Relating to state and local finances and the duties and procedures of the department of revenue by providing for electronic filing, communications, and records, modifying transfer tax remittances, the assessment of property, the collection of debt, the refunds of certain fuel taxes, and the taxation of pass-through entities, reducing inheritance taxes for unknown heirs, establishing salaries, providing for a fee, making appropriations, and providing penalties, and including effective date, applicability, and retroactive applicability provisions

This bill relates to state and local finances and the duties and procedures of the department of revenue by providing for electronic filing, communications, and records, modifying transfer tax remittances, the assessment of property, the collection of debt, and the taxation of pass-through entities, reducing inheritance taxes for unknown heirs, and establishing salaries. DIVISION I —— RECORD RETENTION. Currently, the director of the department of revenue (DOR) may destroy useless records of any taxpayer filed with or kept by the department. The bill specifies that the director of revenue (director) shall destroy useless records by the end of the calendar year following the year in which the records are determined to be useless. The bill permits a taxpayer or the DOR to request the director retain a useless record under certain circumstances. The bill also permits DOR to retain some records if personally identifiable information has been removed, or the records are related to a rule, statement of law or policy, or a final order, decision, or opinion. The bill allows DOR to make electronic copies of records or use other methods to make such copies. The division takes effect January 1, 2025. DIVISION II —— ELECTRONIC FILING —— FIDUCIARIES —— BUSINESS ENTITIES. The bill requires a fiduciary to file an electronic return under any of the following certain circumstances: the individual, estate, or trust has gross receipts of $250,000 or more; the fiduciary is required to provide or more schedules K-1 to the beneficiaries; or the fiduciary reports $25,000 or more of Iowa tax credits. The bill requires a partnership to file an electronic return under any of the following circumstances: the partnership has gross receipts of $250,000 or more; the partnership is required to provide or more schedules K-1 to the partners; or the partnership reports $25,000 or more of Iowa tax credits.36, the bill requires the pass-through entity to file the composite return of the pass-through entity in an electronic format for the same taxable year. A composite return generally is a return filed by a pass-through entity that reports the state income of all nonresident owners. The bill requires a corporation to file an electronic return if the corporation has gross receipts of $250,000 or more, or the corporation reports $25,000 or more of Iowa tax credits, or in the case of an S corporation, the corporation is required to issue or more schedules K-1 to the shareholders. The bill requires an affiliated group of corporations to file an electronic return regardless of the amount of gross receipts of the affiliated group or Iowa tax credits claimed. The bill requires a financial institution (bank) to file an electronic return under any of the following circumstances: the financial institution has gross receipts of $250,000 or more; the financial institution reports $25,000 or more of Iowa tax credits, or in the case of an S corporation, the financial institution is required to issue or more schedules K-1 to the shareholders. The division applies to tax years ending on or after December 31, 2022, for a partnership, pass-through entity, corporation, and financial institution, and applies to tax years ending on or after December 31, 2023, for a fiduciary, or for tax years ending on or after December of the calendar year in which the department implements a system for receiving the electronic returns required by the division. DIVISION III —— ELECTRONIC FILING —— CREDIT UNIONS. The bill requires a credit union to file a return in an electronic format specified by DOR. The division applies to tax years ending on or after December 31, 2024, or for tax years ending on or after December of the calendar year in which the department implements a system for receiving the electronic returns required by the division. DIVISION IV —— AUTHORITY TO CHARGE FEES. The bill specifies DOR may charge a fee for a copy of a return. The fee may be established by rule. The bill also specifies that this division shall not be construed to prohibit DOR from charging a fee for a copy of a return prior to the enactment of the division pursuant to another authority of DOR. DIVISION V —— AUTHORITY TO ACT ON BEHALF OF TAXPAYER. The bill strikes and replaces provisions relating to the authority to act on behalf of a business entity, and specifies that such a person must be designated to act on behalf of the business entity in tax matters. The bill specifies DOR may authorize a trustee to have authority to act on behalf of a taxpayer, if the trustee complies with certain conditions requested by DOR including but not limited to providing a certification of trust or providing a copy of the trust agreement. The