iowa return was not required to be filed shall not be deducted on the Iowa individual return.

Section Amended

Section 37 of Senate File 413 amends section 422.9, subsection 1, Code 2005. Section 38 of Senate File 413 amends section 422.9, subsection 2, paragraph b, Code 2005.

Effective Date

Retroactive to January 1, 2005, for tax years beginning on or after that date.

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SF 413-L- DEDUCTION FOR REGISTRATION FEES PAID FOR MULTIPURPOSE VEHICLES AND OLDER VEHICLES

Prior Law

To the extent not allowed as an itemized deduction for federal income tax, an itemized deduction was allowed for Iowa individual income tax purposes for 60% of the registration fee paid for a 1992 or older model year multipurpose vehicle or an older motor vehicle which is nine model years old or older.

To the extent not allowed as a deduction for federal corporation income tax, a deduction was allowed for Iowa corporation income tax purposes for 60% of the registration fee paid for a 1992 or older model year multipurpose vehicle.

New Provisions

These provisions regarding the deduction for registration fees have been stricken. Therefore, the same deduction allowed for federal income tax purposes will be allowed for Iowa individual and corporation income tax.

Section Amended

Section 39 of Senate File 413 repeals section 422.9, subsection 2, paragraphs g and h, Code 2005. Section 41 of Senate File 413 repeals section 422.35, subsection 15, Code 2005.

Effective Date

Retroactive to January 1, 2005, for tax years beginning on or after that date.

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SF 413-M - WITHHOLDING TAX FILING AND THRESHOLD CHANGES

Prior Law

Semi-monthly filers for withholding tax were required to make six semi-monthly deposits in a calendar quarter, but were not required to file a quarterly return.

The director has the authority by administrative rule to change the filing and remittance thresholds for withholding tax.

New Provisions

Semi-monthly filers for withholding tax are required to make six semi-monthly deposits and are also required to file a quarterly return, which is due on or before the last day of the month following the calendar quarter. This is consistent with the e-file and pay requirements for withholding tax.

The filing and remittance threshold amounts for withholding tax are now in Section 422.16. These threshold amounts are as follows:

Section Amended

Section 40 of Senate File 413 amends section 422.16, subsection 2, unnumbered paragraph 1, Code 2005.

Effective Date

Retroactive to January 1, 2005, for calendar quarters beginning on or after that date. The threshold changes have been set forth in administrative rules for calendar quarters beginning on or after January 1, 2003.

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SF 413-N - NEW DEFINITION OF “EMPLOYER”

Prior Law

For the purposes of Iowa sales and use tax law, within the definition of “Services” the word “Employer” was defined as it is defined in section 422.4, subsection 3, of the Code. In that subsection “Employer” means and includes “all those who have a right to exercise control as to how, when, and where services are to be performed.”

New Provisions

The above definition is stricken. An “employer” is now defined as a person “who pays the wages of an employee”.

Section Amended

Section 42 of Senate File 413 amends section 423.1, subsection 50, Code 2005.

Effective Date

July 1, 2005.

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SF 413-O - CERTIFICATE OF SALES TAX ON STATE BIDS AND CONTRACTS

Prior Law

None

New Provisions

This law amends Iowa Code section 423.2 and 423.5 by adding new subsections that require all retailers that bid with a state agency to register for an Iowa sales tax permit and to collect and remit the sales tax to the department. Every contract executed by a state agency must also contain this certification that the retailer is registered and does collect and remit all taxes due on the contract. The certification must also include a statement that lack of a certification or a false certification gives the state agency the right to declare an executed contract between the retailer and the state void. In the instance of a fraudulent certification, the state may sue the retailer for damages.

Section Amended

Section 43 of Senate File 413 amends section 423.2 by adding new section 9A, Code 2005. Section 47 amends section 423.5 by adding a new subsection 8, Code 2005.

Effective Date

Effective July 1, 2005

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SF 413-P - NEW EXEMPTION-MATERIALS ASSOCIATED WITH AGRICULTURAL DRAINAGE TILE

Prior Law

The sale or use of agricultural drainage tile, including the sales price of its installation, was exempt from tax.

