SSB 1122

This bill relates to state taxation and related laws of the state including the collection of tax, tax credits, the assessment, valuation, and classification of property, fees for registration of vehicles, sales and use tax, and the authority of the director of revenue. The bill is organized into divisions. TAX CREDIT FOR CERTAIN SALES TAXES PAID BY THIRD-PARTY DEVELOPERS. Currently, an eligible business may claim a corporate tax credit in an amount equal to the sales and use taxes paid by a third-party developer under Code chapter 423 for the construction or equipping of a facility of an eligible business. 329 and means in part a business making an investment of $10 million or more in a community. The bill allows an individual to claim the tax credit on an individual return for certain sales tax paid by a third-party developer, if a partnership, limited liability company, S corporation, estate, or trust elects to have income taxed directly to the individual. _____ tax credit to third-party developer tax credit because the tax credit is now available against the individual income tax. This division takes effect upon enactment and applies retroactively January 1, 2020, for tax years beginning on or after that date. GEOTHERMAL HEAT PUMP INSTALLATION TAX CREDIT. The bill requires an applicant for a geothermal heat pump tax credit to file an application for the credit with the department of revenue for each geothermal heat pump installation. The bill requires the application to be filed by May following the year of installation. This division takes effect upon enactment and applies retroactively to January 1, 2019, for tax years beginning on or after that date. TAXES ON ELECTRICITY PROVIDERS. Under the current replacement tax, the proportional tax revenue from a major addition is allocated to the local jurisdiction where a major addition is located. The bill lowers the threshold for the classification of “major additions” of solar energy conversion property under the replacement tax from $10 million to $1 million. The modified threshold allows a local jurisdiction to receive tax revenue generated by a solar energy conversion facility for major additions that exceed $1 million but does not change the amount of tax due on solar energy conversion facilities. FEE FOR NEW REGISTRATION —— VEHICLES.105A. The bill specifies that to be exempt from the fee for new registration, the person listed on the title of a newly acquired vehicle must be the same person listed on the title and registration of the traded vehicle. The bill specifies that in order to be exempt from the fee for new registration, a trade must be between spouses rather than involve spouses. _____ The bill exempts trades between lineal family members from the fee for new vehicle registration. Currently, trades between a grandparent, parent, child, or stepchild are exempt. The bill specifies a sole proprietorship shall not be distinguished from an individual owner for purposes of calculating the new vehicle registration fee when exempting the trade-in value from the purchase price.105A(2)(a)(3). The bill specifies that a vehicle is not subject to the new registration fee if the vehicle is transferred from an entity doing business within the state to another entity in the state and all of the following apply: the receiving entity was formed by the transferring entity within the previous months for the purpose of continuing the business and all ownership remains the same, except in the case of a sole proprietorship, the spouse of the sole proprietor may stand in place of the sole proprietor. The bill provides that a vehicle subject to registration in this state is exempt from the fee for new vehicle registration to the extent the equivalent sales or excise tax of another country has been paid to that country. Currently, a vehicle subject to registration is exempt from the fee for new vehicle registration to the extent state sales, use, or occupational tax has been paid to another state. The bill provides that a vehicle subject to registration in this state which is owned by a person in another country is exempt from the fee for new vehicle registration provided the vehicle was purchased for use in the country from which the owner moved, and was not purchased for use in Iowa. _____ the state from which the owner moved, and was not purchased for use in Iowa.27A for resale by the same wholesaler is exempt from the fee for new registration. The bill provides that a vehicle transferred from one individual to another individual as a gift is exempt from the fee for new vehicle registration. The bill provides that a vehicle subject to registration is subject to the fee for new registration if the vehicle is leased for at least six months. Currently, a vehicle with a gross weight rating of less than 16,000 pounds which is leased for at least months is subject to the fee for new registration. The bill specifies if a lease is voided prior to the termination date contained in the lease agreement, no refund is permitted for the fee for new registration previously paid, except under certain circumstances. Currently, no refund of such a fee is permitted if the lease is terminated prior to