Iowa 2021-2022 Regular Session Status: Enacted

SF 608 — A bill for an act relating to the administration of the tax and related laws by the department of revenue by requiring composite returns for pass-through entities, restricting public disclosure of certain information, providing penalties, and including applicability provisions. (Formerly SSB 1268.) Effective date: 07/01/2021. Applicability date: 01/01/2022.

Last action — Signed by Governor.

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    Enacted

This bill has been enacted into law. Introduced April 22, 2021. Enacted.

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Kim Reynolds O f f i c e o f t h e G o v e r n o r A d a m G r e g g G O V E R N O R L T G O V E R N O R June8,2021 T h e Honorable Paul Pate SecretaryofStateofIowa StateCapitol Des Moines,Iowa 50319 DearMr.Secretary, Iherebytransmit:
Senate File 608 - Enrolled Senate File 608 AN ACT RELATING TO THE ADMINISTRATION OF THE TAX AND RELATED LAWS BY THE DEPARTMENT OF REVENUE BY REQUIRING COMPOSITE RETURNS FOR PASS-THROUGH ENTITIES, RESTRICTING PUBLIC DISCLOSURE OF CERTAIN INFORMATION, PROVIDING PENALTIES, AND INCLUDING APPLICABILITY PROVISIONS.
SenateFile608,anlaigtotheadministrationofthetaxandrelatedlawsbythe DepartmentofRevenuebyrequiringcompositereturnsfottis,eticigghe publicdisclosuraininformation,proenlie,andincludipicbliy provisions.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
TheaboveSenateFileisherebyapprovedonthisdate.
DIVISION I ADMINISTRATION, PENALTIES, AND CANCELLATION OF UNUSED PERMITS Section 1.
Sincerely, Kim Re^noli Governor ofIowa cc:
SecretaryoftheSenate Clerk of the House STATE CAPITDES MOINES,I O W 515.281.5211 FAX 515WWW.GOVERNOR.IOWA.GOV HlflHT liSiiiiiiiiiiiiiiHiiiiiiimimiiiniiiimi G E N E R A I .
A S S E M B I .Y S e n a t e F i l e 6 0 8 A N A C T R E L A T I N G T O T H E A D M I N I S T R A T I O NO F T H E T A X A N D R E L A T E D L A W S B Y THE DEPARTMENT OF REVENUE BY REQUIRING COMPOSITE RETURNS FOR PASS-THROUGH ENTITIES, RESTRICTING PUBLIC DISCLOSURE OF CERTAIN INFORMATION, PROVIDING PENALTIES, AND INCLUDING A P P L I C A B I L I T YP R O V I S I O N S .
B E I T E N A C T E D B Y T H E G E N E R A L A S S E M B L Y O F T H E S T A T E O F I O W A ;
D I V I S I O N I ADMINISTRATION, PENALTIES, AND CANCELLATION OF UNUSED PERMITS Section 1.
Section 421.27, Code 2021, is amended to read as f o l l o w s :
Section 421.27, Code 2021, is amended to read as follows:
Failure to timely file a return or deposit form.
Failure to timely file a return or deposit form .
If a person fails to file a return with the department on or before the due date^ a return or deposit form there shall be added to the tax shown due or required to be shown duo remaining unpaid by the due date a penalty of -feeft five percent of the remaining unpaid tax shown due or roquirod to be shown d u e .
If a person fails to file a return with the department on or before the due date, a return or deposit form there shall be added to the tax shown due or required to be shown due remaining unpaid by the due date a penalty of ten five percent of the remaining unpaid tax shown due or required to be shown due.
In the case of a specified business with no tax shown duo or required to bo shown due that fails to timely file an income return, the specified business shall pay the greater of the following penalty amounts:
In the case of a specified business with no tax shown due or required to be shown due that fails to timely file an income return, the specified business shall pay the greater of the following penalty amounts:
2 (2) An amount equal to ten five percent of the imputed Iowa liability of the specified business, not to exceed twenty-five t h o u s d o l l a r s .
2 (2) An amount equal to ten five percent of the imputed Iowa liability of the specified business, not to exceed twenty-five thousand dollars.
The penalty, if assessed pursuant to paragraph or , shall be in addition to any other penalty provided by law.
The penalty, if assessed pursuant to paragraph “a” or “b”, shall be in addition to any other penalty provided by law.
The penalty, if assessed pursuant to paragraph or '^b", shall be waived by the department upon a showing by the taxpayer of any of the following conditions:
The penalty, if assessed pursuant to paragraph “a” or “b”, shall be waived by the department upon a showing by the taxpayer of any of the following conditions:
(1) An amount of tax greater than zero is required to bo shown due and at least ninety percent of the tax required to be shown due has been paid by the due date of the tax.
(1) An amount of tax greater than zero is required to be shown due and at least ninety percent of the tax required to be shown due has been paid by the due date of the tax.
(3) The death of a taxpayer, death of a member of the immediate family of the taxpayer, or death of the person directly responsible for filing the return and paying the tax, when the death interferes with timely filing of a return or timely payment of tax.
(3) The death of a taxpayer, death of a member of the immediate family of the taxpayer, or death of the person directly responsible for filing the return and paying the tax, when the death interferes with timely filing of a return or timely payment of tax .
