• A Brief Overview of 2014 Iowa Tax Law Changes
  • July 28, 2014
  • Law Firm: Nyemaster Goode P.C. - Des Moines Office
  • During the 2014 legislative session, the Iowa General Assembly passed three minor tax reforms that Governor Branstad has signed into law.

    House File 2436 provided for minor changes to the definition of “dietary supplement” in Iowa Code Section 423.3, which specifies that dietary supplements are not exempt from sales tax. The changes were necessary to conform Iowa’s statutory definition of “dietary supplement” to the definition in the Streamlined Sales and Use Tax Agreement, an agreement that represents an effort by 44 states and the District of Columbia to simplify sales and use tax collection for retailers and states.

    House File 2438 was a technical bill making minor changes to the Iowa Code to facilitate the administration of tax and related laws. For example, the Iowa Code provided that taxpayers were required to “attach” tax credit certificates to their tax returns to claim various tax credits. Because many taxpayers now file their tax returns electronically, this language has been amended to require that taxpayers “include” the certificates with their tax returns. In addition, House File 2438 included several minor substantive amendments. First, the bill eliminated an equipment tax exemption in Iowa Code Section 423D.3 for the sales price of transactions not subject to state sales tax under Iowa Code Section 423.3. Second, the bill amended the powers and duties of the director of the Iowa Department of Revenue to allow for the adoption of rules ensuring that transfers and disbursements to local governments for various projects do not exceed taxes collected within geographic districts where the projects are located. Third, the bill provided that financial institutions subject to state franchise taxes may claim a solar energy credit equal to a percentage of certain federal energy credits allowed under the Internal Revenue Code.

    Finally, House File 2444 was an efficiency bill intended to allow for the more efficient collection of certain taxes. With respect to inheritance taxes, the bill modified the method that the Department of Revenue uses to compute penalty and interest due when a taxpayer files an incorrect inheritance tax return. Specifically, notices sent to taxpayers who file incorrect inheritance tax returns will now include a sum certain that includes penalty and interest computed to the last day of the month in which the notice is printed. Previously such notices dated on or after the twentieth day of each month included interest computed through the last day of the following month. With respect to motor fuel and special fuel taxes, House File 2444 eliminated the twenty-day grace period following notice by a state agency to file or correct fuel tax payments before the state agency would determine the amount of tax due. Appropriate state agencies may now determine or estimate fuel tax due when providing notice that motor fuel or special fuel tax returns either were not filed or were filed incorrectly. Taxpayers may contest such tax liability determinations within sixty days by requesting a hearing or by paying the amount determined to be due and then filing a claim for a refund.