The Department is excited to announce our new website, revenue.iowa.gov, is launching in one week, on July 9!
IDR Releases Updated Tax Guidance: Pass-Through Entity Tax
The Iowa Department of Revenue has released updated tax guidance including the following new or updated Common Questions related to Pass-Through Entity Tax (PTET):
IDR Administrative Rules: Executive Order 10 – Red Tape Review Reports
On January 10, 2023, Governor Kim Reynolds signed Executive Order 10, putting a moratorium on certain administrative rulemaking and instituting a comprehensive review of all existing administrative rules. Pursuant to Executive Order 10, the Iowa Department of Revenue is in the process of reviewing all of its administrative rules between now and 2026.
Pass-Through Entity Tax (PTET)
House File 352 created a voluntary election for a partnership or S corporation to be subject to Iowa tax at the entity level. The legislation applies retroactively to tax years beginning on or after January 1, 2022. This guidance describes the new elective Pass-Through Entity Tax and certain filing procedures being developed to implement the tax.
IDR Releases New Tax Guidance: Pass-Through Entity Tax
On May 11, 2023, Governor Kim Reynolds signed 2023 Iowa Acts, House File 352. The Iowa Department of Revenue has released new tax guidance to explain this tax change:
CITY OF FARMINGTON
Petitioner, the City of Farmington, requested a Declaratory Order to determine if campgrounds and cabins rented at a city owned park were subject to sales tax or hotel and motel tax. The Director found that the campgrounds were exempt from sales tax because Iowa Code section 423.3(32) exempts from sales tax the sale of personal property or of services furnished by a county or city. Cabins or other permanent structures are not included in the definition of campground but are subject to hotel and motel tax and there is no exemption for sales made by a city.
CEDAR FALLS CSD
Petitioner, a school district, requested a Declaratory Order to determine whether the amount paid by Petitioner to universities or colleges for tuition, fees, and books on behalf of participants in the Teacher & Paraeducator Registered Apprenticeship Program would be taxable income to the participants. The Director refused to issue a Declaratory Order because the question is primarily a matter of federal income tax law and the Internal Revenue Service is better suited to answer the question.
Virgil Heidbrink Estate
The Administrative Law Judge affirmed the Department’s penalty waiver denial. Taxpayer requested a penalty waiver from a late filed inheritance tax return on the basis that the COVID-19 pandemic resulted in unavoidable delays in filing. Under Iowa Code § 421.27(1)(c) (2020) (see Iowa Code § 421.27(1)(d) (2022)) late-filed returns are subject to a penalty unless the taxpayer meets one of the listed exceptions. The code offers no “good cause” exception form the penalty for late filed returns.