New Provisions

The sale or use of the following materials which are associated with the installation of agricultural drainage tile is also exempt from tax: tile intakes; outlet pipes and guards; aluminum and gabion structures; water control structures; and miscellaneous tile fittings.

Section Amended

Section 44 of Senate File 413 amends section 423.3; subsection 5, by adding a new paragraph “b”, Code 2005.

Effective Date

Upon enactment (06-03-05) and retroactive to January 1, 1998. Refunds of tax, interest, and penalty which result from this retroactive application are limited to $25,000 in the aggregate and must be filed prior to October 1, 2005. If refund claims total more than $25,000, the Department must prorate them.

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SF 413-Q - VEHICLES, AIRCRAFT AND BOATS NOT CASUAL SALES SALES AND USE TAX

Prior Law

Vehicles subject to registration and aircraft were excluded from the casual sale exemption. Boats and other watercraft were eligible for the casual sale exemption.

New Provisions

This law amends Iowa Code section 423.3(39) by adding a new unnumbered paragraph. This paragraph explicitly excludes from the casual sale exemption (thereby making the sales taxable) the sale of vehicles subject to registration, aircraft, and commercial or pleasure watercraft or vessels.

Section Amended

Section 45 of Senate File 413 amends section 423.3, subsection 39, Code 2005.

Effective Date

Effective July 1, 2005

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SF 413-R - EXEMPTION FOR SERVICES PERFORMED ON A VESSEL SALES AND USE TAX

Prior Law

None

New Provisions

This new law exempts from Iowa sales and use tax the sales of all services performed on vessels if all of the following are met:

  1. The vessel is a licensed vessel under the laws of the United States coast guard;
  2. The vessel is not moored or tied to a physical location in Iowa;
  3. The service is used to repair or restore a defect in the vessel;
  4. The vessel is engaged in interstate commerce and will continue in interstate commerce once the repairs or restoration is completed; and
  5. The vessel is in navigable water that borders the eastern boundary of this state.

Section Amended

Section 46 of Senate File 413 amends section 423.3 by adding a new subsection,
Code 2005.

Effective Date

Effective July 1, 2005

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SF 413-S - CHANGE IN BEGINNING AND ENDING DATES HOTEL/MOTEL TAX

Prior Law

Iowa Code section 423A.1 provided for implementation of the beginning of hotel/motel tax in a jurisdiction on January 1, April 1, July 1, or October 1 of any given year. In addition, this Code section also provided the dates of March 31, June 30, September 30, or December 31 as the only dates in which a hotel/motel tax can be terminated.

New Provisions

Under the new law, imposition of hotel/motel tax in a jurisdiction must start on January 1, or July 1, of any given year. In addition, notice of termination of hotel/motel tax must occur only on June 30 or December 31 of any given year.

Section Amended

Section 48 of Senate File 413 amends section 423A.1, unnumbered paragraph 3, Code 2005.

Effective Date

Effective July 1, 2005

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SF 413-T - CHANGE IN ESTIMATING DATE FOR SCHOOL INFRASTRUCTURE LOCAL OPTION TAX (SILO)

Prior Law

Iowa Code section 423E.4 (3) (a) required for the estimate of the guaranteed amount for SILO tax to be done prior to June 1 of each year.

New Provisions

Under the new law, Iowa Code section 423E.4 (3) (a) was amended to require that the date for estimation of the guaranteed amount for SILO tax must be by August 15th of each year. Currently all other local option estimates are required by August 15 and changing this estimate to coincide will provide uniformity.

Section Amended

Section 49 of Senate File 413 amends section 423E.4, subsection 3, paragraph a, Code 2005.

Effective Date

Effective July 1, 2005

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SF 413-U - HOMESTEAD TAX CREDIT ESTIMATE

Prior Law

The department was required to estimate the amount of homestead property tax credit to be given the homeowner each year pursuant to section 425.1 and also estimate the amount of credit to be given if there was insufficient funding pursuant to section 25B.7.

New Provisions

The estimate requirement contained in section 425.1 was deleted from Code as it is duplicative of the requirement contained in section 25B.7.

