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Adopted and Filed Rules

The Department of Revenue previously submitted the following proposed rules to the Iowa Legislature. The following rules have been adopted and filed.

Income Taxes

Dependent Child Health Care Coverage (effective Dec. 12, 2018)
2017 HF 625 repealed the requirement for taxpayers to indicate whether each of a taxpayer’s dependent children had health care coverage on December 31 of the tax year on the taxpayer’s Iowa individual income tax return. The Department proposed to rescind and reserve the rule.

Educational Savings Plan Trust and ABLE Accounts (effective Jul. 24, 2019)
The Department proposed amendments to implement recent legislative changes to the Iowa educational savings plan trust and Iowa ABLE programs. These amendments update the Department’s existing rules to administer tax consequences of withdrawals for elementary and secondary school tuition expenses and will also update the Department’s rules related to Iowa ABLE accounts to reflect Iowa legislative changes.

Research Activities Credit (effective Dec. 26, 2018)
To implement changes from the Iowa's 2018 Senate File 2417, the Department proposed revisions to its rules implementing the research activities credit for individual and corporate income tax. This rule making reflects those legislative changes and also removes unnecessary or outdated language from the rules.

Section 179 Expensing (effective Jul. 24, 2019)
As a result of 2019 Iowa Acts, Senate File 220, the Department amends the existing charts in rules 701-40.65(422), 701-53.23(422), and 701-59.24(422) for individual income tax, corporate income tax, and franchise tax to reflect the higher limitations now applicable to corporations and financial institutions for 2018. The amendments will update references to the lower limits in the rules and examples to reflect the higher limits. Additionally, the federal section 179 dollar and reduction limitation amounts as indexed for inflation for 2019 by the Internal Revenue Service have been added to the charts.

Sales, Use, and Excise Taxes

Baseball and Softball Complex Sales Tax Rebate (effective Dec. 26, 2018)
The Department proposed to amend a rule to implement a sales tax rebate available to eligible owners or operators of a baseball and softball complex, as provided in Iowa Code section 423.4(10). The rule removes references to out-of-date Iowa Code provisions and provides clarity for owners or operators seeking to claim the rebate.

Commercial Fertilizer and Agricultural Limestone (effective Dec. 12, 2018)
Based on a petition for rulemaking, the Department proposed various changes to its rules regarding the sale of commercial fertilizer, including an exemption from sales and use tax.

Delivery Sales of Alternative Nicotine or Vapor Products (effective Apr. 3, 2019)
This rule making implements a division of 2017 Iowa Acts, Senate File 516, which imposed sales and use tax on all delivery sales of alternative nicotine products or vapor products within Iowa and required sellers of those products into the state to obtain a permit from the Department.

Excise Tax Rate on Motor Fuels (effective Nov. 4, 2019)
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.

Hotel Motel Excise Tax (effective Jan. 23, 2019)
The Department consolidated Chapters 103-105 into a single chapter, Chapter 103. The Department updated these rules to reflect 2018 legislative changes that apply to lodging platform providers and facilitators and made one change from the proposed rule making.

Local Option Sales and Services Tax Amendment (effective Apr. 3, 2019)
This amendment removes rules that repeat the language of the statute, to update calculations, and to incorporate changes necessary as a result of SF 2417.

Manufacturing & Processing (effective Feb. 6, 2019)
This rule making implements changes to Iowa Code section 423.3(47) which provides a sales tax exemption for the sales price from the sale of certain items that are “directly and primarily used in processing by a manufacturer.” New definitions were enacted in SF 2417 and became effective on May 30, 2018. Several changes were made to the proposed rules published in November.

Personal Transportation Service (effective Feb. 6, 2019)
This rule making implements changes to the taxability of personal transportation services made by SF 2417 and defines personal transportation service, addresses sourcing, and describes applicable exemptions. Several changes were made to the proposed rules published in November.

Raceway Facility Sales Tax Rebate (effective Dec. 26, 2018)
The Department proposed a new rule relating to a sales tax rebate available to an eligible owner or operator of a raceway facility, as provided in Iowa Code section 423.4(11). The adopted rule describes the information and supporting documentation required to be submitted to the Department by an owner or operator seeking to claim the rebate.

Sourcing of Taxable Services, Tangible Property, and Digital Products Amendment (effective Apr. 3, 2019)
This rule making amends the chapter on sourcing of taxable services to remove language that is outdated, unnecessary, or duplicative of Iowa Code provisions. It incorporates the sourcing of tangible personal property and specified digital products pursuant to changes to the Iowa Code made by 2018 Iowa Acts, Senate File 2417.

Taxable Sales on Services Related to Photography/Retouching Services (effective Jun. 26, 2019)
The Department proposed to remove photography and retouching services from the category of services treated as tangible personal property, pursuant to 2018 Iowa Acts, Senate File 2417, section 169, by amending rule 701-16.51(422,423). This rule adopts rule 701-26.17(423), whose language is substantially similar to that in the current rule but includes photography and retouching services, which were added to the list of taxable enumerated services by 2018 Iowa Acts, Senate File 2417, section 170. The definitions of “photography” and “retouching” reflect that these services are no longer tied to the production of tangible personal property and that the definitions include digital photography and digital retouching. This new rule provides examples of general taxable photography and retouching services.

Water Service Excise Tax (effective Feb. 6, 2019)
Due to 2018 SF 512, the Department adopted a new Chapter 97 to the Iowa Administrative Code, “State-Imposed Water Service Excise Tax.” No changes were made to the proposed rules, as amended and published in October.

Property and Local Government Taxes

Flood Mitigation Program Amendment (effective March 20, 2019)
This rule making amends 701-238.4(418) regarding the use of moneys from a flood mitigation fund. During the 2018 Legislative Session, the Legislature added language to specify that a governmental entity may use moneys from an account for reimbursements for funds advanced internally or to help make payments on bonds incurred to pay for projects approved by the Flood Mitigation Board before, on, or after July 1, 2018.

Multiresidential & Commercial Real Estate Use of Assessment/Sales Ratio Study (effective Jan. 9, 2019)
The Department proposed to expand the tools utilized to supplement the assessment/sales ratio study. This change adjusts the information that may supplement the assessment/sales ratio study to include modeled appraisal techniques and other statistical methods. This will allow for more accurate calculations in determining equalization for multiresidential and commercial properties.

Other Taxes

Deferred Inheritance Tax Amendment (effective Mar. 20, 2019)
The Department amended a rule relating to inheritance tax to reflect a statutory change. Prior to July 1, 2018, estates containing personal property, real property, or a mix of both were required to provide a bond security to secure payment of deferred inheritance tax. In 2018, the Legislature amended Iowa Code section 450.48 to allow for other options for securing deferred payment in lieu of a bond.

General Department Administration

Surcharge for Enhanced 911 Service Terminology Amendment (effective Mar. 20, 2019)
This rule making amends several rules, implementing 2017 Iowa Acts, Senate File 500 which changed the terms “Enhanced 911” and “E911” to “911” to reflect the merging of E911 and Next Generation 911 services. The Department updated references to those terms.