the termination date except under certain circumstances. The bill creates a new penalty for persons who fail to file an application for certificate of title or registration on or before the due date in the amount of percent of the fee for new registration due. The bill creates a new penalty for persons who file an application for certificate of title or registration with inaccurate information that results in the person paying less than the full amount of the fee for new registration. The penalty equals percent of the fee for new registration due. PENALTIES —— IMPUTED IOWA LIABILITY.27, the department of revenue assesses a percentage of the imputed Iowa liability of a business who fails to file a return or deposit form. _____ “imputed Iowa liability” by allowing the taxpayer to include any tax credits available to the taxpayer prior to calculating the penalty amount when using “imputed Iowa liability”. PARTNERSHIP AND PASS-THROUGH ENTITY AUDITS AND REPORTING. The bill makes numerous technical changes to partnership and pass-through entity audits and reporting requirements enacted in 2020 Iowa Acts, chapter 1118.5A(5)(c). The bill also allows the director of revenue to establish rules that include state-specific issues following a state partnership audit in the election to pay and calculation of amounts due.25C may be applied to tax years beginning before January 1, 2020.25C to apply to tax years beginning before January 1, 2020. This division takes effect upon enactment and applies retroactively to July 1, 2020, and applies to federal adjustments and federal partnership adjustments that have a final determination date after July 1, 2020. COUNTY TREASURER —— CENTRALIZED COLLECTION UNIT OF THE DEPARTMENT OF REVENUE. Currently, a county treasurer may collect delinquent tax revenue owed the state. The bill allows a county treasurer to also collect nontax liabilities being collected by the centralized collection unit of the department of revenue. _____ GARNISHMENT. The bill specifies that a distress warrant issued by the director of revenue or the director of inspections and appeals shall be considered a final judgment. A distress warrant generally directs the sheriff to seize, garnish, or levy upon, and sell, any real or personal property belonging to the taxpayer to satisfy the amount of any delinquency. SNOWMOBILES, ALL-TERRAIN VEHICLES, AND VESSELS —— PURCHASES —— PAYMENT OF SALES OR USE TAX. Currently, if the owner of a vessel (watercraft), snowmobile, or all-terrain vehicle is unable to present satisfactory evidence that the sales or use tax on the purchase has been paid, the county recorder is required to collect the sales or use tax, and remit the amount of taxes along with an itemized statement by the 10th day of each month showing detailed information about the collection of the tax. The bill strikes the requirement the county recorder prepare and send such an itemized statement to the department of revenue, but does require the county recorder to remit the tax in a manner prescribed by the department. 2020 Iowa Acts, chapter 1118, struck numerous instances of the phrase “goods, wares, or merchandise” in order to update the language used in the Code.105A (fee for new registration) and Code chapters 9C (transient merchants) and 423 (streamlined sales and use tax). CONSTRUCTION MATERIALS —— SALES AND USE TAX.8(1) (construction contractor refunds). NONPROFIT ORGANIZATIONS —— SALES AND USE TAX EXEMPTION. _____ of tangible personal property, specified digital products, or services rendered where the profits from the sale or services rendered are used by or donated to a nonprofit, and the entire proceeds from the sale or services are expended for educational, religious, or charitable purposes. The bill enhances the readability of the sales and use tax exemption by specifying that the sales and use tax exemption applies when the entire profits from the sales or services rendered are used by or donated to a nonprofit, and the entire profits are expended for educational, religious, or charitable purposes. RENTALS —— SALES AND USE TAX EXEMPTION.31(4) (filing of sales tax returns and payment of sales tax).3. INTEREST RATE SET BY DIRECTOR OF REVENUE. Currently, in October of each year the director of revenue sets the rate of interest to be used on interest-bearing obligations arising under certain Code chapters to be in effect on or after January of the following year. The bill changes the month the rate is set by the director from October to November. DUTIES OF ASSESSORS. The bill strikes a provision prohibiting an assessor or deputy assessor from personally assessing a property owned by an immediate family member of the assessor or deputy assessor. CONFIDENTIAL INFORMATION —— DEPARTMENT OF REVENUE.72 (other tax cases).72. The director currently has the authority to disclose confidential information when making final orders, decisions, or opinions available for public inspection, if it is necessary to the resolution or decision of the appeal or case. The bill expands the authority of the director of revenue to disclose confidential information to include when it is relevant or necessary to the resolution or decision of the appeal or case.