Bill Text: IA SSB3199 | 2019-2020 | 88th General Assembly | Introduced

---

Bill Title: A bill for an act relating to state taxation and related laws of the state, including the administration by the department of revenue of certain tax credits and refunds, income taxes, moneys and credits taxes, sales and use taxes, partnership and pass-through entity audits, and by modifying provisions relating to the reinstatement of business entities, the assessment and valuation of property, and providing penalties, and including effective date and retroactive applicability provisions.

Spectrum: Committee Bill

Status: (Introduced - Dead) 2020-03-11 - Subcommittee: Sweeney, Brown, and Dotzler. [SSB3199 Detail]

Download: Iowa-2019-SSB3199-Introduced.html

---

Senate Study Bill 3199 - Introduced
SENATE/HOUSE FILE _____
BY (PROPOSED DEPARTMENT OF
REVENUE BILL)
A BILL FOR
An Act relating to state taxation and related laws of the
state, including the administration by the department of
revenue of certain tax credits and refunds, income taxes,
moneys and credits taxes, sales and use taxes, partnership
and pass-through entity audits, and by modifying provisions
relating to the reinstatement of business entities,
the assessment and valuation of property, and providing
penalties, and including effective date and retroactive
applicability provisions.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
TLSB 5409XD (10) 88
jm/jh

S.F. _____ H.F. _____
DIVISION I
ADMINISTRATION AND PENALTY PROVISIONS
Section 1. Section 331.603, subsection 5, Code 2020, is
amended to read as follows:
5. a. The governing board of the county land record
information system may enter into an agreement, including but
not limited to an agreement pursuant to chapter 28E, with a
public agency, as defined in section 28E.2, to provide access
to electronic documents or records on a batch basis. Access to
electronic documents or records may be provided for a fee if
permitted in the agreement between the governing board and the
public agency.
b. The governing board of the county land record information
system shall not enter into an agreement other than as provided
in paragraph “a” to provide access to electronic documents or
records on a batch basis. The county recorder may collect
reasonable fees for access to electronic documents and records
pursuant to an agreement. The fees shall not exceed the
actual cost of providing access to the electronic documents
and records. “Actual cost” means only those expenses directly
attributable to providing access to electronic documents
and records. “Actual cost” shall not include costs such as
employment benefits, depreciation, maintenance, electricity,
or insurance associated with the administration of the office
of the county recorder or the county land record information
system.
b. c. Electronic documents and records made available
under this subsection shall not include personally identifiable
information and shall be subjected to a redaction process prior
to the transfer of the electronic documents or records to
another person pursuant to an agreement under paragraph “a” .
Sec. 2. Section 421.6, Code 2020, is amended to read as
follows:
421.6 Definition of return.
For purposes of this title , unless the context otherwise
-1-
LSB 5409XD (10) 88
jm/jh 1/ 67

S.F. _____ H.F. _____
requires, “return” means any tax or information return, amended
return, declaration of estimated tax, or claim for refund
that is required by, provided for, or permitted under, the
provisions of this title or section 533.329, and which is filed
with the department by, on behalf of, or with respect to any
person. “Return” includes any amendment or supplement to these
items, including supporting schedules, attachments, or lists
which are supplemental to or part of the filed return.
Sec. 3. Section 421.17, Code 2020, is amended by adding the
following new subsection:
NEW SUBSECTION . 36. To enter into an agreement pursuant
to chapter 28E with the state fair organized under chapter 173
or with a fair defined in section 174.1, to collect and remit
taxes and fees from sellers making sales at retail on property
owned, controlled, or operated by a fair or through events
conducted by a fair.
Sec. 4. Section 421.27, subsection 1, Code 2020, is amended
to read as follows:
1. Failure to timely file a return or deposit form.
a. If a person fails to file with the department on or
before the due date a return or deposit form there shall be
added to the tax shown due or required to be shown due a penalty
of ten percent of the tax shown due or required to be shown due.
b. In the case of a specified business with no tax shown
due or required to be shown due that fails to timely file an
income return, the specified business shall pay the greater of
the following penalty amounts:
(1) Two hundred dollars.
(2) An amount equal to ten percent of the imputed Iowa
liability of the specified business, not to exceed twenty-five
thousand dollars.
c. The penalty, if assessed pursuant to paragraph “a” or
“b” , shall be waived by the department upon a showing of any of
the following conditions:
a. (1) At An amount of tax greater than zero is required to
-2-
LSB 5409XD (10) 88
jm/jh 2/ 67

S.F. _____ H.F. _____
be shown due and at least ninety percent of the tax required to
be shown due has been paid by the due date of the tax.
b. (2) Those taxpayers who are required to file quarterly
returns, or monthly or semimonthly deposit forms may have one
late return or deposit form within a three-year period. The
use of any other penalty exception will not count as a late
return or deposit form for purposes of this exception.
c. (3) The death of a taxpayer, death of a member of
the immediate family of the taxpayer, or death of the person
directly responsible for filing the return and paying the tax,
when the death interferes with timely filing.
d. (4) The onset of serious, long-term illness or
hospitalization of the taxpayer, of a member of the immediate
family of the taxpayer, or of the person directly responsible
for filing the return and paying the tax.
e. (5) Destruction of records by fire, flood, or other act
of God.
f. (6) The taxpayer presents proof that the taxpayer
relied upon applicable, documented, written advice specifically
made to the taxpayer, to the taxpayer’s preparer, or to an
association representative of the taxpayer from the department,
state department of transportation, county treasurer, or
federal internal revenue service, whichever is appropriate,
that has not been superseded by a court decision, ruling by a
quasi-judicial body, or the adoption, amendment, or repeal of
a rule or law.
g. (7) Reliance upon results in a previous audit was a
direct cause for the failure to file where the previous audit
expressly and clearly addressed the issue and the previous
audit results have not been superseded by a court decision, or
the adoption, amendment, or repeal of a rule or law.
h. (8) Under rules prescribed by the director, the taxpayer
presents documented proof of substantial authority to rely
upon a particular position or upon proof that all facts and
circumstances are disclosed on a return or deposit form.
-3-
LSB 5409XD (10) 88
jm/jh 3/ 67

S.F. _____ H.F. _____
i. (9) The return, deposit form, or payment is timely,
but erroneously, mailed with adequate postage to the internal
revenue service, another state agency, or a local government
agency and the taxpayer provides proof of timely mailing with
adequate postage.
j. (10) The tax has been paid by the wrong licensee and the
payments were timely remitted to the department for one or more
tax periods prior to notification by the department.
k. (11) The failure to file was discovered through a
sanctioned self-audit program conducted by the department.
l. (12) If the availability of funds in payment of tax
required to be made through electronic funds transfer is
delayed and the delay of availability is due to reasons beyond
the control of the taxpayer. “Electronic funds transfer” means
any transfer of funds, other than a transaction originated
by check, draft, or similar paper instrument, that is
initiated through an electronic terminal telephone, computer,
magnetic tape, or similar device for the purpose of ordering,
instructing, or authorizing a financial institution to debit or
credit an account.
m. (13) The failure to file a timely inheritance tax return
resulting solely from a disclaimer that required the personal
representative to file an inheritance tax return. The penalty
shall be waived if such return is filed and any tax due is paid
within the later of nine months from the date of death or sixty
days from the delivery or filing of the disclaimer pursuant to
section 633E.12 .
n. (14) That an Iowa inheritance tax return is filed for
an estate within the later of nine months from the date of
death or sixty days from the filing of a disclaimer by the
beneficiary of the estate refusing to take the property or
right or interest in the property.
Sec. 5. Section 421.27, subsections 4 and 6, Code 2020, are
amended to read as follows:
4. Willful failure to file or deposit.
-4-
LSB 5409XD (10) 88
jm/jh 4/ 67

S.F. _____ H.F. _____
a. (1) In case of willful failure to file a return
or deposit form with the intent to evade tax or a filing
requirement , or in case of willfully filing a false return
or deposit form with the intent to evade tax, in lieu of the
penalties otherwise provided in this section , a penalty of
seventy-five percent shall be added to the amount shown due or
required to be shown as tax on the return or deposit form.
(2) In case of a willful failure by a specified business to
file an income return with no tax shown due or required to be
shown due with intent to evade a filing requirement, or in case
of willfully filing a false income return with no tax shown due
or required to be shown due with the intent to evade reporting
of Iowa-source income, the penalty imposed shall be the greater
of the following amounts:
(a) One thousand five hundred dollars.
(b) An amount equal to seventy-five percent of the imputed
Iowa liability of the specified business.
(3) If penalties are applicable for failure to file a
return or deposit form and failure to pay the tax shown due or
required to be shown due on the return or deposit form, the
penalty provision for failure to file shall be in lieu of the
penalty provisions for failure to pay the tax shown due or
required to be shown due on the return or deposit form, except
in the case of willful failure to file a return or deposit form
or willfully filing a false return or deposit form with intent
to evade tax.
b. The penalties imposed under this subsection are not
subject to waiver.
6. Improper receipt of payments Liability —— fraudulent
practice . A person who makes an erroneous application for
refund, credit, reimbursement, rebate, or other payment shall
be liable for any overpayment received or tax liability reduced
plus interest at the rate in effect under section 421.7 .
a. In addition, a person who willfully commits a fraudulent
practice and is liable for a penalty equal to seventy-five
-5-
LSB 5409XD (10) 88
jm/jh 5/ 67

S.F. _____ H.F. _____
percent of the refund, credit, exemption, reimbursement,
rebate, or other payment or benefit being claimed if the person
does any of the following:
(1) Willfully makes a false or frivolous application for
refund, credit , exemption , reimbursement, rebate, or other
payment or benefit with intent to evade tax or with intent to
receive a refund, credit, exemption, reimbursement, rebate,
or other payment or benefit, to which the person is not
entitled is guilty of a fraudulent practice and is liable for a
penalty equal to seventy-five percent of the refund, credit,
reimbursement, rebate, or other payment being claimed .
(2) Willfully submits any false information, document,
or document containing false information in support of an
application for refund, credit, exemption, reimbursement,
rebate, or other payment or benefit with the intent to evade
tax.
(3) Willfully submits with any false information, document,
or document containing false information in support of an
application for refund with the intent to receive a refund,
credit, exemption, reimbursement, rebate, or other payment
benefit, to which the person is not entitled.
b. Payments, penalties, and interest due under this
subsection may be collected and enforced in the same manner as
the tax imposed.
Sec. 6. Section 421.27, Code 2020, is amended by adding the
following new subsections:
NEW SUBSECTION . 8. Definitions. As used in this section:
a. “Imputed Iowa liability” means any of the following:
(1) In the case of corporations doing business in Iowa
other than corporations described in section 422.34 or section
422.36, subsection 5, the corporation’s Iowa net income after
the application of the Iowa business activity ration, if
applicable, multiplied by the top income tax rate imposed under
section 422.33 for the tax year.
(2) In the case of financial institutions as defined
-6-
LSB 5409XD (10) 88
jm/jh 6/ 67

S.F. _____ H.F. _____
in section 422.61 doing business in Iowa, the financial
institution’s Iowa net income after the application of the
Iowa business activity ratio, if applicable, multiplied by the
franchise tax rate imposed under section 422.63 for the tax
year.
(3) In the case of all other entities doing business in
Iowa or deriving income from sources within Iowa, including
corporations described in section 422.36, subsection 5, and all
other entities required to file an information return under
section 422.15, subsection 2, the entity’s Iowa net income
after the application of the Iowa business activity ratio, if
applicable, multiplied by the top income tax rate imposed under
section 422.5A for the tax year.
b. “Income return” means an income tax return or information
return required under section 422.15, subsection 2, or section
422.36, 422.37, or 422.62.
c. “Specified business” means a partnership or other entity
required to file an information return under section 422.15,
subsection 2, a corporation required to file a return under
section 422.36 or 422.37, or a financial institution required
to file a return under section 422.62.
NEW SUBSECTION . 9. Additional penalty. In addition to the
penalties imposed by this section, if a taxpayer fails to file
a return within ninety days of written notice by the department
that the taxpayer is required to do so, there shall be added to
the amount shown due or required to be shown due a penalty in
the amount of one thousand dollars.
Sec. 7. NEW SECTION . 421.27A Perjury.
1. For purposes of this title, a form, application, or any
other documentation required or requested by the department
shall be required to be certified under penalty of perjury that
the information contained in the form, application, or other
documentation is true and correct.
2. A person commits a class “D” felony under any of the
following circumstances:
-7-
LSB 5409XD (10) 88
jm/jh 7/ 67

S.F. _____ H.F. _____
a. The person makes a form, application, or other document
containing false information in support of an application for
refund, credit, exemption, reimbursement, rebate, or other
payment or benefit with intent to evade tax.
b. The person makes a form, application, or other document
containing false information with intent to unlawfully receive
a refund, credit, exemption, reimbursement, rebate, or other
payment or benefit, to which the person is not entitled.
c. The person knowingly makes any false affidavit.
d. The person knowingly swears or affirms falsely to any
matter or thing required by the terms of this title to be sworn
to or affirmed.
Sec. 8. NEW SECTION . 421.59 Power of attorney —— authority
to act on behalf of taxpayer.
1. a. A taxpayer may authorize an individual to act on
behalf of the taxpayer by filing a power of attorney with the
department, on a form prescribed by the department.
b. A taxpayer may at any time revoke a power of attorney
filed with the department pursuant to subsection 1. Upon
processing of the taxpayer’s revocation of a power of attorney,
the department shall cease honoring the power of attorney.
2. The department may authorize the following persons to act
and receive information on behalf of and exercise all of the
rights of a taxpayer, regardless of whether a power of attorney
has been filed pursuant to subsection 1:
a. A guardian, conservator, or custodian appointed by a
court, if a taxpayer has been deemed legally incompetent by a
court. The authority of the appointee to act on behalf of the
taxpayer shall be limited to the extent specifically stated in
the order of appointment.
(1) Upon request, a guardian, conservator, or custodian of
a taxpayer shall submit to the department a copy of the court
order appointing the guardian, conservator, or custodian.
(2) The department may petition the court that appointed the
guardian, conservator, or custodian to verify the appointment
-8-
LSB 5409XD (10) 88
jm/jh 8/ 67

