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Declaratory Order - Hogan Capital Management, Inc.

On February 25, 2003, the Director for the Iowa Department of Revenue and Finance issued a Declaratory Order in the above-referenced matter. The Petitioner in this case is provided investment counseling to clients, which is a taxable enumerated service pursuant to Iowa Code section 422.43(11) as implemented by department rule 701 IAC 26.7. The Petitioner was held to be performing this taxable service based on the facts that the Petitioner was performing investment advice to the client. The services rendered by the Petitioner were considered investment counseling because the Petitioner was not allowed to manage the client's investment portfolio, but had to make all financial transactions with the approval of the client. The Director also ruled that the entire fee paid by the client was taxable. This ruling was made despite the fact that the client paid the entire fee to a separate entity that performed services for the Petitioner. This entity then collected their fee and remitted the remainder of the client's payment to the Petitioner. The Director held that this manner of payment did not prevent the entire fee paid by the client from being taxable as the enumerated service of investment counseling.