Ways & Means Committee – Week 6, 2021


SF 365 – Department of Revenue property tax proposal

SF 365 is a proposal from the Department of Revenue that would eliminate the current multiresidential classification for property assessment purposes and place those properties under the residential property tax classification. Eliminating the multiresidential property classification will reduce the need for special assessments and equalization orders for that class of property. Multiresidential property represents a very small portion of the assessed value statewide. This makes sales comparisons difficult because there are very few similar sales within a time period. Many counties also have very few properties in that class, which also causes issues under the equalization process. Moving these properties under the residential classification will simplify the process for local assessors and also even out property values for these properties under the equalization process. The small number of multiresidential properties sold caused some initial equalization orders to be sent to counties with 50% to 100% increases in assessed value based on market value analyses.

The multiresidential classification was created as part of the property tax reform bill in 2013 to phase out the tax differential on apartments and other residential properties that had been classified as commercial property. The 2013 legislation phased down the taxable value of multiresidential property until it would match the residential rollback rate.
[2/11: Short form (Absent: Bolkcom, Quirmbach)]

SF 367 – Fixes for Court Debt Bill

SF 367 corrects errors and unintended language that was included in SF 457, a criminal surcharge and court debt bill that was enacted in 2020.  

The bill does the following:

  • It provides that the Department of Revenue may retain 15% of the amount owed by an offender to cover costs of administration.  Last year’s bill allowed the Department of Revenue to add and collect an additional 15% of the amount of court debt owed by an offender.
  • Clarifies that a consumer credit transaction does not include goods, services, or any other benefits provided by or on behalf of the state or a state agency
  • Clarifies the definition of “court debt” to include restitution and other debt paid to or collected by the clerks.
  • Clarifies that County Attorneys who participate in debt collection do not keep any percentage of specific surcharges that are directly appropriated for specific purposes, e.g. crime victim compensation fund.
  • Provides that the Department of Revenue can “charge off” active collection of debt if:
    • The person owing the court debt is deceased and there are no assets available to pay the court debt
    • The person owing the court debt cannot be located and it is determined that it is not possible to locate the person
  • Certain court debt cannot be “charged off” until 65 years after imposition, e.g. victim restitution.
  • Clarifies that an appellate court cannot review or modify a court order regarding an offender’s ability to pay unless the offender has first requested and received a rehearing with the district court while the offender is still serving their sentence.
    [2/11: Short form (Absent: Bolkcom, Quirmbach)]


SF 363 – Regulation of certain tobacco, hemp-related products  

SF 363 requires a person who engages in the business of a device (paraphernalia) retailer through a retail outlet or delivery sales to hold a tobacco retailer permit, comply with provisions applicable to a tobacco retailer, sell tobacco products in addition to devices at the retail outlet or through delivery sales, and hold a permit as a device retailer. It provides for application for and issuance of annual device retailer permits by cities and counties (depending on the location of the retailer) and requires a $1,000 fee for each permit. The device retailer permit holders must keep certain records and submit reports to the Department of Revenue. A device retailer must not sell, give or otherwise supply a device to anyone under 18 and must verify the age of all purchasers. A device retailer can only display and sell devices in a location that ensures that the devices are not visible to a person younger than 18 and where no person younger than 18 is present or permitted.

The bill provides for the imposition, collection and payment of sales and excise taxes on the retail sale, including delivery sales, of devices. It creates a “specialty courts program fund” to support specialty courts in addressing underlying substance use and mental health issues that contribute to individuals becoming involved with the justice system. Moneys collected, with the exception of city and county permit fees, will be deposited in the fund. The bill also sets various penalties for violations.
[Committee: 2/11: Short form (Absent: Bolkcom, Quirmbach); Floor:2/17: 49-0 (Absent: Nunn)]

SF 364 – Correction to PPP income tax exemption for fiscal year tax filers

SF 364 will fix an issue with the Iowa income tax exemption for the proceeds from a forgiven loan under the federal Paycheck Protection Program (PPP). The language granting the exemption last session in SF 2641 was specific to taxes owed for 2020 and later. Since this was passed, the federal government clarified the law to allow certain business expense deductions paid for using those loan proceeds. The language from SF 2641 inadvertently excludes fiscal year tax filers from the business expense provisions for loans they received during their FY19 tax year. The bill extends the business expenses deduction to those tax filers. The bill will be effective upon enactment.
[Committee: 2/11: Short form (Absent: Bolkcom, Quirmbach); Floor:2/17: 49-0 (Absent: Nunn)]

SF 366 – Department of Revenue policy bill

SF 366 makes a number of changes to existing tax policy, mostly clarifying current practices or making technical corrections to the administration and collection of taxes by the department.