S.F. _____ H.F. _____
or to determine the scope of the appointment.
b. A receiver appointed pursuant to chapter 680. An
appointed receiver shall be limited to act on behalf of the
taxpayer by the authority stated in the order of appointment.
(1) Upon the request of the department, a receiver shall
submit to the department a copy of the court order appointing
the receiver.
(2) The department may petition the court that appointed the
receiver to verify the appointment or to determine the scope
of the appointment.
c. An individual who has been named as an authorized
representative on a fiduciary return of income filed under
section 422.14 or a tax return filed under chapter 450.
d. (1) An individual holding the following title or
position within a corporation, association, partnership, or
other business entity:
(a) A president or chief executive officer, or any other
officer of the corporation or association if the president or
chief executive officer certifies that the officer has the
authority to legally bind the corporation or association.
(b) A designated partner duly authorized to act on behalf
of the partnership.
(c) A person authorized to act on behalf of a limited
liability company in tax matters pursuant to a valid statement
of authority.
(2) An individual seeking to act on behalf of a taxpayer
pursuant to this paragraph shall file an affidavit with the
department attesting to the identity and qualifications of the
individual and any necessary certifications required under this
paragraph. The department may require any documents or other
evidence to demonstrate the individual has authority to act on
behalf of the taxpayer before the department.
e. A licensed attorney who has appeared on behalf of the
taxpayer or the taxpayer’s estate in a court proceeding.
Authorization under this paragraph is limited to those matters
-9-
LSB 5409XD (10) 88
jm/jh 9/ 67

S.F. _____ H.F. _____
within the scope of the representation.
f. A parent or guardian of a taxpayer who has not reached
the age of majority where the parent or guardian has signed the
taxpayer’s return on behalf of the taxpayer. Authorization
under this paragraph is limited to those matters relating to
the return signed by the parent or guardian. Authorization
under this paragraph automatically terminates when the taxpayer
reaches the age of majority pursuant to section 599.1.
3. a. In lieu of executing a power of attorney pursuant
to subsection 1, the department may enter into a memorandum of
understanding with the taxpayer for each employee, officer,
or member of a third-party entity engaged with or otherwise
hired by a taxpayer to manage the tax matters of the taxpayer,
to permit the disclosure of confidential tax information to
the third-party entity and the authority to act on behalf of
the taxpayer. The memorandum of understanding shall adhere to
requirements as established by the director.
b. The memorandum of understanding shall be signed by
the director, the taxpayer, and the third-party entity or an
authorized representative of the third-party entity.
c. At any time, a taxpayer may unilaterally revoke
a memorandum of understanding entered into pursuant to
this subsection by filing a notice of revocation with the
department. Upon the filing of such a revocation by the
taxpayer, the department shall cease honoring the memorandum
of understanding.
4. The department shall adopt rules pursuant to chapter 17A
to administer this section.
Sec. 9. Section 421.60, subsection 2, paragraph a,
subparagraph (2), Code 2020, is amended to read as follows:
(2) The statement prepared in accordance with this
paragraph shall be available on the department’s internet site.
The internet site for this information shall be distributed by
the department to all taxpayers at the first contact by the
department with respect to the determination or collection of
-10-
LSB 5409XD (10) 88
jm/jh 10/ 67

S.F. _____ H.F. _____
any tax, except in the case of simply providing tax forms.
Sec. 10. Section 421.60, Code 2020, is amended by adding the
following new subsection:
NEW SUBSECTION . 11. Electronic communication.
Notwithstanding any provision of the law to the contrary, for
purposes of this title and sections 321.105A and 533.329, a
taxpayer may elect to receive any notices, correspondence,
or other communication electronically that the department is
required to send by regular mail. The director may establish
procedures and limitations for obtaining this election from the
taxpayer.
Sec. 11. Section 421.62, subsection 1, Code 2020, is amended
by adding the following new paragraph:
NEW PARAGRAPH . 0b. “Income tax return or claim for refund”
means any tax return or claim for refund under chapter 422,
excluding withholding returns under section 422.16.
Sec. 12. Section 421.62, subsection 1, paragraph c,
subparagraph (1), Code 2020, is amended to read as follows:
(1) “Tax return preparer” means any individual who, for
a fee or other consideration, prepares ten or more income
tax returns or claims for refund under chapter 422 during
a calendar year, or who assumes final responsibility for
completed work on such income tax returns or claims for refund
under chapter 422 on which preliminary work has been done by
another individual.
Sec. 13. Section 421.62, subsection 2, paragraph a, Code
2020, is amended to read as follows:
a. On or after January 1, 2020, a tax return preparer
is required to include the tax return preparer’s PTIN on
any income tax return or claim for refund prepared by the
tax return preparer and filed under chapter 422 with the
department .
Sec. 14. Section 421.64, subsection 1, Code 2020, is amended
to read as follows:
1. For purposes of this section , “tax return preparer” means
-11-
LSB 5409XD (10) 88
jm/jh 11/ 67

S.F. _____ H.F. _____
the same as defined in section 421.61 421.62 .
Sec. 15. Section 422.20, subsections 1 and 2, Code 2020, are
amended to read as follows:
1. It shall be unlawful for any present or former officer
or employee of the state to willfully or recklessly divulge or
to make known in any manner whatever not provided by law to
any person the amount or source of income, profits, losses,
expenditures, or any particular thereof, set forth or disclosed
in any income return, or to permit any income return or copy
thereof or any book containing any abstract or particulars
thereof to be seen or examined by any person except as provided
by law; and it shall be unlawful for any person to willfully or
recklessly print or publish in any manner whatever not provided
by law any income return, or any part thereof or source of
income, profits, losses, or expenditures appearing in any
income return; and any person committing an offense against the
foregoing provision shall be guilty of a serious misdemeanor.
If the offender is an officer or employee of the state, such
person shall also be dismissed from office or discharged from
employment. Nothing herein shall prohibit turning over to duly
authorized officers of the United States or tax officials of
other states state information and income returns pursuant
to agreement between the director and the secretary of the
treasury of the United States or the secretary’s delegate or
pursuant to a reciprocal agreement with another state.
2. It is unlawful for an officer, employee, or agent, or
former officer, employee, or agent of the state to willfully
or recklessly disclose to any person, except as authorized
in subsection 1 of this section , any federal tax return
or return information as defined in section 6103(b) of the
Internal Revenue Code. It is unlawful for a person to whom
any federal tax return or return information, as defined in
section 6103(b) of the Internal Revenue Code, is disclosed
in a manner unauthorized by subsection 1 of this section
to thereafter willfully or recklessly print or publish in
-12-
LSB 5409XD (10) 88
jm/jh 12/ 67

S.F. _____ H.F. _____
any manner not provided by law any such return or return
information. A person violating this provision is guilty of
a serious misdemeanor.
Sec. 16. Section 422.20, subsection 3, paragraph a, Code
2020, is amended to read as follows:
a. Unless otherwise expressly permitted by section 8A.504 ,
section 8G.4 , section 11.41 , section 96.11, subsection 6 ,
section 421.17, subsections 22, 23, and 26 , section 421.17,
subsection 27 , paragraph “k” , section 421.17, subsection 31 ,
section 252B.9 , section 321.40, subsection 6 , sections 321.120 ,
421.19 , 421.28 , 421.59, 422.72 , and 452A.63 , this section , or
another provision of law, a tax return, return information, or
investigative or audit information shall not be divulged to any
person or entity, other than the taxpayer, the department, or
internal revenue service for use in a matter unrelated to tax
administration.
Sec. 17. Section 422.20, Code 2020, is amended by adding the
following new subsections:
NEW SUBSECTION . 3A. The director may disclose the tax
return of a partnership, limited liability company, or S
corporation, any such return information, or any investigative
information related to the return, to any person who was a
partner, shareholder, or member of such an entity during any
part of the period covered by the return.
NEW SUBSECTION . 3B. a. Prior to being made available for
public inspection, the department shall redact from the record
in an appeal or contested case the following information from
any pleading, exhibit, attachment, motion, written evidence,
final order, decision, or opinion:
(1) A financial account number.
(2) An account number generated by the department to
identify an audit or examination.
(3) A social security number.
(4) A federal employer identification number.
(5) The name of a minor.
-13-
LSB 5409XD (10) 88
jm/jh 13/ 67

S.F. _____ H.F. _____
(6) A medical record or other medical information.
b. Upon a motion filed by the taxpayer, the department
may redact from the record in an appeal or contested case any
other information from a pleading, exhibit, attachment, motion,
or written evidence, if the taxpayer proves by clear and
convincing evidence that the release of such information would
disclose a trade secret or be a clear, unwarranted invasion of
personal privacy.
c. Notwithstanding paragraph “a” , when making final orders,
decisions, or opinions available for public inspection, the
department may disclose the items in paragraph “a” if the
department determines such information is necessary to the
resolution or decision of the appeal or case.
d. Except as described in paragraphs “a” and “b” , all
information contained in a pleading, exhibit, attachment,
motion, written evidence, final order, decision, opinion,
and the record in an appeal or contested case is subject to
examination to the extent provided by chapter 22.
Sec. 18. Section 422.25, subsection 1, Code 2020, is amended
by adding the following new paragraph:
NEW PARAGRAPH . c. The period of examination and
determination is unlimited under this title in the case of
any action by the department to recover or rescind any tax
expenditure as defined by section 2.48, subsection 1, or any
other incentive or assistance, due to a failure to meet or
maintain the requirements of a program administered by the
economic development authority.
Sec. 19. Section 422.72, subsection 1, paragraph a,
subparagraph (1), Code 2020, is amended to read as follows:
(1) It is unlawful for the director, or any person having
an administrative duty under this chapter , or any present or
former officer or other employee of the state authorized by the
director to examine returns, to willfully or recklessly divulge
in any manner whatever, the business affairs, operations, or
information obtained by an investigation under this chapter of
-14-
LSB 5409XD (10) 88
jm/jh 14/ 67

S.F. _____ H.F. _____
records and equipment of any person visited or examined in the
discharge of official duty, or the amount or source of income,
profits, losses, expenditures or any particular thereof, set
forth or disclosed in any return, or to willfully or recklessly
permit any return or copy of a return or any book containing
any abstract or particulars thereof to be seen or examined by
any person except as provided by law.
Sec. 20. Section 422.72, Code 2020, is amended by adding the
following new subsection:
NEW SUBSECTION . 7A. a. Prior to being made available for
public inspection, the department shall redact from the record
in an appeal or contested case the following information from
any pleading, exhibit, attachment, motion, written evidence,
final order, decision, or opinion:
(1) A financial account number.
(2) An account number generated by the department to
identify an audit or examination.
(3) A social security number.
(4) A federal employer identification number.
(5) The name of a minor.
(6) A medical record or other medical information.
b. Upon a motion filed by the taxpayer, the department
may redact from the record in an appeal or contested case any
other information from a pleading, exhibit, attachment, motion,
or written evidence, if the taxpayer proves by clear and
convincing evidence that the release of such information would
disclose a trade secret or be a clear, unwarranted invasion of
personal privacy.
c. Notwithstanding paragraph “a” , when making final orders,
decisions, or opinions available for public inspection, the
department may disclose the items in paragraph “a” if the
department determines such information is necessary to the
resolution or decision of the appeal or case.
d. Except as described in paragraphs “a” and “b” , all
information contained in a pleading, exhibit, attachment,
-15-
LSB 5409XD (10) 88
jm/jh 15/ 67

S.F. _____ H.F. _____
motion, written evidence, final order, decision, opinion,
and the record in an appeal or contested case is subject to
examination to the extent provided by chapter 22.
Sec. 21. Section 423.37, Code 2020, is amended by adding the
following new subsection:
NEW SUBSECTION . 4. The period of limitation on examination
and determination is unlimited under this title in the case
of any action by the department to recover or rescind any tax
expenditure as defined by section 2.48, subsection 1, or any
other incentive or assistance, due to a failure to meet or
maintain the requirements of a program administered by the
economic development authority.
Sec. 22. Section 428A.1, subsections 2 and 3, Code 2020, are
amended to read as follows:
2. When each deed, instrument, or writing by which any real
property in this state is granted, assigned, transferred, or
otherwise conveyed is presented for recording to the county
recorder, a declaration of value signed by at least one of the
sellers or one of the buyers or their agents shall be submitted
to the county recorder. However, if the deed, instrument, or
writing contains multiple parcels some of which are located
in more than one county, separate declarations of value
shall be submitted on the parcels located in each county and
submitted to the county recorder of that county when paying
the tax as provided in section 428A.5 . A declaration of value
is not required for those instruments described in section
428A.2, subsections 2 to 5, 7 to 13, and 16 to through 21 , or
described in section 428A.2, subsection 6 , except in the case
of a federal agency or instrumentality, or if a transfer is
the result of acquisition of lands, whether by contract or
condemnation, for public purposes through an exercise of the
power of eminent domain.
3. The declaration of value shall state the full
consideration paid for the real property transferred. If
agricultural land, as defined in section 9H.1 , is purchased by
-16-
LSB 5409XD (10) 88
jm/jh 16/ 67