Sections Amended

Section 52 of Senate File 413 amends section 425.1, subsection 4, Code 2005.

Effective Date

July 1, 2005.

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SF 413-V - ENVIRONMENTAL PROTECTION CHARGE

Prior Law

Depositors were not required to file reports and returns by electronic transmission.

The department was required pay interest on environmental protection charge overpayments that were not refunded within 60 days from the date of payment.

New Provisions

The director may require by rule that depositors file reports and returns by electronic transmission.

Interest is to be paid on overpayments of environmental protection charges in the same manner as interest is paid on refunds of overpayments for other taxes.

Sections Amended

Section 50 of Senate File 413 amends section 424.7 by adding new subsection 5 and section 51 amends section 424.10, subsection 3. Both amendments are to the 2005 Code.

Effective Date

July 1, 2005.

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SF 413-W - LATE FILED CLAIMS FOR PROPERTY TAX EXEMPTION

Prior Law

No tax exemption was allowable pursuant to section 427.1, subsections 8 and 9, unless a claim for exemption was filed by February 1.

New Provisions

The board of supervisors may abate the taxes levied against property acquired by gift after the deadline for filing a claim for tax exemption if the property would have been exempt under section 427.1, subsections 8 or 9, had the organization filed a timely claim for exemption.

The board of supervisors of a county with a population of more than 180,000 but not more than 200,000 is required to abate the taxes of an educational institution if the institution received the property by gift but failed to file a timely claim for tax exemption. The abatement applies to taxes payable in the fiscal years beginning July 1, 2004 and July 1, 2005. The educational institution is required to apply for the abatement with the board of supervisors by October 1, 2005.

Sections Amended

Section 53 of Senate File 413 adds new section 427.3, Code 2005 and section 71 adds a provision that will not be codified.

Effective Date

The provision adding new section 427.3 is effective July 1, 2005.

The provision relating to the abatement of taxes payable in the fiscal years beginning July 1, 2004 and July 1, 2005 on the property of an educational institution is effective June 3, 2005.

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SF 413-X - ASSESSOR APPOINTMENT / CONTINUING EDUCATION

Prior Law

The physical condition and reputation of a person applying for the job of assessor could be taken into consideration by the conference board in making the appointment.

The conference board is required to hold a meeting not less than 90 days before the expiration of the assessor’s term of office to determine if the assessor is to be reappointed to a new term. If the incumbent assessor is not reappointed, a new assessor is to be selected not less than 60 days before the expiration of the assessor’s term of office.

Assessors and deputy assessors were required to complete a specific number of hours of continuing education credit during their term of office to remain in their position.

New Provisions

The physical condition and reputation of a person applying for the position of assessor are removed from the Code as criteria the conference board can take into consideration in making the appointment.

The conference board is required to notify the assessor, in writing, not less than 90 days prior to the expiration of the assessor’s term of office if the board decides not to reappoint the assessor. If the conference board fails to timely notify the assessor that the decision has been made not to reappoint the assessor, the assessor shall be reappointed.

The director of revenue is authorized to waive the continuing education requirements if the assessor or deputy assessor makes a written request to the director and the director determines that the requirements can not be complied with for good cause.

Sections Amended

Section 54 of Senate File 413 amends section 441.6 and sections 55 and 56 amend section 441.8. All amendments are to the 2005 Code.

Effective Date

July 1, 2005.

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SF 413-Y - ASSESSMENT PROTESTS PROPERTY TAX

Prior Law

The assessor had the authority to require that separate assessment protests be filed by the same property owner on separately assessed parcels and to schedule separate oral hearings on the protests.

A property owner is required to file an appeal of a property assessment protest decision of the board of review to the district court within 20 days of the board’s adjournment or May 31, whichever date is later. There was no time limit specified for the property owner to serve notice of appeal on the board that the board’s decision on the property assessment protest was being appealed to district court.

New Provisions

The property owner may combine protests of separately assessed parcels on one form if the same grounds for protest are being used. The assessor is required to schedule any oral hearings on the protests consecutively.

A property owner is required to serve notice of appeal on the board of review that the property owner is appealing the board’s decision to district court within 20 days of the board’s adjournment or May 31, whichever date is later.