Division I – Third-party Developer tax credit: The third-party developer tax credit is available under the High-Quality Jobs program administered by the Iowa Economic Development Authority. This tax credit is currently available to be used against corporate income taxes. This bill would allow the tax credit to be used by other business entities, such as LLCs, S-corporations and partnerships.

Division II – Geothermal Heat Pump Tax Credit: This division makes technical corrections to the tax credit to reflect current policy. The language relates to the deadline and process for a taxpayer to claim the tax credit. This process is similar to the process used by taxpayers claiming the solar energy system tax credit.

Division III – Solar energy facilities – Utility replacement tax: This division would make changes to the utility replacement tax as it relates to solar energy facilities. The change lowers the value of utility improvements that would constitute a “major addition” for solar energy facilities to $1 million. Currently, a major addition is facilities valued at $10 million. This impacts local government because they can capture a portion of the property tax generated by major improvements, whereas other improvements by utilities only impact the property taxes over the entirety of the utility’s service area.

Division IV – Fee for new registration of vehicles: This division makes some technical corrections to the process for the administration of the fee for new registrations. The division also creates new penalties for failure to file and underpayment of the fee for new registration. Those penalties are 10% and 5% of the fee for new registration, respectively.

Division V – Penalties – Imputed tax liability: This makes changes to a provision of the omnibus tax bill last year that had extended the imputed tax liability for taxpayers as part of a pass-through entity. The change allows taxpayers to claim the portion of tax credits available to the pass-through entity when calculating their imputed tax liability.

Division VI – Pass-through entities and Reporting: This division contains clean-up language that was included in the omnibus tax bill last session. These changes are technical and provide the department with additional rulemaking authority.

Division VII – Vehicle registration renewals for court debt: This division would allow county treasurers to place a hold on car registration renewals for unpaid court debt. This is a follow-up issue from last session when the collection of court debt was transferred back to the Department of Revenue’s central collections unit. Counties can place holds on car registration renewals for unpaid taxes. Some counties have used that authority to also place holds on car registrations for unpaid court debt, though it is disputed if that is actually allowed under current law.

Division VIII – Garnishment: The division clarifies that a distress warrant issued by the Department of Revenue or the director of the Department of Inspections and Appeals will be considered a final warrant and no longer subject to change or appeal.

Division IX – Snowmobiles, ATVs, Boating vessels: This makes technical changes to the transfer of information collected by county treasurers during the registration of snowmobiles, ATVs and boating vessels to the Department of Revenue. This will allow for the electronic transfer of the information.

Division X – Sales and Use Tax clean-up: This division makes various corrections and clarifications to the administration and collection of sales and use taxes on the following issues:

  • Updates outdated language and conforms to current use of “tangible personal property”
  • Updates language regarding rentals and when sales are exempt under current law to reflect current practices

Division XI – Interest rate: This division extends the time frame for the director to set and publish the interest rate the department will use from October to November.

Division XII – Assessors: This division fixes language from last year’s omnibus tax policy bill regarding when a local assessor could not personally assess a property. This language restricts that requirement to only property owned by the assessor or someone in the assessor’s own family. The language included in the legislation last year was broader but vague; this will make the restriction clearer and easier to enforce. The bill also establishes reporting requirements to the director of the Department of Revenue on the use of special counsel in the handling of property tax assessment litigation once special counsel is employed. Assessors are allowed to employ special counsel to handle litigation issues, but legislation last session required them to get approval of the city legal department or the county attorney.

Division XIII – Confidential Information: This division extends the types of information that must be redacted by the department during the course of an appeal or a contested case to include tax returns. This also applies to the director’s authority to disclose confidential information when necessary under current law. The division is needed because of recent changes to the definition of “tax return” in Iowa Code.

Division XIV – Power of Attorney: The division provides technical corrections for situations when a taxpayer may designate someone to have power of attorney when corresponding with the department on their behalf. This includes language requested by the Attorney General’s office to clear up an issue of standing, as well as scenarios and administrative issues that came to light during rulemaking, but weren’t addressed by the legislation.

Division XV – Timing of notification for refund claims under the high-quality jobs program: There is currently a two-week deadline for the notification of sales and use tax refunds. The division would allow the notification period to be extended to allow for up to a year to claim the refund, in line with other notification requirements under the program.
[Committee: 2/11: 11-4 (No: Dotzler, Jochum, Petersen, T. Taylor; Absent: Bolkcom, Quirmbach); Floor: 2/17: 48-0 (Absent: Hogg, Nunn)]