S.F. _____ H.F. _____
a corporation, limited partnership, trust, alien or nonresident
alien, the declaration of value shall include the name and
address of the buyer, the name and address of the seller, a
legal description of the agricultural land, and identify the
buyer as a corporation, limited partnership, trust, alien,
or nonresident alien. The county recorder shall not record
the declaration of value, but shall not charge a recording
fee. The county recorder shall enter on the declaration of
value information the director of revenue requires for the
production of the sales/assessment ratio study and transmit
all declarations of value to the city or county assessor in
whose jurisdiction the property is located. The city or county
assessor shall enter on the declaration of value provide the
information the director of revenue requires for the production
of the sales/assessment ratio study and transmit one copy of
each declaration of value to the director of revenue, at times
as directed by the director of revenue. The assessor shall
retain one copy of each declaration of value for three years
from December 31 of the year in which the transfer of realty
for which the declaration was filed took place. The director
of revenue shall, upon receipt of the information required to
be filed under this chapter by the city or county assessor,
send to the office of the secretary of state that part of the
declaration of value which identifies a corporation, limited
partnership, trust, alien, or nonresident alien as a purchaser
of agricultural land as defined in section 9H.1 .
Sec. 23. Section 441.48, Code 2020, is amended to read as
follows:
441.48 Notice of adjustment.
1. Before the department of revenue shall adjust the
valuation of any class of property any such percentage, the
department shall first serve ten days’ notice by mail, on the
county auditor of the county whose valuation is proposed to be
adjusted. The department shall hold an adjourned meeting after
such
-17-
LSB 5409XD (10) 88
jm/jh 17/ 67

S.F. _____ H.F. _____
2. If the county or assessing jurisdiction intends to
protest the proposed adjustment, the board of supervisors or
city council, as applicable, shall provide the department with
notice of intent to protest prior to expiration of the ten
days’ notice.
3. After expiration of the ten days’ notice, at which time
the county or assessing jurisdiction may appear by its city
council or board of supervisors, city or county attorney, and
other assessing jurisdiction, or city or county officials, and
make written or oral protest against such proposed adjustment.
4. The protest shall consist simply of a statement of the
error, or errors, complained of with such facts as may lead to
their correction. At the adjourned meeting
5. After written protest is received, or an oral protest
is heard, the final action may be taken in reference to the
proposed adjustment.
Sec. 24. Section 489.706, subsection 2, Code 2020, is
amended to read as follows:
2. The secretary of state shall refer the federal tax
identification number contained in the application for
reinstatement to the departments department of revenue and
workforce development. The departments department of revenue
and workforce development shall report to the secretary of
state the tax status of the limited liability company. If
either the department reports to the secretary of state that
a filing delinquency or liability exists against the limited
liability company, the secretary of state shall not cancel the
declaration of dissolution until the filing delinquency or
liability is satisfied.
Sec. 25. Section 490.1422, subsection 2, paragraph a, Code
2020, is amended to read as follows:
a. The secretary of state shall refer the federal tax
identification number contained in the application for
reinstatement to the departments department of revenue and
workforce development. The departments department of revenue
-18-
LSB 5409XD (10) 88
jm/jh 18/ 67

S.F. _____ H.F. _____
and workforce development shall report to the secretary
of state the tax status of the corporation. If either the
department reports to the secretary of state that a filing
delinquency or liability exists against the corporation,
the secretary of state shall not cancel the certificate of
dissolution until the filing delinquency or liability is
satisfied.
Sec. 26. Section 501.813, subsection 2, paragraph a, Code
2020, is amended to read as follows:
a. The secretary of state shall refer the federal tax
identification number contained in the application for
reinstatement to the departments department of revenue and
workforce development. The departments department of revenue
and workforce development shall report to the secretary
of state the tax status of the cooperative. If either the
department reports to the secretary of state that a filing
delinquency or liability exists against the cooperative,
the secretary of state shall not cancel the certificate of
dissolution until the filing delinquency or liability is
satisfied.
Sec. 27. Section 504.1423, subsection 2, paragraph a, Code
2020, is amended to read as follows:
a. The secretary of state shall refer the federal tax
identification number contained in the application for
reinstatement to the departments department of revenue and
workforce development. The departments department of revenue
and workforce development shall report to the secretary
of state the tax status of the corporation. If either the
department reports to the secretary of state that a filing
delinquency or liability exists against the corporation,
the secretary of state shall not cancel the certificate of
dissolution until the filing delinquency or liability is
satisfied.
Sec. 28. Section 533.329, Code 2020, is amended by adding
the following new subsection:
-19-
LSB 5409XD (10) 88
jm/jh 19/ 67

S.F. _____ H.F. _____
NEW SUBSECTION . 03. Returns shall be in the form the
director of revenue prescribes, and shall be filed with the
department of revenue on or before the last day of the fourth
month after the expiration of the tax year. The moneys and
credits tax is due and payable on the last day of the fourth
month after the expiration of the tax year.
Sec. 29. Section 533.329, subsection 3, Code 2020, is
amended to read as follows:
3. The department of revenue shall administer and enforce
the provisions of this section , and except as explicitly
provided in this section or another provision of law, shall
apply all applicable penalty, interest, and administrative
provisions of chapters 421 and 422 as nearly as possible in
administering and enforcing the moneys and credits tax imposed
by this section .
Sec. 30. LEGISLATIVE INTENT. It is the intent of the
general assembly that the sections of this division amending
Code sections 422.25 and 423.37 are conforming amendments
consistent with current state law, and that the amendments
do not change the application of current law but instead
reflect current law both before and after the enactment of this
division of this Act.
Sec. 31. EFFECTIVE DATE. The following, being deemed of
immediate importance, take effect upon enactment:
1. The section of this division of this Act amending section
422.25.
2. The section of this division of this Act amending section
423.37.
Sec. 32. APPLICABILITY. The following apply to tax years
beginning on or after January 1, 2022:
The sections of this division of this Act amending section
421.27.
DIVISION II
SALES AND USE TAX
Sec. 33. Section 321G.4, subsection 2, Code 2020, is amended
-20-
LSB 5409XD (10) 88
jm/jh 20/ 67

S.F. _____ H.F. _____
to read as follows:
2. a. The owner of the snowmobile shall file an application
for registration with the department through the county
recorder of the county of residence in the manner established
by the commission. The application shall be completed by the
owner and shall be accompanied by a fee of fifteen dollars and
a writing fee as provided in section 321G.27 . A snowmobile
shall not be registered by the county recorder until the
county recorder is presented with receipts, bills of sale,
or other satisfactory evidence that the sales or use tax has
been paid for the purchase of the snowmobile or that the
owner is exempt from paying the tax. A snowmobile that has
an expired registration certificate from another state may be
registered in this state upon proper application, payment of
all applicable registration and writing fees, and payment of a
penalty of five dollars.
b. If the owner of the snowmobile is unable to present
satisfactory evidence that the sales or use tax has been paid,
the county recorder shall collect the tax. On or before the
tenth day of each month, the county recorder shall remit to
the department of revenue the amount of the taxes collected
during the preceding month, together with an itemized statement
on forms furnished by the department of revenue showing the
name of each taxpayer, the make and purchase price of each
snowmobile, the amount of tax paid, and such other information
as the department of revenue requires.
Sec. 34. Section 321I.4, subsection 2, Code 2020, is amended
to read as follows:
2. a. The owner of the all-terrain vehicle shall file an
application for registration with the department through the
county recorder of the county of residence, or in the case
of a nonresident owner, in the county of primary use, in the
manner established by the commission. The application shall
be completed by the owner and shall be accompanied by a fee
of fifteen dollars and a writing fee as provided in section
-21-
LSB 5409XD (10) 88
jm/jh 21/ 67

S.F. _____ H.F. _____
321I.29 . An all-terrain vehicle shall not be registered by the
county recorder until the county recorder is presented with
receipts, bills of sale, or other satisfactory evidence that
the sales or use tax has been paid for the purchase of the
all-terrain vehicle or that the owner is exempt from paying the
tax. An all-terrain vehicle that has an expired registration
certificate from another state may be registered in this state
upon proper application, payment of all applicable registration
and writing fees, and payment of a penalty of five dollars.
b. If the owner of the all-terrain vehicle is unable to
present satisfactory evidence that the sales or use tax has
been paid, the county recorder shall collect the tax. On or
before the tenth day of each month, the county recorder shall
remit to the department of revenue the amount of the taxes
collected during the preceding month, together with an itemized
statement on forms furnished by the department of revenue
showing the name of each taxpayer, the make and purchase price
of each all-terrain vehicle, the amount of tax paid, and such
other information as the department of revenue requires.
Sec. 35. Section 423.2, subsection 6, paragraph bs, Code
2020, is amended to read as follows:
bs. Services arising from or related to installing,
maintaining, servicing, repairing, operating, upgrading, or
enhancing either specified digital products or software sold
as tangible personal property .
Sec. 36. Section 423.2, subsection 8, paragraph d,
subparagraph (1), Code 2020, is amended to read as follows:
(1) The retail sale of tangible personal property or
specified digital product and a service , where the tangible
personal property or specified digital product is essential
to the use of the service, and is provided exclusively in
connection with the service, and the true object of the
transaction is the service.
Sec. 37. Section 423.3, subsection 3A, Code 2020, is amended
to read as follows:
-22-
LSB 5409XD (10) 88
jm/jh 22/ 67

S.F. _____ H.F. _____
3A. The sales price from the sale of a commercial recreation
service offering the opportunity to hunt a preserve whitetail
as defined in section 484C.1 if the sale occurred between July
1, 2005, and December 31, 2015.
Sec. 38. Section 423.3, subsection 31, unnumbered paragraph
1, Code 2020, is amended to read as follows:
The sales price of tangible personal property or specified
digital products sold to and of services furnished to a tribal
government as defined in 216A.161, or the sales price of
tangible personal property or specified digital products sold
to and of services furnished , and used for public purposes
sold to a tax-certifying or tax-levying body of the state or a
governmental subdivision of the state, including the following:
regional transit systems, as defined in section 324A.1 , ;
the state board of regents , ; department of human services , ;
state department of transportation , ; any municipally owned
solid waste facility which sells all or part of its processed
waste as fuel to a municipally owned public utility , ; and all
divisions, boards, commissions, agencies, or instrumentalities
of state, federal, county, or municipal government , or tribal
government which have no earnings going to the benefit of an
equity investor or stockholder, except any of the following:
Sec. 39. Section 423.3, Code 2020, is amended by adding the
following new subsection:
NEW SUBSECTION . 60A. The sales price from sales of diapers
eligible for medical assistance as defined in section 249A.2.
Sec. 40. Section 423.3, subsection 80, paragraphs b and c,
Code 2020, are amended to read as follows:
b. Subject to the limitations in paragraph “c” , if a
contractor, subcontractor, or builder is to use building
materials, supplies, and equipment , or services in the
performance of a written construction contract with a
designated exempt entity, the person shall purchase such
items of tangible personal property or services without
liability for the tax if such property or services will be
-23-
LSB 5409XD (10) 88
jm/jh 23/ 67

S.F. _____ H.F. _____
used in the performance of the written construction contract
and a purchasing agent authorization letter and an exemption
certificate, issued by the designated exempt entity, are
presented to the retailer.
c. (1) With regard to a written construction contract
with a designated exempt entity described in paragraph “a” ,
subparagraph (1), the sales price of building materials,
supplies, or equipment , or services is exempt from tax by this
subsection only to the extent the building materials, supplies,
or equipment , or services are completely consumed in the
performance of the construction contract with the designated
exempt entity , and only if the property that is the subject
of the construction project becomes public property or the
property of the designated exempt entity .
(2) With regard to a written construction contract with
a designated exempt entity described in paragraph “a” ,
subparagraph (2), the sales price of building materials,
supplies, or equipment , or services is exempt from tax by this
subsection only to the extent the building materials, supplies,
or equipment , or services are completely consumed in the
performance of a construction contract to construct a project,
as defined in section 15J.2, subsection 10 , which project has
been approved by the economic development authority board in
accordance with chapter 15J .
Sec. 41. Section 423.4, subsection 1, Code 2020, is amended
to read as follows:
1. a. For purposes of this subsection, a “designated exempt
entity” means any of the following:
(1) A private nonprofit educational institution in this
state , .
(2) A nonprofit Iowa affiliate of a nonprofit international
organization whose primary activity is the promotion of the
construction, remodeling, or rehabilitation of one-family or
two-family dwellings for low-income families , .
(3) A nonprofit private museum in this state , .
-24-
LSB 5409XD (10) 88
jm/jh 24/ 67