bill specifies DOR may authorize a person named as an agent in a general or durable power of attorney document that is currently in force.256, of a very small estate to act on behalf of the taxpayer. The bill requires a person acting on behalf of a taxpayer to certify that the person possesses actual authority to act on behalf of the entity in tax matters. The bill allows DOR to require any documents or other evidence to demonstrate an individual has authority to act on behalf of the taxpayer before DOR. DIVISION VI —— ELECTRONIC COMMUNICATION. Under the bill, DOR may permit a person to elect to receive a notice, correspondence, or other communication electronically.329 (taxation of credit unions). The bill allows DOR to send any notice, correspondence, or other communication by mail to a person who has elected to receive an electronic communication. DIVISION VII —— INCOME STATEMENTS TO BE PROVIDED TO THE DEPARTMENT.16(10)(a) relating to the penalties for willful violations of the following: failure to furnish an employee with an income statement; furnishing a false or fraudulent income statement to an employee; failure to file an income statement with DOR; filing a false or fraudulent income statement with DOR; failure to file an annual reporting of taxes withheld with DOR; and filing a false or fraudulent annual reporting of taxes withheld with DOR. Under the bill and in current law, each violation is punishable by a $500 civil penalty.27 in addition to the tax or additional tax due.16 (withholding income tax) in the case of illness, disability, absence, or if good cause is shown. DIVISION VIII —— REMITTANCES OF TRANSFER TAX. Currently, the county recorder remits the real estate transfer tax to the treasurer of state. The bill changes the remittances of the transfer tax by the county recorder and requires the remittances of the transfer tax by the county recorder be made to the department of revenue. DIVISION IX —— BOARD OF REVIEW ELIGIBILITY.32 relating to the removal of a member of a board of review by specifying that if a board member is removed under that Code section, the board member shall not be eligible for appointment to a board of review in this state for six years following the date of the removal. DIVISION X —— EQUALIZATION ADJUSTMENTS —— APPEALS.48 to provide that, in addition to the board of supervisors or the city council, a city or county attorney or other official of the county or assessing jurisdiction may provide written notice of intent to appeal an equalization to the department of revenue. The bill also requires the written notice of appeal to be provided within days of the notice provided by the department of revenue. Upon receiving a timely notice of intent to appeal, the bill requires the department to schedule a hearing on the proposed adjustment with the county or assessing jurisdiction and specifies the allowable formats for the hearing or written presentation of the appeal. The bill specifies that appeals of a proposed adjustment are not subject to Code chapter 17A. DIVISION XI —— BUSINESS PROPERTY TAX CREDIT AND ASSESSMENT LIMITATION. Code chapter 426C provides a business property tax credit for commercial, industrial, and railway property for property taxes due and payable in fiscal years beginning on or after July 1, 2014. The business property tax credit is funded from an annual standing appropriation of $125 million.2 for fiscal years beginning on or after July 1, 2023, and provides that moneys remaining in the business property tax credit fund at the end of the fiscal year beginning July 1, 2022, shall be transferred by the department of revenue for deposit in the general fund of the state. The bill also establishes a future repeal date for Code chapter 426C of July 1, 2024.21 imposes an assessment limitation (rollback) on commercial property, industrial property, and property valued by the department of revenue under Code chapter 434 (railway company property) of percent for assessment years beginning on or after January 1, 2014. The bill modifies the amount and methodology for calculating the assessment limitation for property units, as defined in the bill, within those classifications of property. Instead of a uniform percentage of value, for valuations established for the assessment year beginning January 1, 2022, and each assessment year thereafter, the portion of actual value at which each property unit of commercial property shall be assessed shall be the sum of the following: (1) an amount equal to the product of the assessment limitation percentage applicable to residential property multiplied by the actual value of the property that exceeds $0 but does not exceed $150,000; and (2) an amount equal to percent of the actual value of the property for that assessment year that exceeds $150,000. The bill establishes a similar provision for industrial property and provides that the assessed value of railway company property shall be determined in the same manner as commercial property. The bill also establishes an annual payment to local governments based on the modified assessment limitations imposed on that portion of the value of commercial and industrial properties that does not exceed $150,000. For each fiscal year beginning