Administrative Orders

The Department is charged by statute with many administrative duties, some of which it accomplishes by taking administrative actions or issuing administrative orders. Depending on what the statute requires, the administrative actions or orders can be either requested of or initiated by the Director. This page also includes judicial reviews of Director's Orders from the current year.

The following orders are from the past year. All orders from previous years can be found in the Iowa Tax Research Library

Administrative Orders

Petitioner, a homeowners’ association, owns, operates, and maintains its own water system and provides water service to homeowners in its development. Petitioner inquired about the collection and remittance of water service excise tax (WET) on the water service, stating that it was not required to collect and remit because it did not meet the definition of a water utility providing water service for compensation. Director found that because the water service fee included within the homeowners’ annual dues is identifiable and itemized, the petitioner is furnishing water service for compensation, therefore it qualifies as a water utility under Iowa Code section 423.3(103)(b)(2) and requires it to collect and remit WET

Date: 2021-08-17

The Administrative Law Judge found Petitioners failed to substantiate expenses they sought to deduct as ordinary and necessary expenses paid or incurred during the taxable year in carrying on a trade or business under 26 U.S.C. § 162(a), noting that 26 U.S.C. § 262(a) provides that personal, living, or family expenses are not allowable deductions under the Internal Revenue Code. The Administrative Law Judge also referenced the duty to retain records found at 701 Iowa Administrative Code § 38.3. Neither party appealed the proposed decision, and it became the Department’s final order pursuant to Iowa Administrative Code rule 701-7.17(8)(d).

Date: 2021-07-14

The Administrative Law Judge found Petitioner’s divorce decree could not extinguish liability for individual income tax owed. Petitioner and his former spouse filed their tax return as married filing separately on a combined return. Under Iowa Code section 422.21(7), such filing status made both parties jointly and severally liable for tax due, including penalty and interest. While it was found the divorce decree may assign liability among divorcing spouses, the divorce decree could not extinguish liability for both spouses as to the Iowa Department of Revenue. Neither party appealed the proposed decision, and it became the Department’s final order pursuant to Iowa Administrative Code rule 701-7.17(8)(d).

Date: 2021-07-14

Petitioner, an operator of an online virtual learning platform, offers for sale various learning plans. The learning plans are all accessible through the online platform. Each learning plan is paid for on a monthly subscription basis. Petitioner inquired whether its various learning plans were subject to sales tax under Iowa Code chapter 423. The Director found that all of Petitioner's learning plans are subject to Iowa sales tax because they all constitute software as a service pursuant to Iowa Code section 423.2(6)(bu). The Director also found that certain learning plans may be exempt from sales tax if the requirements of the commercial enterprise exemption under Iowa Code section 423.3(104)(a) are satisfied. Petitioner also inquired about the taxability of its revenue generated from Internet advertising. The Director found that Internet advertising is not a taxable enumerated service under the Iowa Code and is therefore, not subject to Iowa sales tax.

Date: 2021-06-14

The Administrative Law Judge found good cause as interpreted by Purethane, Inc. v. Iowa State Board of Tax Review, 498 N.W.2d 706 (Iowa 1993) did not exist to reinstate Petitioner’s dismissed protest. Petitioner failed to timely protest each tax assessment. Although the Petitioner claimed to have not received one of the mailed assessments, the assessment was delivered to the last address Petitioner made known to the Department. Petitioner’s reliance on her accountant’s advice or her lack of knowledge of the appeal process were not extenuating circumstances constituting good cause. Neither party appealed the proposed decision, and it became the Department’s final order pursuant to Iowa Administrative Code rule 701-7.17(8)(d).

Date: 2021-04-06

The Administrative Law Judge found that Petitioner was not entitled to a refund of the new vehicle registration fees he paid on the five vehicles purchased by his single-member limited liability company. First, Petitioner failed to establish the vehicles qualified for registration exemption under Iowa Code section 321.155. Second, Petitioner was personally liable for the registration fees because the Department properly disregarded the Montana limited liability company because it was a sham company. Third, even if the Department had not disregarded the Montana limited liability company as a sham company, Petitioner was personally liable for the registration fees owed by the company. Neither party appealed the proposed decision; therefore, it became the Department’s final order under Iowa Administrative Code rule 701-7.17(8)(d).

Date: 2021-03-31

Declaratory Orders

Any person may petition the Department for a declaratory order. For more detailed information about declaratory orders or how to file a petition, see 17A.9 Declaratory Orders and 701-7.24 (17A) Declaratory order-in general.

To view declaratory orders, cases, or rulings published by the Department, visit the Iowa Tax Research Library.