S.F. _____ H.F. _____
(4) A tax-certifying or tax-levying body or governmental
subdivision of the state, including the state board of regents,
state department of human services, state department of
transportation , a .
(5) A municipally owned solid waste facility which sells all
or part of its processed waste as fuel to a municipally owned
public utility , and all .
(6) The state of Iowa.
(7) Any political subdivision of the state.
(8) All divisions, boards, commissions, agencies, or
instrumentalities of state, federal, county, or municipal
government which do not have earnings going to the benefit of
an equity investor or stockholder , .
(9) A tribal government as defined in section 216A.161,
and any instrumentalities of the tribal government which do
not have earnings going to the benefit of an equity investor
or stockholder.
b. A designated exempt entity may make application apply
to the department for the refund of the sales or use tax upon
the sales price of all sales of goods, wares, or merchandise
building materials, supplies, equipment , or from services
furnished to a contractor, used in the fulfillment performance
of a written contract with the state of Iowa, any political
subdivision of the state, or a division, board, commission,
agency, or instrumentality of the state or a political
subdivision, a private nonprofit educational institution in
this state, a nonprofit Iowa affiliate described in this
subsection , or a nonprofit private museum in this state if the
property becomes an integral part of the project under contract
and at the completion of the project becomes public property,
is devoted to educational uses, becomes part of a low-income
one-family or two-family dwelling in the state, or becomes a
nonprofit private museum; except goods, wares, or merchandise,
designated exempt entity if all of the following apply:
(1) The building materials, supplies, equipment, or
-25-
LSB 5409XD (10) 88
jm/jh 25/ 67

S.F. _____ H.F. _____
services are completely consumed in the performance of a
construction project with the designated entity.
(2) The property that is subject of the construction project
becomes public property or the property of an exempt entity.
(3) The building materials, supplies, equipment, or
services furnished which are not used in the performance of
any contract in connection with the operation of any municipal
utility engaged in selling gas, electricity, or heat to
the general public or in connection with the operation of a
municipal pay television system; and except goods, wares, and
merchandise are not used in the performance of a contract for a
“project” under chapter 419 as defined in that chapter other
than goods, wares, or merchandise used in the performance of
a contract for a “project” under chapter 419 for which a bond
issue was approved by a municipality prior to July 1, 1968, or
for which the goods, wares, or merchandise becomes an integral
part of the project under contract and at the completion of the
project becomes public property or is devoted to educational
uses.
a. c. Such A contractor shall state under oath, on forms
provided by the department, the amount of such sales of goods,
wares, or merchandise, or services furnished and used in the
performance of such contract, and upon which sales or use tax
has been paid, and shall file such forms with the governmental
unit, private nonprofit educational institution, nonprofit Iowa
affiliate, or nonprofit private museum designated exempt entity
which has made any written contract for performance by the
contractor. The forms shall be filed by the contractor with
the governmental unit, educational institution, nonprofit Iowa
affiliate, or nonprofit private museum designated exempt entity
before final settlement is made.
b. d. Such governmental unit, educational institution,
nonprofit Iowa affiliate, or nonprofit private museum A
designated exempt entity shall, not more than one year after
the final settlement has been made, make application apply
-26-
LSB 5409XD (10) 88
jm/jh 26/ 67

S.F. _____ H.F. _____
to the department for any refund of the amount of the sales
or use tax which shall have been paid upon any goods, wares,
or merchandise building materials, supplies, equipment ,
or services furnished, the application to be made in the
manner and upon forms to be provided by the department,
and the department shall forthwith audit the claim and, if
approved, issue a warrant to the governmental unit, educational
institution, nonprofit Iowa affiliate, or nonprofit private
museum designated exempt entity in the amount of the sales or
use tax which has been paid to the state of Iowa under the
contract.
c. e. Refunds authorized under this subsection shall accrue
interest in accordance with section 421.60, subsection 2 ,
paragraph “e” .
d. f. Any contractor who willfully makes a false report of
tax paid under the provisions of this subsection is guilty of
a simple misdemeanor and in addition shall be liable for the
payment of the tax and any applicable penalty and interest.
Sec. 42. Section 423.4, subsection 2, paragraphs a and b,
Code 2020, are amended to read as follows:
a. A contractor awarded a contract for a transportation
construction project is considered the consumer of all building
materials, building supplies, and equipment , and services and
shall pay sales tax to the supplier or remit consumer use tax
directly to the department.
b. The contractor is not required to file information with
the state department of transportation stating the amount of
goods, wares, or merchandise, or services rendered, furnished,
or performed and building materials, supplies, equipment, or
services used in the performance of the contract or the amount
of sales or use tax paid.
Sec. 43. Section 423.4, subsection 6, paragraph a,
subparagraph (1), Code 2020, is amended to read as follows:
(1) The owner of a collaborative educational facility
in this state may make application to the department for the
-27-
LSB 5409XD (10) 88
jm/jh 27/ 67

S.F. _____ H.F. _____
refund of the sales or use tax upon the sales price of all sales
of goods, wares, or merchandise building materials, supplies,
equipment , or from services furnished to a contractor, used
in the fulfillment of a written construction contract with
the owner of the collaborative educational facility for the
original construction, or additions or modifications to, a
building or structure to be used as part of the collaborative
educational facility.
Sec. 44. Section 423.4, subsection 6, paragraphs b and c,
Code 2020, are amended to read as follows:
b. Such A contractor shall state under oath, on forms
provided by the department, the amount of such sales of goods,
wares, or merchandise building materials, supplies, equipment ,
or services furnished and used in the performance of such
contract, and upon which sales or use tax has been paid, and
shall file such forms with the owner of the collaborative
educational facility which has made any written contract for
performance by the contractor.
c. (1) The owner of the collaborative educational facility
shall, not more than one year after the final settlement has
been made, make application to the department for any refund
of the amount of the sales or use tax which shall have been
paid upon any goods, wares, or merchandise building materials,
supplies, equipment , or services furnished, the application
to be made in the manner and upon forms to be provided by
the department, and the department shall forthwith audit the
claim and, if approved, issue a warrant to the owner of the
collaborative educational facility in the amount of the sales
or use tax which has been paid to the state of Iowa under the
contract.
(2) Refunds authorized under this subsection shall accrue
interest in accordance with section 421.60, subsection 2 ,
paragraph “e” .
Sec. 45. Section 423.5, subsection 1, paragraph b, Code
2020, is amended by striking the paragraph.
-28-
LSB 5409XD (10) 88
jm/jh 28/ 67

S.F. _____ H.F. _____
Sec. 46. Section 423.29, subsection 1, Code 2020, is amended
to read as follows:
1. Every seller who is a retailer and who is making taxable
sales of tangible personal property or specified digital
products in Iowa or who is a retailer maintaining a place
of business in this state making taxable sales of tangible
personal property or specified digital products shall, at
the time of making the sale, collect the sales tax. Every
seller who is a retailer that is not otherwise required to
collect sales tax under the provisions of this chapter and who
is selling tangible personal property or specified digital
products for use in Iowa shall, at the time of making the sale,
whether within or without the state, collect the use tax.
Sellers required to collect sales or use tax shall give to any
purchaser a receipt for the tax collected in the manner and
form prescribed by the director.
Sec. 47. Section 423.33, subsection 1, Code 2020, is amended
to read as follows:
1. Liability of purchaser for sales tax and retailer .
a. If a purchaser fails to pay sales tax to the retailer
required to collect the tax, then in addition to all of the
rights, obligations, and remedies provided, the a use tax
is payable by the purchaser directly to the department, and
sections 423.31 , 423.32 , 423.37 , 423.38 , 423.39 , 423.40 ,
423.41 , and 423.42 apply to the purchaser.
b. For failure to pay the sales or use tax as described
in paragraph “a” , the retailer and purchaser are jointly
liable, unless the circumstances described in section 29C.24,
subsection 3, paragraph “a” , subparagraph (2), section 421.60,
subsection 2 , paragraph “m” , section 423.34A , or section
423.45, subsection 4 , paragraph “b” or “e” , or subsection 5 ,
paragraph “c” or “e” , are applicable.
c. If the retailer fails to collect sales tax at the time
of the transaction, the retailer shall thereafter remit the
applicable sales tax, or the purchaser thereafter shall remit
-29-
LSB 5409XD (10) 88
jm/jh 29/ 67

S.F. _____ H.F. _____
the applicable use tax. If the purchaser remits all applicable
use tax, the retailer remains liable for any local sales and
services tax under chapter 423B that the retailer failed to
collect.
Sec. 48. REFUNDS RELATED TO PRESERVE WHITETAIL DEER
HUNTING. Refunds of taxes, interest, or penalties that arise
from claims resulting from the amendment of section 423.3,
subsection 3A, for sales occurring between July 1, 2005,
and the effective date of the amendment to section 423.3,
subsection 3A, shall not be allowed, notwithstanding any other
law to the contrary.
Sec. 49. LEGISLATIVE INTENT.
1. It is the intent of the general assembly that the section
of this division of this Act amending section 423.29 is a
conforming amendment consistent with current state law, and
that the amendment does not change the application of current
law but instead reflects current law both before and after the
enactment of this division of this Act.
2. It is the intent of the general assembly that the
addition of “jointly” in the section of this division of
this Act amending section 423.33 is a conforming amendment
consistent with current state law, and that the amendment
does not change the application of current law but instead
reflects current law both before and after the enactment of
this division of this Act.
Sec. 50. EFFECTIVE DATE. The following, being deemed of
immediate importance, take effect upon enactment:
1. The section of this division of this Act amending section
423.3A.
2. The section of this division of this Act relating
to refunds for commercial recreation services offering an
opportunity to hunt preserve whitetail deer.
Sec. 51. RETROACTIVE APPLICABILITY. The following applies
retroactively to July 1, 2005:
The section of this division of this Act amending section
-30-
LSB 5409XD (10) 88
jm/jh 30/ 67

S.F. _____ H.F. _____
423.3A.
DIVISION III
INCOME TAX
Sec. 52. Section 422.9, subsection 3, paragraph c, Code
2020, is amended by striking the paragraph and inserting in
lieu thereof the following:
c. A taxpayer may elect to waive the entire carryback period
with respect to an Iowa net operating loss for any taxable year
beginning on or after January 1, 2020. The election shall be
made in the manner and form prescribed by the department, and
shall be made by the due date for filing the taxpayer’s Iowa
return, including extensions of time. After the election is
made for any taxable year, the election shall be irrevocable
for such taxable year. When an election has been properly
made, the Iowa net operating loss shall be carried forward
twenty taxable years.
Sec. 53. Section 422.9, subsection 3, paragraph d, Code
2020, is amended to read as follows:
d. Notwithstanding paragraph “a” , for a taxpayer who is
engaged in the trade or business of farming , which means the
same as a “farming business” as defined in section 263A(e)(4) of
the Internal Revenue Code , and has a farming loss from farming
as defined in section 172(b)(1)(B) of the Internal Revenue Code
including modifications prescribed by rule by the director,
the Iowa farming loss from the trade or business of farming is
a net operating loss which may , at the time of the election of
the taxpayer, be carried back five taxable years prior to the
taxable year of the loss. The election shall be made in the
manner and form prescribed by the department, and shall be made
by the due date for filing the taxpayer’s return, including
extensions of time. After the election is made for any taxable
year, the election shall be irrevocable for such taxable year.
Sec. 54. APPLICABILITY. This division of this Act applies
to tax years beginning on or after January 1, 2020.
DIVISION IV
-31-
LSB 5409XD (10) 88
jm/jh 31/ 67

S.F. _____ H.F. _____
RESEARCH ACTIVITIES CREDIT
Sec. 55. Section 15.335, subsection 4, paragraph a, Code
2020, is amended to read as follows:
a. In lieu of the credit amount computed in subsection 2 , an
eligible business may elect to compute the credit amount for
qualified research expenses incurred in this state in a manner
consistent with the alternative simplified credit described in
section 41(c)(5) 41(c)(4) of the Internal Revenue Code. The
taxpayer may make this election regardless of the method used
for the taxpayer’s federal income tax. The election made under
this paragraph is for the tax year and the taxpayer may use
another or the same method for any subsequent year.
Sec. 56. Section 15.335, subsection 4, paragraph b,
unnumbered paragraph 1, Code 2020, is amended to read as
follows:
For purposes of the alternate credit computation method in
paragraph “a” , the credit percentages applicable to qualified
research expenses described in section 41(c)(5)(A) 41(c)(4)(A)
and clause (ii) of section 41(c)(5)(B) 41(c)(4)(B) of the
Internal Revenue Code are as follows:
Sec. 57. Section 422.10, subsection 1, paragraphs c and d,
Code 2020, are amended to read as follows:
c. In lieu of the credit amount computed in paragraph “b” ,
subparagraph (1), subparagraph division (a), a taxpayer may
elect to compute the credit amount for qualified research
expenses incurred in this state in a manner consistent with the
alternative simplified credit described in section 41(c)(5)
41(c)(4) of the Internal Revenue Code. The taxpayer may make
this election regardless of the method used for the taxpayer’s
federal income tax. The election made under this paragraph is
for the tax year and the taxpayer may use another or the same
method for any subsequent year.
d. For purposes of the alternate credit computation
method in paragraph “c” , the credit percentages applicable to
qualified research expenses described in section 41(c)(5)(A)
-32-
LSB 5409XD (10) 88
jm/jh 32/ 67

