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
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.
The Department's adopted rules to implement the temporary nonconformity of Iowa’s tax laws to the federal repeal of gain or loss deferral from exchanges of like-kind personal property in tax year 2018. The rules also implement 2018 Iowa Acts, Senate File 2417, and 2019 Iowa Acts, House File 779, which, in part, provide an election to defer gain or loss from exchanges of like-kind personal property in tax year 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.
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.