Relating to the administration of the tax by the department of revenue by modifying provisions related to personal income, property, sales and use, motor fuel, and inheritance taxes, changing tax expenditure reviews, and including effective date and retroactive applicability provisions

The division takes effect upon enactment. DIVISION II —— ANNUAL REPORTING. The bill strikes the requirement that the department annually report to the general assembly the areas of recurrent taxpayer noncompliance with the rules of the department including any recommendations relating to the noncompliance. DIVISION III —— PROPERTY TAX —— EXTENSIONS. Under current law, a claimant may ask the director of the department, the county treasurer, or the director of the department of health and human services for an extension to claim a reimbursement for rent constituting property taxes in case of sickness, absence, or disability. _____ claimant. Under current law, when issuing a refund for an erroneous property tax paid by a taxpayer, the taxpayer must have presented a claim of refund to the board of supervisors, or if appealed, a claim to the property assessment appeal or district court within two years of the final decision on the property taxes owed. Under the bill, a taxpayer is eligible to claim a refund for an erroneous tax if the taxpayer had previously appealed the claim for a refund of an erroneous tax to the director of revenue within two years of the director’s final decision. This provision takes effect upon enactment. DIVISION IV —— FARM TENANCY INCOME TAX EXCLUSION. Currently, an eligible individual may exclude income received by the individual pursuant to a farm tenancy covering real property held by the individual for or more years, if the individual materially participated in a farming business for or more years. The bill allows the eligible individual to exclude such income under such circumstances, if the individual materially participated in a farming business for or more years in the aggregate.7(13). DIVISION V —— PASS-THROUGH ENTITIES.29.25. The division takes effect upon enactment and applies retroactively to January 1, 2024. DIVISION VI —— SALES TAX CHANGES. _____ the collection of sales taxes on building materials, supplies, and equipment where an owner, contractor, subcontractor, or builder is also a retailer holding a sales and use tax permit. Under such circumstances, if a customer of the retailer purchases tangible personal property from the retailer, the bill provides that such property will not be subject to sales tax if the property will be subject to sales tax at resale at a later date or if the property will be subject to use tax at the time the retailer withdraws the property from inventory for use by the retailer in construction. The bill makes other related changes to enhance the readability of the provision. Under current law, a purchaser, user, and consumer of taxable property or services may be authorized to remit tax owed directly to the department instead of the tax being collected and paid by the seller. The bill specifies that in order to qualify for the direct pay tax permit such a taxpayer must accrue a tax liability of more than $8,000 on a monthly basis. Currently, such a taxpayer must accrue a tax liability of $4,000 on a semimonthly basis in order to qualify for the direct pay tax permit. DIVISION VII —— MOTOR FUEL TAXES.3(3)(a)(2).33. The bill allows the department to amend the initial distribution percentage due to a mistake, or if there is a late report filed by a retail dealer to the department, or the distribution percentage is not accurate. _____ modifies the biannual tax period by one day. The bill allows a person who uses electric fuel for a nontaxable purpose to provide an exemption certificate to the license holder selling or dispensing the fuel, if the certificate is produced by the department. DIVISION VIII —— INHERITANCE TAX —— FUTURE CODE CHANGES DUE TO REPEAL. The bill changes numerous Code sections to reflect the repeal of the inheritance tax beginning for the estates of decedents dying on or after January 1, 2025. However, other provisions of Code chapter 450 relating to the inheritance tax have not been repealed. The division takes effect upon enactment and applies retroactively to the estates of decedents dying on or after January 1, 2025. DIVISION IX —— LUMP SUM DISTRIBUTION OF RETIREMENT INCOME. Under current law, commencing with tax years beginning on or after January 1, 2023, retirement income is not subject to Iowa individual income tax.5(8) at a rate of percent of the federal tax rate imposed on the amount of the lump sum distribution. The bill provides that the taxation of a lump sum distribution from a retirement account is also exempt from state taxation by exempting the lump sum distribution for a person who is disabled, or years of age or older, or who is the surviving spouse of an individual or is a survivor having an insurable interest in an individual who would have qualified for the exemption for the tax year.5(2) and (3). The division takes effect upon enactment and applies retroactively to tax years beginning on or after January 1, 2025. _____ DIVISION X —— ESTIMATED TAX THRESHOLD. Under the bill, a taxpayer filing a return is required to make estimated tax payments if Iowa income tax liability can reasonably be expected to exceed $1,000 or more. Under current law, such a taxpayer filing a return is required to make estimated tax payments if Iowa income tax liability can reasonably be expected to exceed $200 or more. The division takes effect January 1, 2026, and applies to tax years beginning on or after that date. DIVISION XI —— TAX EXPENDITURE REVIEW. The bill specifies that the department administering a tax expenditure (tax credit) is not required to review the tax expenditure if the tax expenditure has been repealed or if a zero amount of the tax expenditure remains available to be awarded or claimed.11B (Code 2018).48 with the future repeal of the renewable chemical tax credit program.