The Iowa Department of Revenue has submitted new proposed rules to the Iowa Legislature, available for public comment through September 28, 2021. See individual notices below for details.
- Order of Deduction of Tax Credits
This proposed rule making updates the Department’s rules that dictate the order in which Iowa income and franchise tax credits must be deducted by Iowa taxpayers. The amendments strike from the deduction list recently repealed tax credits, add newly enacted tax credits, and update certain tax credits. These amendments change the order of deduction for the alternative minimum tax credit in tax year 2021 for corporations and financial institutions, and in tax year 2023 for individuals, because that is the final tax year that credit may be claimed for those tax types, so the carryforward period is reduced to zero. These amendments also provide for the order in which tax credits carried forward from a previous tax year must be deducted. Finally, this rule making proposes a rule regarding order of deduction for tax credits claimed under the Iowa franchise tax.
- Nonresident and Part-Year Resident Income Tax Credit
This proposed rule making relates to the Iowa individual income tax credit used to apportion a nonresident’s or part-year resident’s income among Iowa and other jurisdictions. The primary objective of the amendments is to modify the Iowa income percentage used to calculate the credit so that the percentage is computed to the nearest ten-thousandth of a percent for tax years beginning on or after January 1, 2022. The amendments also make a number of changes to improve clarity and readability of the rules, updating or removing outdated language or outdated year or form references.
- Appeals of Director’s Rejection of Assessor Appointment or Reappointment
This proposed rule making is intended to implement and clarify procedures for appeals of the Director of Revenue’s rejection of an assessor appointment or reappointment under Iowa Code section 441.6(3). This rule making alters the existing appeal procedures to clarify that the Director of Revenue is the presiding officer in contested cases under rule 701—7.37(441). Additionally, this rule making clarifies cross-references to the Department’s rule regarding contested cases before the Department.
- Out-of-State Tax Credit
This proposed rule making relates to the Iowa out-of-state tax credit against regular Iowa income tax for income tax paid to other jurisdictions on a resident individual’s or fiduciary’s income that is also taxed by Iowa. The primary purpose of these amendments is to implement 2020 Iowa Acts, House File 2641, division XVII. The amendments provide that resident individuals and fiduciaries who are direct or indirect members of a pass-through entity may include in the calculation of the out-of-state tax credit their pro rata share of entity-level income tax owed and paid by such pass-through entity in another qualifying jurisdiction if the income tax would otherwise qualify for inclusion in the calculation of the out-of-state tax credit, had it been imposed on and paid by the resident, and if the pass-through entity provides certain statements to the resident and to other intermediate pass-through entities in the case of indirect ownership. The amendments also provide rules for regulated investment companies and their resident shareholders. The amendments significantly update, rewrite, or expand other parts of the out-of-state tax credit rule not directly impacted by 2020 Iowa Acts, House File 2641, in order to provide more guidance to taxpayers on the application of the credit. Finally, the amendments modify the Iowa income percentage used to calculate the maximum credit so that it is computed to the nearest ten-thousandth of a percent for tax years beginning on or after January 1, 2022.
- Assessors and Deputy Assessors—Assessment of Own Property
This proposed rule making is intended to implement changes made in the 2021 Legislative Session. Specifically, 2021 Iowa Acts, Senate File 366, section 76, removes the “immediate family” component from Iowa Code section 441.17(2), which prohibits assessors and deputy assessors from assessing their own property, property the assessor or deputy assessor has a financial interest in, and property owned by an entity in which the assessor or deputy assessor has a financial interest. This rule making removes reporting requirements and requires that assessors and deputy assessors certify annually to the Director that they have not personally assessed the above properties.
The Department previously submitted the following proposed rules to the Iowa Legislature. The following rules have been adopted and filed, effective October 13, 2021.
- Marketable Food Products for Human Consumption
Iowa Code section 423.3(49) provides a limited exemption for manufacturers producing “marketable food products for human consumption.” The phrase “marketable food products for human consumption” had never been defined in the Iowa Code or the Department’s administrative rules. The Department’s long-standing interpretation of the term has been that only final food products, not food ingredients, are “marketable food products for human consumption.” The Department has adopted this definition. No changes to the NOIA for this rule making were made.
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