3 return or timely payment of tax.
3 return or timely payment of tax .
(6) The taxpayer presents proof that the taxpayer relied upon applicable, documented, written advice specifically made to the taxpayer, to the taxpayer's preparer, or to an association representative of the taxpayer from the department, state department of transportation, county treasurer, or federal internal revenue service, whichever is appropriate, t h a t the reliancwas the d i r e c t cause of the failure t o f i l e or failure to pay, and that the advice has not been superseded by a court decision, ruling by a quasi-judicial body, or the adoption, amendment, or repeal of a rule or law.
(6) The taxpayer presents proof that the taxpayer relied upon applicable, documented, written advice specifically made to the taxpayer, to the taxpayer’s preparer, or to an association representative of the taxpayer from the department, state department of transportation, county treasurer, or federal internal revenue service, whichever is appropriate, that the reliance was the direct cause of the failure to file or failure to pay, and that the advice has not been superseded by a court decision, ruling by a quasi-judicial body, or the adoption, amendment, or repeal of a rule or law.
(7) Reliance upon results in a previous audit was a direct cause for the failure to file or the failure to pay where the previous audit expressly and clearly addressed the issue and the previous audit results have not been superseded by a court decision, or the adoption, amendment, or repeal of a rule or l a w .
(7) Reliance upon results in a previous audit was a direct cause for the failure to file or the failure to pay where the previous audit expressly and clearly addressed the issue and the previous audit results have not been superseded by a court decision, or the adoption, amendment, or repeal of a rule or law.
(8) Under rules prescribed by the director, the taxpayer presents documented proof of substantial authority to rely upon a particular position or upon proof that all facts and circumstances are disclosed on a return or deposit form.
(8) Under rules prescribed by the director, the taxpayer presents documented proof of substantial authority to rely upon a particular position or upon proof that all facts and circumstances are disclosed on a return or deposit form .
"^Electronic funds transfer" means any transfer of funds, other than a transaction originated by check, draft, or similar paper instrument, that is initiated through an electronic terminal telephone, computer, magnetic tape, or similar device for the purpose of ordering, instructing, or Senate File 608, p.
“Electronic funds transfer” means any transfer of funds, other than a transaction originated by check, draft, or similar paper instrument, that is initiated through an electronic terminal telephone, computer, magnetic tape, or similar device for the purpose of ordering, instructing, or Senate File 608, p.
4 authorizing a financial institution to debit or credit an a c c o u n t .
4 authorizing a financial institution to debit or credit an account.
(13) Tho failure to file a timely inheritance tax return resulting solely from a disclaimer that required the personal representative to file an inheritance tax return.—The penalty shall be waived if such return io filed and any tax due is paid within the later of nine months from the date of death or sixty days from the delivery or filing of the disclaimer pursuant to s e c t i6 3 3 E .
(13) The failure to file a timely inheritance tax return resulting solely from a disclaimer that required the personal representative to file an inheritance tax return.
1 2 .
The penalty shall be waived if such return is filed and any tax due is paid within the later of nine months from the date of death or sixty days from the delivery or filing of the disclaimer pursuant to section 633E.12 .
Failure to timely pay "the tax shown due, or the tax required to be shown due,—with the filing of a return or deposit form.
Failure to timely pay the tax shown due, or the tax required to be shown due, with the filing of a return or deposit form.
If a person fails to pay the tax shown due or required to be shown duo,—on a return or deposit form on or before the due date^ there shall be added to the tax shown due or roquirod to be shown due remaining unpaid by the due date a penalty of five percent of the unpaid tax due.
If a person fails to pay the tax shown due or required to be shown due, on a return or deposit form on or before the due date, there shall be added to the tax shown due or required to be shown due remaining unpaid by the due date a penalty of five percent of the unpaid tax due.
At least ninety porGcnt of the tax required to bo shown duo has boon paid by the duo date of the tax Any reason listed under subsection 1, paragraph ^d", except subsection 1, paragraph "^d", subparagraph (11).
At least ninety percent of the tax required to be shown due has been paid by the due date of the tax Any reason listed under subsection 1, paragraph “d”, except subsection 1, paragraph “d”, subparagraph (11).
a.
c.