S.F. _____ H.F. _____
41(c)(4)(A) and clause (ii) of section 41(c)(5)(B) 41(c)(4)(B)
of the Internal Revenue Code are four and fifty-five
hundredths percent and one and ninety-five hundredths percent,
respectively.
Sec. 58. Section 422.33, subsection 5, paragraphs c and d,
Code 2020, are amended to read as follows:
c. In lieu of the credit amount computed in paragraph
“a” , subparagraph (1), a corporation may elect to compute the
credit amount for qualified research expenses incurred in this
state in a manner consistent with the alternative simplified
credit described in section 41(c)(5) 41(c)(4) of the Internal
Revenue Code. The taxpayer may make this election regardless
of the method used for the taxpayer’s federal income tax. The
election made under this paragraph is for the tax year and the
taxpayer may use another or the same method for any subsequent
year.
d. For purposes of the alternate credit computation
method in paragraph “c” , the credit percentages applicable to
qualified research expenses described in section 41(c)(5)(A)
41(c)(4)(A) and clause (ii) of section 41(c)(5)(B) 41(c)(4)(B)
of the Internal Revenue Code are four and fifty-five
hundredths percent and one and ninety-five hundredths percent,
respectively.
Sec. 59. EFFECTIVE DATE. This division of this Act, being
deemed of immediate importance, takes effect upon enactment.
Sec. 60. RETROACTIVE APPLICABILITY. This division of this
Act applies retroactively to January 1, 2019, for tax years
beginning on or after that date.
DIVISION V
PARTNERSHIP AND PASS-THROUGH ENTITY AUDITS AND REPORTING OF
FEDERAL ADJUSTMENTS
Sec. 61. Section 421.27, subsection 2, paragraph c, Code
2020, is amended to read as follows:
c. (1) The Except in the case of a final federal
partnership adjustment governed by subparagraph (2), the
-33-
LSB 5409XD (10) 88
jm/jh 33/ 67

S.F. _____ H.F. _____
taxpayer provides written notification to the department of a
federal audit while it is in progress and voluntarily files an
amended return which includes a copy of the federal document
showing the final disposition or final federal adjustments
within sixty days of the final disposition determination date
of the federal government’s audit. For purposes of this
subparagraph, “final determination date” means the same as
defined in section 422.25.
(2) (a) In the case of a final federal partnership
adjustment arising from a partnership level audit, all of the
following conditions are satisfied:
(i) The audited partnership provides written notification
to the department of the partnership level audit while it is
in progress.
(ii) With respect to the audited partnership or a direct
partner or indirect partner of the audited partnership, the
audited partnership, direct partner, or indirect partner
voluntarily and timely complies with its reporting and payment
requirements under section 422.25A, subsection 4 or 5.
(b) As used in this subparagraph, all words and phrases
defined in section 422.25A shall have the same meaning given
them by that section.
Sec. 62. Section 422.7, Code 2020, is amended by adding the
following new subsection:
NEW SUBSECTION . 59. Any income subtracted from federal
taxable income for an adjustment year pursuant to section 6225
of the Internal Revenue Code and the regulations thereunder
shall be added back in computing net income for state tax
purposes for the adjustment year.
Sec. 63. Section 422.25, subsections 1 and 2, Code 2020,
are amended by striking the subsections and inserting in lieu
thereof the following:
1. a. For purposes of this subsection:
(1) “Federal adjustment” means a change to an item or amount
required to be determined under the Internal Revenue Code and
-34-
LSB 5409XD (10) 88
jm/jh 34/ 67

S.F. _____ H.F. _____
the regulations thereunder that is used by the taxpayer to
compute state tax owed whether such change results from action
by the internal revenue service, or the filing of a timely
amended federal return or timely federal refund claim. A
federal adjustment is positive to the extent that it increases
Iowa taxable income as determined under this title and is
negative to the extent that it decreases Iowa taxable income
as determined under this title.
(2) “Federal adjustments report” means the method or form
required by the department by rule to report final federal
adjustments or final federal partnership adjustments as defined
in section 422.25A, and in the case of any entity taxed as a
partnership or S corporation for federal income tax purposes,
identifies all owners that hold an interest directly in such
entity and provides the effect of the final federal adjustments
on such owner’s Iowa income.
(3) “Final determination date” means the following:
(a) Except as provided in subparagraph divisions (b) and
(c), for federal adjustments arising from an internal revenue
service audit or other action by the internal revenue service,
the final determination date is the first day on which no
federal adjustments arising from that audit or other action
remain to be finally determined, whether by internal revenue
service decision with respect to which all rights of appeal
have been waived or exhausted, by agreement, or, if appealed
or contested, by a final decision with respect to which all
rights of appeal have been waived or exhausted. For agreements
required to be signed by the internal revenue service and the
taxpayer, the final determination date is the date on which the
last party signed the agreement.
(b) For federal adjustments arising from an internal
revenue service audit or other action by the internal revenue
service, if the taxpayer filed as a member of a consolidated
return under section 422.37, the final determination date
is the first day on which no related federal adjustments
-35-
LSB 5409XD (10) 88
jm/jh 35/ 67

S.F. _____ H.F. _____
arising from that audit or other action remain to be finally
determined, as described in subparagraph division (a), for the
entire group.
(c) For federal adjustments arising from a timely filed
amended federal return or a timely filed federal refund
claim, or if it is a federal adjustment reported on a timely
amended federal return or other similar report filed pursuant
to section 6225(c) of the Internal Revenue Code, the final
determination date is the day on which the amended return,
refund claim, or other similar report was filed.
(4) “Final federal adjustment” means a federal adjustment
after the final determination date for that federal adjustment
has passed.
b. Within three years after the return is filed or within
three years after the return became due, including any
extensions of time for filing, whichever time is the later,
the department shall examine the return and determine the tax.
However, if the taxpayer omits from income an amount which
will, under the Internal Revenue Code, extend the statute of
limitations for assessment of federal tax to six years under
the federal law, the period for examination and determination
is six years.
c. The period for examination and determination of the
correct amount of tax is unlimited in the case of a false or
fraudulent return made with the intent to evade tax or in the
case of a failure to file a return.
d. In lieu of the period of limitation for any prior year
for which an overpayment of tax or an elimination or reduction
of an underpayment of tax due for that prior year results from
the carryback to that prior year of a net operating loss or
net capital loss, the period is the period of limitation for
the taxable year of the net operating loss or net capital loss
which results in the carryback.
e. (1) In addition to the applicable period of limitation
for examination and determination in paragraph “b” , “c” , or “d” ,
-36-
LSB 5409XD (10) 88
jm/jh 36/ 67

S.F. _____ H.F. _____
the department may make an examination and determination at any
time within one year from the date of receipt by the department
of a federal adjustments report with respect to a final
federal adjustment or final federal partnership adjustment
as defined in section 422.25A for a particular tax year. In
order to begin the running of the one-year period, the federal
adjustments report related to the final federal adjustment or
final federal partnership adjustment shall be transmitted to
the department by the taxpayer in the form and manner specified
by the department by rule.
(2) The department in its discretion may adopt rules to
establish a de minimis amount for which subparagraph (1) shall
not apply and the taxpayer shall not be required to file a
federal adjustments report.
(3) The department may in its discretion and when
administratively feasible adopt a process through rule by
which a taxpayer may make estimated payments of tax expected
to result from a pending internal revenue service audit
prior to the filing of a federal adjustments report with the
department. The process shall provide that the estimated
tax payments shall be credited against any tax liability
ultimately found to be due to the state from the internal
revenue service audit and will limit the accrual of further
statutory interest on that liability. The process shall also
provide that if the estimated tax payments exceed the final
tax liability and statutory interest ultimately determined to
be due, the taxpayer is entitled to a refund or credit for
the excess, without interest, provided the taxpayer files a
federal adjustments report, or a claim for refund or credit of
tax under section 422.73, no later than one year following the
final determination date.
2. a. If the tax found due under subsection 1 is greater
than the amount paid, the department shall compute the amount
due, together with interest and penalties as provided in
paragraph “b” , and shall mail a notice of assessment to the
-37-
LSB 5409XD (10) 88
jm/jh 37/ 67

S.F. _____ H.F. _____
taxpayer and, if applicable, to the taxpayer’s authorized
representative of the total, which shall be computed as a sum
certain, with interest computed to the last day of the month
in which the notice is dated.
b. In addition to the tax or additional tax determined
by the department under subsection 1, the taxpayer shall pay
interest on the tax or additional tax at the rate in effect
under section 421.7 for each month counting each fraction of
a month as an entire month, computed from the date the return
was required to be filed. In addition to the tax or additional
tax, the taxpayer shall pay a penalty as provided in section
421.27.
Sec. 64. NEW SECTION . 422.25A Reporting and treatment of
certain partnership adjustments.
1. Definitions. As used in this section and sections
422.25B and 422.25C, unless the context otherwise requires:
a. “Administrative adjustment request” means the same as
provided in section 6227 of the Internal Revenue Code.
b. “Audited partnership” means a partnership subject
to a final federal partnership adjustment resulting from a
partnership level audit.
c. “C corporation” means an entity that elects to be taxed
as a corporation under title 26, chapter 1, subchapter A, part
2, of the Internal Revenue Code.
d. “Corporate partner” means a C corporation partner that is
subject to tax pursuant to section 422.33.
e. “Direct partner” means a person that holds an interest
directly in a partnership or pass-through entity.
f. “Exempt partner” means a partner that is exempt from
taxation pursuant to section 422.34.
g. “Federal adjustments report” means the same as defined
in section 422.25.
h. “Federal partnership adjustment” means a change to an
item or amount required to be determined under the Internal
Revenue Code and the regulations thereunder that is used by a
-38-
LSB 5409XD (10) 88
jm/jh 38/ 67

S.F. _____ H.F. _____
partnership and its direct and indirect partners to compute
state tax owed for the reviewed year where such change results
from a partnership level audit or an administrative adjustment
request. A federal partnership adjustment is positive to the
extent that it increases Iowa taxable income as determined
under this title and is negative to the extent that it
decreases Iowa taxable income as determined under this title.
A federal adjustment reported on an amended federal return
or other similar report filed pursuant to section 6225(c) of
the Internal Revenue Code shall not be considered a federal
partnership adjustment for purposes of this section.
i. “Federal partnership representative” means the person
the partnership designates for the taxable year as the
partnership’s representative, or the person the internal
revenue service has appointed to act as the federal partnership
representative, pursuant to section 6223(a) of the Internal
Revenue Code and the regulations thereunder.
j. “Fiduciary partner” means a partner that is a fiduciary
that is subject to tax pursuant to sections 422.5 and 422.6.
k. “Final determination date” means any one of the following
dates:
(1) In the case of a federal partnership adjustment that
arises from a partnership level audit, the first day on which
no federal adjustments arising from that audit remain to be
finally determined, whether by agreement, or, if appealed
or contested, by a final decision with respect to which all
rights of appeal have been waived or exhausted. For agreements
required to be signed by the internal revenue service and the
audited partnership, the final determination date is the date
on which the last party signed the agreement.
(2) In the case of a federal partnership adjustment that
results from a timely filed administrative adjustment request,
the day on which the administrative adjustment request was
filed with the internal revenue service.
l. “Final federal partnership adjustment” means a federal
-39-
LSB 5409XD (10) 88
jm/jh 39/ 67

S.F. _____ H.F. _____
partnership adjustment after the final determination date for
that federal partnership adjustment has passed.
m. “Indirect partner” means a partner in a partnership or
pass-through entity where such partnership or pass-through
entity itself holds an interest directly, or through another
indirect partner, in a partnership or pass-through entity.
n. “Individual partner” means a partner who is a natural
person that is subject to tax pursuant to section 422.5.
o. “Nonresident partner” means a partner that is not a
resident partner as defined in this subsection.
p. “Partner” means a person that holds an interest, directly
or indirectly, in a partnership or pass-through entity.
q. “Partnership” means an entity subject to taxation
under subchapter K of the Internal Revenue Code and the
regulations thereunder and includes but is not limited to a
syndicate, group, pool, joint venture, or other unincorporated
organization through or by means of which any business,
financial operation, or venture is carried on and which is
not, within the meaning of this chapter, a trust, estate, or
corporation.
r. “Partnership level audit” means an examination by the
internal revenue service at the partnership level pursuant to
subchapter C, title 26, subtitle F, chapter 63, of the Internal
Revenue Code, as enacted by the Bipartisan Budget Act of 2015,
Pub. L. No. 114-74, and as amended, which results in final
federal partnership adjustments initiated and made by the
internal revenue service.
s. “Pass-through entity” means an entity, other than
a partnership, that is not subject to tax under section
422.33 for C corporations but excluding an exempt partner.
“Pass-through entity” includes but is not limited to S
corporations, estates, and trusts, and other grantor trusts.
t. “Reallocation adjustment” means a final federal
partnership adjustment that changes the shares of items of
partnership income, gain, loss, expense, or credit allocated
-40-
LSB 5409XD (10) 88
jm/jh 40/ 67

S.F. _____ H.F. _____
to a partner that holds an interest directly in a partnership
or pass-through entity. A positive reallocation adjustment
means the portion of a reallocation adjustment that would
increase Iowa taxable income for such partners, and a negative
reallocation adjustment means the portion of a reallocation
adjustment that would decrease Iowa taxable income for such
partners.
u. “Resident partner” means any of the following:
(1) For an individual partner, a “resident” as defined in
section 422.4.
(2) For a fiduciary partner, one with situs in Iowa.
(3) For all other partners, a partner whose headquarters or
principal place of business is located in Iowa.
v. “Reviewed year” means the taxable year of a partnership
that is subject to a partnership level audit from which final
federal partnership adjustments arise, or otherwise means the
taxable year of the partnership or pass-through entity that is
the subject of a state partnership audit.
w. “State partnership audit” means an examination by the
director at the partnership or pass-through entity level which
results in adjustments to partnership or pass-through entity
related items or reallocations of income, gains, losses,
expenses, credits, and other attributes among such partners for
the reviewed year.
x. “Tiered partner” means any partner that is a partnership
or pass-through entity.
y. “Unrelated business income” means the income which is
defined in section 512 of the Internal Revenue Code and the
regulations thereunder.
2. Application. Partnerships and their direct partners
and indirect partners shall report final federal partnership
adjustments as provided in this section.
3. State partnership representative. Notwithstanding any
other law to the contrary, the state partnership representative
for the reviewed year shall have the sole authority to act on
-41-
LSB 5409XD (10) 88
jm/jh 41/ 67

