The Department has released updated guidance related to the following:
- Iowa Composite Returns for Tax Year 2022 and Later
The Department has updated its Iowa Composite Return tax guidance. Notably, a new exemption from filing tax year 2022 Iowa Composite Returns (IA PTE-C) is provided for the following pass-through entities:
- A pass-through entity that is a financial institution subject to the Iowa franchise tax, provided the entity files an Iowa franchise tax return (IA 1120F) and pays any franchise tax shown due on that return.
- A pass-through entity that wholly owns one or more financial institutions subject to the Iowa franchise tax that are treated as disregarded entities for federal and Iowa income tax purposes, provided that substantially all (at least 90%) of the pass-through entity’s gross income for the tax year is also reportable income on the wholly-owned financial institutions’ Iowa franchise tax returns (IA 1120F), and provided the wholly-owned financial institutions file an IA 1120F and pay any Iowa franchise tax shown due on that return.
This exemption only relieves these pass-through entities of the requirement to file a 2022 IA PTE-C Composite Return and pay related composite return tax. If the pass-through entity is also a nonresident member of another pass-through entity that is required to file an Iowa Composite Return, this exemption does not relieve the pass-through entity from the requirement to be included on that other Iowa Composite Return. This exemption does not apply to any tax year beginning on or after January 1, 2023. The Department has also updated the 2022 IA PTE-C Composite Return Instructions 41-176 to reflect this change.
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