Sections Amended

Section 57 of Senate File 413 amends section 441.37, subsection 1; section 58 amends section 441.37, subsection 3; and section 59 amends section 441.38, subsection 2. All amendments are to the 2005 Code.

Effective Date

July 1, 2005. The provisions relating to assessment protests on multiple parcels of property by the same property owner apply to assessment protests filed after January 1, 2006.

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SF 413-Z - MOTOR FUEL DEFINITIONS, REPORTS & INVENTORY TAX

Prior Law

No reference was made to methanol in chapter 452A.

Compressed natural gas and liquefied petroleum gas dealers and users were not required to file reports and returns by electronic transmission as were all other licensees.

Nonterminal storage facilities were not required to keep the same records as terminals.

The inventory tax on fuel applied to increases in the tax rate of less than ½¢ per gallon.

New Provisions

The definition of “motor fuel” is clarified to exclude methanol unless it is blended with other motor fuels for use in aircraft or motor vehicles.

The definition of “special fuel’ is clarified to exclude methanol unless it is blended with other special fuels for use in a motor vehicle with a diesel engine.

The director may require by rule that compressed natural gas and liquefied petroleum gas licensed dealers and users file reports and returns by electronic transmission.

The director may require by rule that licensed blenders file reports and returns by electronic transmission.

A nonterminal storage facility must keep records of fuel dispersed from the facility.

The department is authorized to examine the records of a nonterminal storage facility pertaining to the withdrawals of fuel from the facility.

The inventory tax on fuel does not apply unless the increase in the tax rate of the fuel is at least ½ ¢ per gallon.

Sections Amended

Section 60 of Senate File 413 amends section 452A.2, subsection 19; section 61 amends section 452A.2, subsection 25; section 62 amends section 452A.8, subsection 2, paragraph e; section 63 amends section 452A.8, subsections 3 and 4; section 64 amends section 452A.10; section 65 amends section 452A.62, subsection 1, paragraph a; section 66 amends section 452A.62, subsection 2; and section 67 amends section 452A.85 by adding a new subsection 4. All amendments are to the 2005 Code.

Effective Date

July 1, 2005.

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SF 413-AA - DECLARATORY JUDGEMENT ON NEXUS SALES AND USE TAX

Prior Law

Prior law allowed nexus issues involving Iowa sales and use tax to be resolved by an administrative protest with appeal procedures.

New Provisions

This law creates Iowa Code section 602.6703, which allows a party that disputes nexus for the purpose for registering, collecting and remitting sales tax in another state because it is an undue burden on interstate commerce, the option of not pursuing an administrative remedy, but instead, may file for a declaratory judgment in Iowa District Court for a determination of the issue.

To be eligible for filing for relief with Iowa District Court, all of the following must apply:

1. The party seeking declaratory relief is a business that is one of the following:

a. Organized under the laws of this state;

b. A sole proprietorship owned by a domiciliary of this state; or

c. Authorized to do business in this state.

2. The responding party is a government official of another state, or political subdivision of another state, who asserts that the business in question is obliged to collect sales or use taxes based upon conduct of the business that occurs wholly or partially within that state or political subdivision.

Section Amended

Section 68 of Senate File 413 creates a new section 602.6703.

Effective Date

Effective July 1, 2005

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SF 413-BB - ASSAULT AGAINST A REVENUE EMPLOYEE

Prior Law

None specifically for Department of Revenue employees.

New Provisions

This new law amended previous statutory provisions and set forth that the assault of a department of revenue employee would result in a charge ranging from a Class D felony to a serious misdemeanor, depending on the facts and intent surrounding the assault.

This statute also defines what constitutes an "employee of the department of revenue" for the purpose of this statute as a person who is employed as an auditor, agent, tax collector, or any contractor or representative acting in the same capacity. The employee, contractor, or representative shall maintain current identification indicating that the person is an employee, contractor, or representative of the department.

Section Amended

Section 69 of Senate File 413 amends section 708.3A, subsections 1 through 4, Code 2005. Section 70 amends section 708.3A by adding a new subsection 9, Code 2005.

Effective Date

Effective July 1, 2005

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