IDR Releases New State Tax Guidance: Tax Preparers; GILTI; FDII

Thursday - 11/21/2019

In May 2019, the Iowa legislature enacted House File 590, a bill providing requirements and penalties for tax return preparers. The Department has released new guidance to explain the provisions of this act:

  • Tax Return Preparers - Beginning January 1, 2020, individuals preparing certain tax returns or claims for refund under Iowa Code chapter 422 may be classified as tax return preparers. Tax return preparers will be subject to continuing education requirements and penalties for failing to provide their preparer tax identification number (PTIN) on returns they prepare. This guidance explains who shall be considered tax return preparers and the specifics of completing and reporting continuing education courses. Additionally, this guidance provides information on the penalties for violating the tax return preparer requirements and examples of situations involving tax return preparers.

In 2018, the Iowa legislature enacted Senate File 2417, a state tax reform bill that includes extensive changes to the state’s tax structure. The Department has released new guidance to explain the following tax change:

  • Global Intangible Low Tax Income & Foreign Derived Intangible Income - Beginning in tax year 2019, Global Intangible Low-Tax Income (GILTI) is included in taxpayers' Iowa net income. Taxpayers are also allowed the same deductions for Foreign Derived Intangible Income (FDII) and for a portion of GILTI for Iowa purposes that they are allowed for federal purposes. Corporate taxpayers which file consolidated federal returns may have to make certain adjustments to the amounts of GILTI and FDII included for Iowa purposes. Businesses must apportion their net GILTI to Iowa to the extent the income arises out of the taxpayer’s ownership interests in Controlled Foreign Corporations (CFCs) that are an integral part of some business activity occurring regularly in or outside of Iowa. Other taxpayers may be eligible for an election to include or exclude GILTI from their Iowa apportionment factor under certain circumstances. The Department intends to file administrative rules to implement the apportionment method described in this guidance in the near future.

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