S.F. _____ H.F. _____
behalf of the partnership or pass-through entity with respect
to an action required or permitted to be taken by a partnership
or pass-through entity under this section or section 422.28 or
422.29 with respect to final federal partnership adjustments
arising from a partnership level audit or an administrative
adjustment request, and its direct partners and indirect
partners shall be bound by those actions.
4. Reporting and payment requirements for audited
partnerships and their partners subject to final federal
partnership adjustments.
a. Unless an audited partnership makes the election in
subsection 5, the audited partnership shall do all of the
following for all final federal partnership adjustments no
later than ninety days after the final determination date of
the audited partnership:
(1) File a completed federal adjustments report.
(2) Notify each direct partner of such partner’s
distributive share of the adjustments in the manner and form
prescribed by the department by rule.
(3) File an amended composite return under section 422.13
if one was originally filed, and if applicable for withholding
from partners, file an amended withholding report under
section 422.16, and pay the additional amount under this title
that would have been due had the final federal partnership
adjustments been reported properly as required, including any
applicable interest and penalties.
b. Unless an audited partnership paid an amount on behalf
of the direct partners of the audited partnership pursuant to
subsection 5, all direct partners of the audited partnership
shall do all of the following no later than one hundred
eighty days after the final determination date of the audited
partnership:
(1) File a completed federal adjustments report reporting
the direct partner’s distributive share of the adjustments
required to be reported to such partners under paragraph “a” .
-42-
LSB 5409XD (10) 88
jm/jh 42/ 67

S.F. _____ H.F. _____
(2) If the direct partner is a tiered partner, notify all
partners that hold an interest directly in the tiered partner
of such partner’s distributive share of the adjustments in the
manner and form prescribed by the department by rule.
(3) If the direct partner is a tiered partner and subject to
section 422.13, file an amended composite return under section
422.13 if such return was originally filed, and if applicable
for withholding from partners file an amended withholding
report under section 422.16 if one was originally required to
be filed.
(4) Pay any additional amount under this title that would
have been due had the final federal partnership adjustments
been reported properly as required, including any applicable
penalty and interest.
c. Unless a partnership or tiered partner paid an amount on
behalf of the partners pursuant to subsection 5, each indirect
partner shall do all of the following:
(1) Within ninety days after the time for filing and
furnishing statements to tiered partners and their partners
as established by section 6226 of the Internal Revenue Code
and the regulations thereunder, file a completed federal
adjustments report.
(2) If the indirect partner is a tiered partner, within
ninety days after the time for filing and furnishing statements
to tiered partners and their partners as established by
section 6226 of the Internal Revenue Code and the regulations
thereunder but within sufficient time for all indirect partners
to also complete the requirements of this subsection, notify
all of the partners that hold an interest directly in the
tiered partner of such partner’s distributive share of the
adjustments in the manner and form prescribed by the department
by rule.
(3) Within ninety days after the time for filing and
furnishing statements to tiered partners and their partners
as established by section 6226 of the Internal Revenue Code
-43-
LSB 5409XD (10) 88
jm/jh 43/ 67

S.F. _____ H.F. _____
and the regulations thereunder, if the indirect partner
is a tiered partner and subject to section 422.13, file an
amended composite return under section 422.13 if such return
was originally filed, and if applicable for withholding from
partners, file an amended withholding report under section
422.16 if one was originally required to be filed.
(4) Within ninety days after the time for filing and
furnishing statements to tiered partners and the partners of
the tiered partners as established by section 6226 of the
Internal Revenue Code and the regulations thereunder, pay any
additional amount due under this title, including any penalty
and interest that would have been due had the final federal
partnership adjustments been reported properly as required.
5. Election for partnership or tiered partners to pay.
a. An audited partnership, or a tiered partner that receives
a notification of a final federal partnership adjustment under
subsection 4, may make an election to pay as provided under
this subsection.
b. An audited partnership or tiered partner makes an
election to pay under this subsection by filing a completed
federal adjustments report, notifying the department in the
manner and form prescribed by the department that it is making
the election under this subsection, notifying each of the
direct partners of such partner’s distributive share of the
adjustments, and paying on behalf of its partners an amount
calculated in paragraph “c” , including any applicable penalty
and interest. These requirements shall all be fulfilled within
one of the following time periods:
(1) For the audited partnership, no later than ninety days
after the final determination date of the audited partnership.
(2) For a direct tiered partner, no later than one hundred
eighty days after the final determination date of the audited
partnership.
(3) For an indirect tiered partner, within ninety days
after the time for filing and furnishing statements to a
-44-
LSB 5409XD (10) 88
jm/jh 44/ 67

S.F. _____ H.F. _____
tiered partner and the partner of the tiered partner, as
established by section 6226 of the Internal Revenue Code and
the regulations thereunder.
c. The amount due under this subsection from an audited
partnership or tiered partner shall be calculated as follows:
(1) Exclude from final federal partnership adjustments and
any positive reallocation adjustments the distributive share
of such adjustments reported to an exempt partner that holds
an interest directly in the audited partnership if the audited
partnership is making the election or that holds an interest
directly in the tiered partner if the tiered partner is making
the election, but only to the extent the distributive share is
not unrelated business income.
(2) Determine the total distributive share of all final
federal partnership adjustments and positive reallocation
adjustments as modified by this title that are reported to
corporate partners, and to exempt partners to the extent the
distributive share is unrelated business income, and allocate
and apportion such adjustments as provided in section 422.33
at the partnership or tiered partner level, and multiply the
resulting amount by the maximum state corporate income tax rate
pursuant to section 422.33 for the reviewed year.
(3) Determine the total distributive share of all final
federal partnership adjustments and positive reallocation
adjustments as modified by this title that are reported to
nonresident individual partners and nonresident fiduciary
partners and allocate and apportion such adjustments as
provided in section 422.33 at the partnership or tiered
partner level, and multiply the resulting amount by the maximum
individual income tax rate pursuant to section 422.5A for the
reviewed year.
(4) For the total distributive share of all final federal
partnership adjustments and positive reallocation adjustments
as modified by this title that are reported to tiered partners:
(a) Determine the amount of such adjustments which are of a
-45-
LSB 5409XD (10) 88
jm/jh 45/ 67

S.F. _____ H.F. _____
type that would be subject to sourcing to Iowa under section
422.8, subsection 2, paragraph “a” , as a nonresident, and then
determine the portion of this amount that would be sourced to
Iowa under those provisions as if the tiered partner were a
nonresident.
(b) Determine the amount of such adjustments which are of
a type that would not be subject to sourcing to Iowa under
section 422.8, subsection 2, paragraph “a” , as a nonresident.
(c) Determine the portion of the amount in subparagraph
division (b) that can be established, as prescribed by the
department by rule, to be properly allocable to indirect
partners that are nonresident partners or other partners not
subject to tax on the adjustments.
(d) Multiply the total of the amounts determined in
subparagraph divisions (a) and (b), reduced by any amount
determined in subparagraph division (c), by the highest
individual income tax rate pursuant to section 422.5A for the
reviewed year.
(5) For the total distributive share of all final federal
partnership adjustments and positive reallocation adjustments
as modified by this title that are reported to resident
individual partners and resident fiduciary partners, multiply
that amount by the highest individual income tax rate pursuant
to section 422.5A for the reviewed year.
(6) Total the amounts computed pursuant to subparagraphs
(2) through (5) and calculate any interest and penalty as
provided under this title. Notwithstanding any provision of
law to the contrary, interest and penalties on the amount due
by the audited partnership or tiered partner shall be computed
from the day after the due date of the reviewed year return
without extension, and shall be imposed as if the audited
partnership or tiered partner was required to pay tax or show
tax due on the original return for the reviewed year.
d. Adjustments subject to the election in this subsection
do not include any adjustments arising from an administrative
-46-
LSB 5409XD (10) 88
jm/jh 46/ 67

S.F. _____ H.F. _____
adjustment request.
e. An audited partnership or tiered partner not otherwise
subject to any reporting or payment obligation to Iowa that
makes an election under this subsection consents to be subject
to the Iowa laws related to reporting, assessment, collection,
and payment of Iowa tax, interest, and penalties calculated
under the election.
6. Modified reporting and payment method. The department may
adopt procedures for an audited partnership or tiered partner
to enter into an agreement with the department to use an
alternative reporting and payment method, including applicable
time requirements or any other provision of this section. The
audited partnership or tiered partner must demonstrate that
the requested method will reasonably provide for the reporting
and payment of taxes, penalties, and interest due under the
provisions of this section. Application for approval of an
alternative reporting and payment method must be made by the
audited partnership or tiered partner within the time for
making an election to pay under subsection 5 and in the manner
prescribed by the department. Approval of such an alternative
reporting and payment method shall be at the discretion of the
department.
7. Effect of election by partnership or tiered partner and
payment of amount due.
a. The election made under subsection 5 is irrevocable,
unless in the discretion of the director, the director
determines otherwise.
b. The amount determined in subsection 5, when properly
reported and paid by the audited partnership or tiered partner,
shall be treated as paid on behalf of the partners of such
audited partnership or tiered partner on the same final federal
partnership adjustments, provided, however, that no partner may
take any deduction or credit for the amount, claim a refund of
the amount, or include the amount on such partner’s Iowa return
in any manner.
-47-
LSB 5409XD (10) 88
jm/jh 47/ 67

S.F. _____ H.F. _____
c. In the event another state offers to an audited
partnership or tiered partner a similar election to pay state
tax resulting from final federal partnership adjustments,
nothing in this subsection shall prohibit a resident who holds
an interest directly in that audited partnership or tiered
partner, as the case may be, from claiming a credit for taxes
paid by the resident to another state under section 422.8,
subsection 1, for any amounts paid by the audited partnership
or tiered partner on such resident partner’s behalf to another
state, provided such payment otherwise meets the requirements
of section 422.8, subsection 1.
d. Nothing in this section shall prohibit the department
from assessing direct partners and indirect partners for taxes
they owe in the event that an audited partnership or tiered
partner fails to timely make any report or payment required by
this section for any reason.
8. Assessments of additional Iowa income tax, interest, and
penalties, and claims for refund, arising from final federal
partnership adjustments.
a. The department shall assess additional Iowa income
tax, interest, and penalties arising from final federal
partnership adjustments in the same manner as provided in
this title unless a different treatment is provided by this
subsection. Since final federal partnership adjustments are
determined at the audited partnership level, any assessment
issued to partners shall not be appealable by the partner.
The department may assess any taxes, including on-behalf-of
amounts, interest, and penalties arising from the final federal
partnership adjustments if it issues a notice of assessment to
the audited partnership, tiered partner, or other direct or
indirect partner on or before the expiration of the applicable
limitations period specified in section 422.25.
b. In addition to the period for claiming a refund or credit
provided in section 422.73, subsection 1, paragraph “a” , and
notwithstanding section 422.73, subsection 1, paragraph “b” ,
-48-
LSB 5409XD (10) 88
jm/jh 48/ 67

S.F. _____ H.F. _____
a partnership, tiered partner, or other direct or indirect
partner, as the case may be, may file a claim for refund of
Iowa income tax arising directly or indirectly from a final
federal partnership adjustment arising from a partnership level
audit on or before the date which is one year from the date the
federal adjustments report for that final federal partnership
adjustment was required to be filed by such person under this
section.
9. Rules. The department may adopt any rules pursuant to
chapter 17A to implement this section.
Sec. 65. NEW SECTION . 422.25B State partnership
representative.
1. As used in this section, all words and phrases defined
in section 422.25A shall have the same meaning given them by
that section.
2. The state partnership representative for the reviewed
year for a partnership shall be the partnership’s federal
partnership representative with respect to an action required
or permitted to be taken by a state partnership representative
under this chapter for a reviewed year, unless the partnership
designates in writing another person as the state partnership
representative as provided in subsection 3. The state
partnership representative for the reviewed year for a
pass-through entity is the person designated in subsection 3.
3. The department may establish reasonable qualifications
for a person to be a state partnership representative. If
a partnership desires to designate a person other than the
federal partnership representative, the partnership shall
designate such person in the manner and form prescribed by the
department. A pass-through entity shall designate a person as
the state partnership representative in the manner and form
prescribed by the department. A partnership or pass-through
entity shall be allowed to change such designation by notifying
the department at the time the change occurs in the manner and
form prescribed by the department.
-49-
LSB 5409XD (10) 88
jm/jh 49/ 67

S.F. _____ H.F. _____
4. The department may adopt any rules pursuant to chapter
17A to implement this section.
Sec. 66. NEW SECTION . 422.25C Partnership and pass-through
entity audits and examinations —— consistent treatment of
entity-level items —— binding actions —— amended returns.
1. As used in this section, all words and phrases defined
in section 422.25A shall have the same meaning given them by
that section.
2. For tax years beginning on or after January 1, 2020, any
adjustments to a partnership’s or pass-through entity’s items
of income, gain, loss, expense, or credit, or an adjustment
to such items allocated to a partner that holds an interest
in a partnership or pass-through entity for the reviewed year
by the department as a result of a state partnership audit,
shall be determined at the partnership level or pass-through
entity level in the same manner as provided by section 6221(a)
of the Internal Revenue Code and the regulations thereunder
unless a different treatment is specifically provided in this
title. The provisions of sections 6222, 6223, and 6227 of the
Internal Revenue Code and the regulations thereunder shall also
apply to a partnership or pass-through entity and its direct
or indirect partners in the same manner as provided in such
sections unless a different treatment is specifically provided
in this title. For purposes of applying such sections, due
account shall be made for differences in federal and Iowa
terminology. The adjustment provided by section 6221(a) of
the Internal Revenue Code shall be determined as provided in
such section but shall be based on Iowa taxable income or
other tax attributes of the partnership as determined pursuant
to this chapter for the reviewed year. The department shall
issue a notice of adjustment to the partnership or pass-through
entity. Such notice shall be treated as an assessment for
the purposes of section 422.25, and the notice shall be
appealable by the partnership or pass-through entity pursuant
to sections 422.28 and 422.29 and shall be issued within the
-50-
LSB 5409XD (10) 88
jm/jh 50/ 67

