Administrative Orders

The Petition for Rulemaking was denied for failure to include required information. Petitioner, Vitacostcom Inc., did not clearly state what rulemaking action it was requesting from the Department, and also failed to cite any existing laws or supporting evidence.

Petitioner, the City of Farmington, requested a Declaratory Order to determine if campgrounds and cabins rented at a city owned park were subject to sales tax or hotel and motel tax. The Director found that the campgrounds were exempt from sales tax because Iowa Code section 423.3(32) exempts from sales tax the sale of personal property or of services furnished by a county or city. Cabins or other permanent structures are not included in the definition of campground but are subject to hotel and motel tax and there is no exemption for sales made by a city.

The Administrative Law Judge affirmed the Department’s penalty waiver denial. Taxpayer requested a penalty waiver from a late filed inheritance tax return on the basis that the COVID-19 pandemic resulted in unavoidable delays in filing. Under Iowa Code § 421.27(1)(c) (2020) (see Iowa Code § 421.27(1)(d) (2022)) late-filed returns are subject to a penalty unless the taxpayer meets one of the listed exceptions. The code offers no “good cause” exception form the penalty for late filed returns. Neither party appealed the proposed decision: therefore it became the Department’s final order under Iowa Administrative Code rule 701-7.17(8)(d).

Petitioner, a school district, requested a Declaratory Order to determine whether the amount paid by Petitioner to universities or colleges for tuition, fees, and books on behalf of participants in the Teacher & Paraeducator Registered Apprenticeship Program would be taxable income to the participants. The Director refused to issue a Declaratory Order because the question is primarily a matter of federal income tax law and the Internal Revenue Service is better suited to answer the question.

Petitioners, owners of a cleaning business, requested a Declaratory Order to determine whether the sale of a building used in their business qualified for the Iowa capital gains deduction. Petitioners had previously claimed and been denied the deduction attributable to the gain from the sale of the building on their 2019 Iowa income tax return. The Director refused to issue a Declaratory Order because the petition was not based on facts to plan future conduct as the deduction had already been claimed and the appeal process would have been the appropriate proceeding to challenge the Department's assessment.

Petitioner, a qualified subchapter S subsidiary financial institution, requested a Declaratory Order to determine whether a gain realized by the parent company of Petitioner from the sale of Petitioner should be included in the calculation of Petitioner's net income for franchise tax purposes under Iowa Code section 422.61(3). The Director found that the gain realized from the parent company's sale of Petitioner is not included in the calculation of Petitioner's net income for franchise tax purposes.

The Iowa District Court for Polk County affirmed the Department’s denial of sales tax refunds filed by the Iowa State Association of Counties. The taxpayer was not an exempt government instrumentality under Iowa Code section 423.3(31). Government did not sufficiently control the detailed performance of the taxpayer. And other factors did not demonstrate that the taxpayer was an exempt government instrumentality. ISAC did not appeal the district court’s ruling.