The Department of Revenue previously submitted the following proposed rules to the Iowa Legislature. The following rules have been adopted and filed.
Adopted and Filed Rules
Adopted and Filed Rules
Following an inquiry from a taxpayer about the applicability of a rule, the Department proposed amending its rules regarding affiliated corporations acting as a unit, published on July 15, 2020 as ARC 5077C. The Department received one public comment but did not make any changes to the rule filing prior to adopting the changes, published on October 7 as ARC 5201C.
This rule making implements new provisions that were added to Iowa Code chapter 421 by 2019 Iowa Acts, House File 590, and by 2020 Iowa Acts, House File 2641. Iowa Code section 421.62 defines “tax return preparer” and sets forth a penalty for tax return preparers who fail to include their preparer tax identification number on certain returns or claims for refund they prepare under Iowa Code chapter 422. Iowa Code section 421.63 grants the Department the authority to enjoin certain tax return preparers.
During the 2019 Legislative Session, the General Assembly added a new exemption from sales and use tax: “The sales price from the sale of a grain bin, including material or replacement parts used to construct or repair a grain bin.” The exemption defines a grain bin as “property that is vented and covered with corrugated metal or similar material, and that is primarily used to hold loose grain for drying or storage.” This rule explains what materials will be taxable or exempt under the exemption and then provides a non-exhaustive list of items commonly used to construct a grain bin
The 2019 Iowa Code provides a sales tax exemption for manufacturers that excludes persons who are not commonly understood to be manufacturers, and a person who engages in any one of five listed activities. 2019 Iowa Acts, House File 779, amends that provision to exclude persons who are primarily engaged in one of those five activities. This rule offers guidance to taxpayers as to how a person is primarily engaged in one of those activities and provides several examples of how the provision will be applied. No changes to the noticed rulemaking were made prior to adoption.
Following recent federal tax reform legislation, Tax Cuts and Jobs Act (TCJA) created a new category of income, Global Intangible Low Tax Income (GILTI), which must be included in a taxpayer’s U.S. income. Beginning in tax year 2019, Iowa also requires taxpayers to include federal GILTI, after subtracting allowable federal deductions, if any, in the taxpayer’s Iowa net income. Because GILTI represents a new category of income, it does not fit into any of the existing categories of income for which the Iowa Code & rules provide methods of apportionment.
This rule amends subrule 68.2(1) to adjust the excise tax rate on gasoline pursuant to the formula prescribed by Iowa Code section 452A.3. The ethanol distribution percentage for calendar year 2018 is between 60-65% (a decrease from 2017). As a result, pursuant to Iowa Code section 452A.3(1)“b”(4), in fiscal year 2020 the excise tax rate for ethanol blended gasoline will remain 29¢ per gallon, but the excise tax rate for gasoline will decrease from 30.7¢ per gallon to 30.5¢ per gallon.
The Department adopts this rule making to implement an exemption from sales tax added by 2018 Iowa Acts, Senate File 2417. Iowa Code section 423.3(104) exempts from sales tax specified digital products, prewritten computer software, and certain enumerated services sold or furnished to a commercial enterprise when used exclusively by the commercial enterprise. This new rule is unchanged from the NOIA publication.
The Department amends its rules requiring agents only need to file forms for persons from whom tax was withheld. The Department has also moved the relevant filing deadline from January 31 annually to February 15 annually, which should improve the Department’s ability to respond to withholding agents who contact the Department for assistance. The Department made one change from the NOIA publication.
The Department amends a rule relating to the sourcing of taxable services to provide an explanation and examples of how taxable services should be sourced. This includes a cross reference to this sourcing rule in the rule regarding the service of photography in Chapter 26.
The Department has adopted a new chapter of rules to implement sales tax collection requirements imposed on marketplace facilitators and remote sellers by 2018 Iowa Acts, Senate File 2417. These rules provide information about how and when remote sellers and marketplace facilitators are required to register, collect, and remit sales tax in Iowa.