S.F. _____ H.F. _____
time period provided by section 422.25. Once the adjustments
to partnership-related or pass-through entity-related items or
reallocations of income, gains, losses, expenses, credits, and
other attributes among such partners for the reviewed year are
finally determined, the partnership or pass-through entity and
any direct partners or indirect partners shall then be subject
to the provisions of section 422.25, subsection 1, paragraph
“e” , and section 422.25A in the same manner as if the state
partnership audit were a federal partnership level audit, and
as if the final state partnership audit adjustment were a
final federal partnership adjustment. The penalty exception
in section 421.27, subsection 2, paragraph “c” , shall not apply
to a state partnership audit.
3. The state partnership representative for the reviewed
year as determined under section 422.25B shall have the sole
authority to act on behalf of the partnership or pass-through
entity with respect to an action required or permitted to
be taken by a partnership or pass-through entity under this
section, including proceedings under section 422.28 or 422.29,
and the partnership’s or pass-through entity’s direct partners
and indirect partners shall be bound by those actions.
4. If the department, the partnership or pass-through
entity, and the partnership or pass-through entity owners
agree, the provisions of this section may be applied to tax
years beginning before January 1, 2020.
5. The department may adopt rules pursuant to chapter 17A to
implement this section.
Sec. 67. Section 422.35, Code 2020, is amended by adding the
following new subsection:
NEW SUBSECTION . 26. Any income subtracted from federal
taxable income for an adjustment year pursuant to section 6225
of the Internal Revenue Code and the regulations thereunder
shall be added back in computing net income for state tax
purposes for the adjustment year.
Sec. 68. Section 422.39, Code 2020, is amended by striking
-51-
LSB 5409XD (10) 88
jm/jh 51/ 67

S.F. _____ H.F. _____
the section and inserting in lieu thereof the following:
422.39 Statutes applicable to corporations and corporation
tax.
All the provisions of sections 422.24 through 422.27
of division II, respecting payment, collection, reporting,
examination, and assessment, shall apply in respect to a
corporation subject to the provisions of this division and to
the tax due and payable by a corporation taxable under this
division. This includes but is not limited to a corporation
that is a pass-through entity as defined in section 422.25A.
Sec. 69. Section 422.73, Code 2020, is amended by adding the
following new subsection:
NEW SUBSECTION . 01. For purposes of this section, “federal
adjustment” , “final determination date” , and “final federal
adjustment” all mean the same as defined in section 422.25.
Sec. 70. Section 422.73, subsections 1 and 3, Code 2020, are
amended to read as follows:
1. a. If it appears that an amount of tax, penalty, or
interest has been paid which was not due under division II ,
III or V of this chapter , then that amount shall be credited
against any tax due on the books of the department by the
person who made the excessive payment, or that amount shall be
refunded to the person or with the person’s approval, credited
to tax to become due. A claim for refund or credit that has
not been filed with the department within three years after
the return upon which a refund or credit claimed became due,
or within one year after the payment of the tax upon which a
refund or credit is claimed was made, whichever time is the
later, shall not be allowed by the director. If, as a result of
a carryback of a net operating loss or a net capital loss, the
amount of tax in a prior period is reduced and an overpayment
results, the claim for refund or credit of the overpayment
shall be filed with the department within the three years after
the return for the taxable year of the net operating loss or
net capital loss became due.
-52-
LSB 5409XD (10) 88
jm/jh 52/ 67

S.F. _____ H.F. _____
b. Notwithstanding the period of limitation specified in
paragraph “a” , the taxpayer shall have six months one year from
the day of final disposition final determination date of any
income tax matter between the taxpayer and the internal revenue
service final federal adjustment arising from an internal
revenue service audit or other similar action by the internal
revenue service with respect to the particular tax year to
claim an income tax refund or credit arising from that final
federal adjustment .
3. The department shall enter into an agreement with the
internal revenue service for the transmission of federal income
tax reports on individuals required to file an Iowa income tax
return who have been involved in an income tax matter with the
internal revenue service. After final disposition the final
determination date of the income tax matter that involves a
final federal adjustment between the taxpayer and the internal
revenue service, the department shall determine whether the
individual is due a state income tax refund as a result of that
final disposition of federal adjustment from such income tax
matter. If the individual is due a state income tax refund,
the department shall notify the individual within thirty days
and request the individual to file a claim for refund or credit
with the department.
Sec. 71. APPLICABILITY. This division of this Act applies
to federal adjustments and federal partnership adjustments that
have a final determination date after the effective date of
this division of this Act.
EXPLANATION
The inclusion of this explanation does not constitute agreement with
the explanation’s substance by the members of the general assembly.
This bill relates to state taxation and related laws of
the state, including the administration by the department of
revenue (department) of certain tax credits and refunds, income
taxes, moneys and credits taxes, sales and use taxes, and by
modifying provisions relating to reinstatement of business
-53-
LSB 5409XD (10) 88
jm/jh 53/ 67

S.F. _____ H.F. _____
entities and to the assessment and valuation of property. The
bill is organized into divisions.
DIVISION I —— ADMINISTRATION AND PENALTY PROVISIONS.
The amendment to Code section 336.603(5) provides that the
governing board of a county land record information system may
enter into an agreement with a public agency to provide access
to electronic documents or records on a batch basis. The bill
allows access to electronic documents to be provided for a fee.
The bill prohibits any other types of agreements between the
board and the public agency except as otherwise provided in the
bill.
The amendment to Code section 421.6 enhances the readability
of the Code section by including in the definition of “return”
the moneys and credits tax turn administered by the department
under Code section 533.329.
The bill enacts new Code section 421.17(36) which permits
the director of revenue to enter into Code chapter 28E
agreements with the state fair or a county or district fair
to collect and remit sales taxes and fees from sellers making
retail sales on the grounds owned by the fair or through events
conducted by the fair.
The amendment to Code section 421.27(1) provides that in
the case of a specified business with no tax shown due or
required to be shown due that fails to timely file their
income tax return or information return shall pay the greater
of the following penalty amounts: $200; or an amount equal
to 10 percent of the imputed Iowa liability of the specified
business, not to exceed $25,000.
The amendment to Code section 421.27(1) provides that the
penalty for individuals or specified businesses that fail to
timely file a return may be waived under certain circumstances.
The amendment to Code section 421.27(4) provides that the
penalty for a specified business that willfully fails to file a
return with no tax shown due or required to be shown due with
the intent to evade such a filing requirement or reporting
-54-
LSB 5409XD (10) 88
jm/jh 54/ 67

S.F. _____ H.F. _____
Iowa-source income, the penalty imposed shall be the greater
of $1,500 or an amount equal to 75 percent of the imputed Iowa
liability of the specified business.
The amendment to Code section 421.27(4) expands penalty
provisions by providing that a person who willfully fails to
file a return or deposit form with intent to evade a filing
requirement shall be subject to a penalty of 75 percent of the
tax added to the amount of tax shown due or required to be shown
due, in lieu of other penalties.
The amendment to Code section 421.27(6) makes numerous
changes to the criminal offense of fraudulent practice
by expanding the criminal offense to include a person who
willfully makes a false application for an exemption or benefit
with the intent to receive the exemption or benefit to which
the person is not entitled.
The amendment to Code section 421.27(6) also expands the
fraudulent practice criminal offense to include when a person
willfully submits any false information, document, or document
containing false information in support of an application
for a refund, credit, exemption, reimbursement, rebate, or
other payment or benefit with the intent to evade taxes;
and to include when a person willfully submits any false
information, document, or document containing false information
in support of an application for a refund, credit, exemption,
reimbursement, rebate, or other payment or benefit to which the
person is not entitled.
The sections of this division amending Code section 421.27
apply to tax years beginning on or after January 1, 2022.
A person who commits fraudulent practice under Code section
421.76(6), in addition to the criminal penalties, is liable for
a penalty equal to 75 percent of the refund, credit, exemption,
reimbursement, rebate, or other payment or benefit being
fraudulently claimed.
The bill enacts new Code section 421.27(8) which defines
“imputed Iowa liability” and “specified business”.
-55-
LSB 5409XD (10) 88
jm/jh 55/ 67

S.F. _____ H.F. _____
The bill enacts new Code section 421.27(9) by adding an
additional penalty under Code section 421.27 in the amount
of $1,000 if a taxpayer fails to file a tax return within 90
days of written notice by the department that the taxpayer is
required to file such a return.
The bill enacts new Code section 421.27A by creating a
criminal offense for perjury. Currently, a different perjury
criminal offense exists in Code section 720.2. A person
commits perjury under the following circumstances in the bill:
the person makes a document containing false information in
support of an application for refund, credit, exemption,
reimbursement, rebate, or other payment or benefit with intent
to evade tax; the person makes a document containing false
information with intent to unlawfully receive a refund, credit,
exemption, reimbursement, rebate, or other payment or benefit,
to which the person is not entitled; the person knowingly makes
any false affidavit; the person knowingly swears or affirms
falsely to any matter or thing required by the terms of title X
of the Code (financial resources) to be sworn to or affirmed.
A person who commits the criminal offense of perjury under new
Code section 421.27A commits a class “D” felony. A class “D”
felony is punishable by confinement for no more than five years
and a fine of at least $750 but not more than $7,500.
The bill enacts new Code section 421.59 relating to a
power of attorney or other authority to act on behalf of the
taxpayer. The bill formalizes a process for the following
persons to act and receive information on behalf of and
exercise all of the rights of a taxpayer, regardless of whether
a power of attorney has been filed with the department: a
guardian, conservator, or custodian appointed by the court; a
receiver appointed pursuant to Code chapter 680; an individual
who has been named as an authorized representative on a
fiduciary return filed under Code section 422.14 (fiduciary
return) or Code chapter 450 (inheritance tax); an individual
holding a title or position within a corporation, association,
-56-
LSB 5409XD (10) 88
jm/jh 56/ 67

S.F. _____ H.F. _____
partnership, or other business entity; a licensed attorney
who has appeared on behalf of the taxpayer or the taxpayer’s
estate; and a parent or legal guardian of the taxpayer who has
not reached the age of majority.
New Code section 421.59 also authorizes the department to
enter into a memorandum of understanding with the taxpayer
for each employee, officer, or member of a third-party entity
engaged with or otherwise hired by a taxpayer to manage
the taxpayer’s tax matters, in lieu of requiring a power of
attorney for each person.
The bill enacts new Code section 421.60(11) which allows a
taxpayer to elect to receive correspondence electronically from
the department rather than by regular mail.
The amendments to Code section 421.62 provide that the
regulations relating to tax return preparers apply to an
income tax return or claim or refund under Code chapter 422
(individual, corporate, and franchise taxes), but do not apply
to withholding returns under Code section 422.16.
The amendment to Code section 421.64 enhances the
readability of the Code section.
The amendment to Code section 422.20(1) adds an intent
element “willfully or recklessly” to the criminal offense
related to the unlawful disclosure of tax return information
by state personnel or former state personnel. A person who
commits a violation under Code section 422.20(1) commits a
serious misdemeanor. A serious misdemeanor is punishable by
confinement for no more than one year and a fine of at least
$315 but not more than $1,875.
The amendment to Code section 422.20(3) provides that tax
return information may be disclosed to authorized individuals
pursuant to new Code section 421.59 created in the bill.
The bill enacts new Code section 422.20(3A) permitting the
director of revenue to disclose the tax return information of
a partnership, limited liability company, or S corporation to
a person who was a partner, shareholder, or member of such an
-57-
LSB 5409XD (10) 88
jm/jh 57/ 67

S.F. _____ H.F. _____
entity during any part of the period covered by the tax return.
The bill enacts new Code section 422.20(3B) specifying the
information the department is required to redact prior to
the disclosure of the record in an appeal or contested case.
The bill specifies the department may also redact other tax
information from the record in an appeal or contested case, if
the taxpayer proves by clear and convincing evidence that the
release of the tax information would disclose a trade secret
or be an unwarranted invasion of personal privacy. The bill
permits the department to disclose information that is required
to be redacted if the department determines such information is
necessary to the resolution or decision of the case.
The bill enacts new Code section 422.25(1)(c) (income tax)
that provides the period of examination and determination is
unlimited under title X (financial resources) in any action
by the department to recover or rescind a tax expenditure
as defined in Code section 2.48, or any other incentive or
assistance administered by the economic development authority.
The amendment takes effect upon enactment. The bill also
provides that it is the intent of the general assembly that the
amendment to Code section 422.25(1) is a conforming amendment
consistent with current law, and that the amendment does not
change the application of current law. This provision takes
effect upon enactment.
The amendment to Code section 422.72(1)(a) adds the intent
element of “willfully or recklessly” to the criminal offense
related to the unlawful disclosure by state personnel or
former state personnel of the business affairs, operations,
or information obtained through a tax-related investigation.
A person who unlawfully discloses such information commits a
serious misdemeanor under Code section 422.72(4). A serious
misdemeanor is punishable by confinement for no more than one
year and a fine of at least $315 but not more than $1,875.
The bill enacts new Code section 422.72(7A), a similar
provision to new Code section 422.20(3B) in the bill. New Code
-58-
LSB 5409XD (10) 88
jm/jh 58/ 67

