IOWA DEPARTMENT OF REVENUE
JULY 2005
BILL NUMBER INDEX
| Bill Number | |
| HF 102 | 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.
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.
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.
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.
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.
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
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.
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.
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
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).
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.
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.
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.
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.
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.
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.
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
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
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
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:
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:
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.
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
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.
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
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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
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.
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.
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.
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