on or after July 1, 2023, there is appropriated from the general fund of the state to the department of revenue the sum of $125 million to be used for such payments. If an amount appropriated for a fiscal year is insufficient to make all payments, the director of revenue shall prorate the payments to the county treasurers. DIVISION XII —— WAGE ASSIGNMENT NOTICE.17B (administrative wage assignment cooperative agreement). Under the bill, the centralized debt collection facility (facility) within the department of revenue may proceed against an obligor if a days’ notice of intent has been sent to the obligor notifying the obligor the facility intends to begin a wage assignment action. The bill specifies the days’ notice period does not apply if the facility determines the collection of past due amounts would be in jeopardy. After the days’ notice period has run, the bill requires the facility to notify the obligor of the initiation of the wage assignment action within two working days of sending the notice to the obligor’s employer, and the facility may obtain multiple wage assignments, if the obligor has multiple employers. DIVISION XIII —— OUT-OF-STATE RECIPROCAL COLLECTIONS. The bill modifies provisions related to out-of-state reciprocal debt collections. Currently, the provisions are limited to the collection of out-of-state tax debt. The bill expands the types of debt the director is able to collect, and allows the director to enter into an agreement with a department in another state to collect the debts being collected by DOR. The bill allows the director to enter into agreements to collect the debts of another state through DOR. The bill requires the out-of-state debt being collected by DOR to be delinquent and not subject to litigation prior to accepting the collection on such debt. The bill establishes procedures to collect out-of-state debt including procedures for challenging the collection of such debt. The bill allows DOR to collect a fee from the amount of out-of-state debt collected. The bill specifies the DOR may release taxpayer information that otherwise would be confidential when working with an out-of-state department or agency, provided the out-of-state department or agency complies with Iowa confidentiality law. DIVISION XIV —— PASS-THROUGH ENTITY TAXATION. The bill changes the term “state partnership representative” to “state pass-through representative” numerous times. The bill modifies certain penalties for pass-through entities that fail to timely file an income return. The provision takes effect upon enactment and applies retroactively to tax years beginning on or after January 1, 2022. The bill permits a pass-through entity filing a composite return that has a nonrefundable income tax credit carryforward amount attributable to the composite return following the close of the entity’s composite return for the tax year that began during the 2021 calendar year to allocate those income tax credit carryforward amounts to the pass-through entity’s partners, members, beneficiaries, or shareholders in the pass-through entity’s tax year that begins during the 2022 calendar year. DIVISION XV —— INHERITANCE TAX —— UNKNOWN HEIRS. Currently, if an heir entitled to an estate interest cannot be found, a tax of percent is paid to the state, until the heir is found, and at such time the correct amount of inheritance tax is recomputed and paid to the state.10. The inheritance tax is set to be repealed for decedents dying on or after January 1, 2025. The division applies retroactively to January 1, 2021. DIVISION XVI —— NOTICE REQUIREMENTS FOR PUBLICATION OF INTEREST RATES. The bill strikes a provision requiring the director to publish the rate of interest in a newspaper, and substitutes this requirement by allowing for the publication of interest rates on the internet site of DOR. DIVISION XVII —— PROPERTY ASSESSMENT APPEAL BOARD —— SALARIES. The general assembly periodically establishes salary ranges for certain appointed state officers and authorizes a person (generally the governor) to establish the salaries of those state officers. In 2013, the general assembly amended the most recent salary range legislation (2008 Iowa Acts, chapter 1191) to add members of the property assessment appeal board to salary range ($73,250 to $112,070). The bill removes members of the property assessment appeal board from the most recent salary range and provides that the salaries of such members shall be set by the governor and be commensurate with the salary of an administrative law judge. DIVISION XVIII —— DUE DATES —— HOLIDAYS.9A that establishes more uniformity for references to due dates and holidays of DOR and makes related conforming changes. DIVISION XIX —— AVIATION AND MARINE FUEL —— CALCULATIONS. The bill specifies the calculations to be used to calculate the amounts to be deposited into the aviation and marine fuel funds. DIVISION XX —— INHERITANCE TAX REPEAL —— SUBMISSION OF PROPOSED CODE CHANGES. The bill delays by two years the due date of the proposed bill DOR must submit to the general assembly for Code updates relating to the inheritance tax repeal. The bill is now required to be submitted to the general assembly by the 2024 regular session of the 90th general assembly.