S.F. _____ H.F. _____
section 422.72(7A) specifies the information the department
is required to redact prior to the disclosure to the general
public of the record in an appeal or contested case. The
bill specifies that the department may also redact other tax
information from the record in an appeal or contested case, if
the taxpayer proves by clear and convincing evidence that the
release of the tax information would disclose a trade secret
or be an unwarranted invasion of personal privacy. The bill
permits the department to disclose information that is required
to be redacted if the department determines such information is
necessary to the resolution or decision of the case.
The bill enacts new Code section 423.37(4) (sales and use
tax) that provides the period of examination and determination
is unlimited under title X (financial resources) in any action
by the department to recover or rescind a tax expenditure
as defined in Code section 2.48 or any other incentive or
assistance administered by the economic development authority.
The amendment takes effect upon enactment. The bill also
provides that it is the intent of the general assembly that the
amendment to Code section 423.37(4) is a conforming amendment
consistent with current law, and that the amendment does not
change the application of current law. This provision takes
effect upon enactment.
The amendment to Code section 428A.1 (real estate
transfer tax) provides that a county recorder shall record
the declaration of value but is prohibited from charging a
recording fee for the filing.
The amendment to Code section 441.48 enhances the
readability of the Code section by specifying the board of
supervisors or city council, as applicable, shall provide
the department with notice of intent to protest prior to the
expiration of the 10 days’ notice to adjust the valuation of
any class of property issued by the department.
The amendments to Code sections 489.706, 490.1422, 501.813,
and 504.1423, remove the role of the department in the
-59-
LSB 5409XD (10) 88
jm/jh 59/ 67

S.F. _____ H.F. _____
application for reinstatement by a limited liability company,
corporation, cooperative, or nonprofit corporation after the
dissolution of such an entity.
The bill enacts new Code section 533.329(03) by specifying
that a money and credit tax return prepared by a credit union
shall be on a form prepared by the department of revenue, and
shall be filed with the department on or before the last day of
April.
The bill amends Code section 533.329(3) relating to
enforcement of the moneys and credits tax paid by credit
unions.
DIVISION II —— SALES AND USE TAX. The amendments to Code
sections 321G.4 (snowmobiles) and 321I.4 (all-terrain vehicles)
require the county recorder to collect sales or use tax if
an owner of such a vehicle is unable to present satisfactory
evidence that the sales or use tax has been paid.
The amendment to Code section 423.2(6)(bs) specifies that
any services arising from or related to software sold as
tangible personal property are subject to the sales tax.
The amendment to Code section 423.2(8)(d)(1) specifies that
the following is not subject to the sales tax: the retail
sale of a specified digital product and a service where the
specified digital product is essential and exclusive to the use
of the service, and the true object of the transaction is the
service.
The amendment to Code section 423.3(3A) provides that the
sales price from the sale of a commercial recreation service
offering the opportunity to hunt a preserve whitetail is
exempt from the sales tax if the sale occurred between July
1, 2005, and December 31, 2015. This provision takes effect
upon enactment an applies retroactively to July 1, 2005. The
bill prohibits any refunds resulting from the amendment to Code
section 423.3(3A).
The amendment to Code section 423.3(31) specifies that
the sales price of tangible personal property or specified
-60-
LSB 5409XD (10) 88
jm/jh 60/ 67

S.F. _____ H.F. _____
digital products sold to, or of services furnished to a
tribal government as defined in Code section 216A.161, or the
instrumentalities of such tribal government are exempt from the
sales tax under most circumstances.
The amendments to Code section 423.3(80)(b) and (c) specify
that services performed pursuant to a written construction
contract with a designated exempt entity as defined in Code
section 423.3(80)(a)(1) are exempt from the sales tax.
Currently, the construction contract is not required to be a
written contract and only building materials, supplies, and
equipment used in such a contract are exempt from the sales
tax. The bill also provides that the building materials,
supplies, equipment, and services are exempt from the sales
tax only if the property that is subject to the construction
project becomes public property or the property of a designated
exempt entity, in addition to the requirement that the
exempt items be completely consumed in the performance of the
construction contract.
The bill enacts new Code section 423.3(60A) exempting from
the sales tax the sales price from sales of diapers eligible
for medical assistance as defined in Code section 249A.2.
The amendment to Code section 423.4(1), relating to refunds
of sales or use taxes to tax-exempt entities, enhances the
readability of the Code section by defining a “designated
exempt entity” and thus removing repeated references to each
exempt entity in the Code section. The bill also adds a tribal
government to the definition of a designated exempt entity.
The bill strikes the terms “goods, wares, and merchandise” and
uses the terms “building materials, supplies, and equipment”
for purposes of claiming the exemption, when a designated
exempt entity makes an application to the department for the
refund of the sales or use tax upon the sales price of all
sales or services related to the performance of a written
construction contract. Additionally, if the sales price of
all building materials, supplies, equipment, or services
-61-
LSB 5409XD (10) 88
jm/jh 61/ 67

S.F. _____ H.F. _____
related to the performance of a written construction contract
are to be exempt from the sales or use tax under the bill,
all of the following must apply: the building materials,
supplies, equipment, or services are completely consumed in the
performance of a construction project; the property that is the
subject of the construction project becomes public property or
the property of an exempt entity; and the building materials,
supplies, equipment, or services furnished are not used in
the performance of a construction contract with a designated
exempt entity in connection with the construction of certain
facilities.
The amendments to Code section 423.4(2)(a) and (b) relate
to construction contracts for transportation projects by
specifying the contractor shall pay sales or use tax for the
services related to such contracts, and by making terminology
more consistent in the subsection.
The amendments to Code sections 423.4(2) and 423.4(6) make
the terminology more consistent with other changes in the bill.
The amendment to Code section 423.5(1)(b) strikes the
imposition of a 6 percent excise tax on the use of manufactured
housing, or the purchase price if such housing is sold in the
form of tangible personal property, or the installed purchase
price if such housing is sold in the form of realty.
The amendment to Code section 423.29(1) provides that a
retailer maintaining a place of business in this state and
making taxable sales shall, at the time of making such sales,
collect the sales tax. The bill also provides that it is
the intent of the general assembly that the amendment to
Code section 423.29(1) is a conforming amendment consistent
with current law, and that the amendment does not change the
application of current law.
The amendment to Code section 423.33(1) enhances the
readability of the Code section by specifying that if a
purchaser fails to pay sales tax to a retailer required to
collect the sales tax, then the purchaser shall pay a use
-62-
LSB 5409XD (10) 88
jm/jh 62/ 67

S.F. _____ H.F. _____
tax directly to the department. The bill specifies that the
retailer and purchaser are jointly liable for the failure
to pay either the sales or use tax in most circumstances.
Additionally, the bill provides that it is the intent of the
general assembly that the addition of “joint liability” is a
conforming amendment consistent with current law, and that
the amendment does not change the application of current law.
The bill provides that if the purchaser pays the use tax,
the retailer remains liable for any local option sales and
services tax under Code chapter 423B that the retailer failed
to collect.
DIVISION III —— INCOME TAX. The bill strikes and replaces
Code section 422.9(3)(c). The bill provides that a taxpayer
may elect to waive the entire carryback period with respect to
an Iowa net operating loss for any taxable year, in the manner
prescribed by the department, and by the due date for filing
the taxpayer’s return, including extensions of time. After the
election is made for any taxable year, the election shall be
irrevocable for such taxable year. If an election has been
properly made, the bill provides that the Iowa net operating
loss shall be carried forward 20 taxable years.
The amendment to Code section 422.9(3)(d) modifies the
election for an Iowa farming loss, which may be carried back
for five taxable years prior to the taxable year of the loss.
The bill specifies that a farming business that has an Iowa
farming loss may make an election to carry back the loss for
five taxable years, in the manner prescribed by the department,
and shall be made by the due date for filing the taxpayer’s
return, including extensions of time. After the election is
made for any taxable year, the bill provides the election shall
be irrevocable for such taxable year.
The division applies to tax years beginning on or after
January 1, 2020.
DIVISION IV —— RESEARCH ACTIVITIES TAX CREDIT. The
amendments to Code sections 15.335, 422.10, and 422.33
-63-
LSB 5409XD (10) 88
jm/jh 63/ 67

S.F. _____ H.F. _____
update references to the Internal Revenue Code relating to
the alternative simplified credit for increasing research
activities.
The division takes effect upon enactment and applies
retroactively to January 1, 2019, for tax years beginning on
or after that date.
DIVISION V —— PARTNERSHIP AND PASS-THROUGH ENTITY AUDITS
AND REPORTING OF FEDERAL ADJUSTMENTS. The amendment to Code
section 421.27(2)(c) specifies that a taxpayer is required
to pay a penalty of 5 percent of the tax due, unless the
taxpayer provides written notification to the department of a
federal audit while it is in progress and voluntarily files
an amended return which includes the final disposition of the
audit and final federal adjustments to taxes paid within 60
days of the final determination date. The bill defines “final
determination date” to generally mean the first day on which no
federal adjustments to taxes arising from the audit or other
action remain to be finally determined. In cases of a final
federal partnership adjustment arising from a partnership
level audit, the taxpayer is required to pay a penalty of 5
percent of the tax due, unless the taxpayer provides written
notification to the department of the partnership level audit
while it is in progress, or timely complies with reporting and
payment requirements.
The bill enacts new Code section 422.7(59) providing that
any income subtracted from federal taxable income shall be
added back in computing net income for state individual income
tax purposes when federal adjustments are made to taxes in the
adjustment year. The bill defines “adjustment year” to mean
the year in which the final determination of the adjustment
occurs.
The amendment to Code section 422.25 adds definitions to the
Code section for “federal adjustment”, “federal adjustments
report”, “final determination date”, and “final federal
adjustment”.
-64-
LSB 5409XD (10) 88
jm/jh 64/ 67

S.F. _____ H.F. _____
The bill enacts new Code section 422.25A which creates a
process for audited partnerships and their direct and indirect
partners to report final federal partnership adjustments to
the department. The bill provides that the state partnership
representative for the reviewed year shall have sole authority
to act on behalf of the partnership. The bill creates
reporting and payment requirements for audited partnerships
and their partners subject to final federal adjustments.
The bill permits an audited partnership or a tiered partner
(partner that is a partnership or pass-through entity) to make
irrevocable elections about the payment of any adjustments,
and specifies the consequences of making certain elections.
The bill permits an audited partnership or tiered partner to
enter into an agreement with the department to use alternative
reporting and payment methods. The bill permits the department
to assess additional Iowa income tax, interest, and penalties
arising from a federal partnership adjustments in the same
manner as provided in other tax-related provisions.
The bill enacts new Code section 422.25B that requires
the state partnership representative acting on behalf of the
partnership for the reviewed year to be the partnership’s
federal partnership representative with respect to an action
required or permitted to be taken by a state partnership
representative, unless the partnership designates in writing in
the manner prescribed by the department another person to act
as the state partnership representative.
The bill enacts new Code section 422.25C relating to
partnership or pass-through entity audits and examinations.
The bill provides that for tax years beginning on or after
January 1, 2020, any adjustments to a partnership’s or
pass-through entity’s taxes or an adjustment allocated to a
partner’s taxes as a result of a department audit shall be
determined at the partnership or pass-through entity level in
the same manner as provided by federal law. The bill specifies
that the state partnership representative shall have the sole
-65-
LSB 5409XD (10) 88
jm/jh 65/ 67

S.F. _____ H.F. _____
authority to act on behalf of the partnership or pass-through
entity with respect to any actions taken due to the audit,
including appealing decisions to the director of revenue or
seeking judicial review of the director’s decision. The
provisions of new Code section 422.25C may be applied to tax
years beginning before January 1, 2020, if the partnership or
pass-through entity and the department agree.
The bill enacts new Code section 422.35(26) providing that
any income subtracted from federal taxable income shall be
added back in computing net income for state corporate income
tax purposes when federal adjustments are made to taxes in the
adjustment year. The bill defines “adjustment year” to mean
the year in which the final determination of the adjustment
occurs.
The bill amends Code section 422.39 by specifying that Code
sections relating to payments of interest, computation of tax,
liens, and final reports of fiduciaries apply to not just
payments and collections but to reporting, examinations, and
assessments with respect to corporations including pass-through
entities organized as corporations.
The amendment to Code section 422.73 relates to credits
against taxes due because of errors. The bill changes the
period of limitation (statute of limitations) for a claim for
a refund of or a credit against individual income tax by a
taxpayer to one year from the final determination date of any
final adjustment with respect to the particular tax year to
claim an income tax refund or credit. Currently, a claim for
a refund of or a credit against the individual income tax by
a taxpayer is six months from the final disposition of any
income tax matter between the taxpayer and the internal revenue
service. The bill makes other changes relating to agreements
entered into by the department and the internal revenue
service for the transmission of federal income tax reports on
individuals who have been involved in an income tax matter with
the internal revenue service.
-66-
LSB 5409XD (10) 88
jm/jh 66/ 67

S.F. _____ H.F. _____
The division applies to federal adjustments and federal
partnership adjustments that have a final determination date
after the effective date of this division of this Act.
-67-
LSB 5409XD (10) 88
jm/jh 67/ 67