(1) Except in the case of a final federal partnership adjustment governed by subparagraph (2), the taxpayer voluntarily files an amended return which includes a copy of the federal document showing the final disposition or final federal adjustments and pays any additional Iowa tax due within one hundred eighty days of the final determination date of the federal government's audit.
(1) Except in the case of a final federal partnership adjustment governed by subparagraph (2), the taxpayer voluntarily files an amended return which includes a copy of the federal document showing the final disposition or final federal adjustments and pays any additional Iowa tax due within one hundred eighty days of the final determination date of the federal government’s audit.
For purposes of this subparagraph.
For purposes of this subparagraph, Senate File 608, p.
Senate File 608, p.
5 “final determination date” means the same as defined in section 422.25.
5 final determination date" means the same as defined in section 2 2 .
(2) (a) In the case of a final federal partnership adjustment arising from a partnership level audit, with respect to the audited partnership or a direct partner or indirect partner of the audited partnership, the audited partnership, direct partner, or indirect partner voluntarily and timely complies with its reporting and payment requirements under section 422.25A, subsection 4 or 5.
2 5 .
(2) (a) In the case of a final federal partnership adjustment arising from a partnership level audit, with respect to the audited partnership or a direct partner or indirect partner of the audited partnership, the audited partnership, direct partner, or indirect partner voluntarily and timely complies with its reporting and payment requirements under section 422.25A, subsection 4 or 5 .
d-.
d.
The taxpayer presents proof that the taxpayer relied upon applicable, documented, written advice specifically made to the taxpayer# to the taxpayer's preparer» or to an association representative of the taxpayer from the department, state department of transportation, county treasurer^ or federal internal revenue service^ whichever is appropriate, that has not been superseded by a court decision^ ruling by a quasi-judicial body^ or the adoption, amendment^ or repeal of a r u lo r l a w .
The taxpayer presents proof that the taxpayer relied upon applicable, documented, written advice specifically made to the taxpayer, to the taxpayer’s preparer, or to an association representative of the taxpayer from the department, state department of transportation, county treasurer, or federal internal revenue service, whichever is appropriate, that has not been superseded by a court decision, ruling by a quasi-judicial body, or the adoption, amendment, or repeal of a rule or law.
e-.—Reliance upon results in a previous audit was a direct cause for—the failure to pay the—tax required to be—shown due where the previous audit expreoaly and clearly addressed the issue and the previous audit results have not been superseded by a court decision,—or—the adoption,—amendment,—or—repeal of a r u lo r l a w .
e.
—Under rules prescribed by the director,—the taxpayer presents documented proof of substantial authority to rely upon a particular position or upon proof that all facts and circumstaneea are disclosed on a return or deposit form.
Reliance upon results in a previous audit was a direct cause for the failure to pay the tax required to be shown due where the previous audit expressly and clearly addressed the issue and the previous audit results have not been superseded by a court decision, or the adoption, amendment, or repeal of a rule or law.
g-.
f.
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The return^ deposit form^ or payment is timely^ but erroneously, mailed with adequate postage to the internal revenue service, another state agency, or a local government agency and the taxpayer provides proof of timely mailing with adequate postage.
Under rules prescribed by the director, the taxpayer presents documented proof of substantial authority to rely upon a particular position or upon proof that all facts and circumstances are disclosed on a return or deposit form.
A-j—The tax has been paid by the wrong licensee and the payments were timely remitted to the department for one or more tax periods prior to notification by the department.
g.
The return, deposit form, or payment is timely, but erroneously, mailed with adequate postage to the internal revenue service, another state agency, or a local government agency and the taxpayer provides proof of timely mailing with adequate postage.
h.
The tax has been paid by the wrong licensee and the payments were timely remitted to the department for one or more tax periods prior to notification by the department.
6 i " ! — T h a t an Iowa inheritancereturn i s filed for an estate within the later of nine months from the date of death or sixty days from the filing of a disclaimor by the beneficiary of the estate refusing to take the property or right or interest in the property.
6 i.
That an Iowa inheritance tax return is filed for an estate within the later of nine months from the date of death or sixty days from the filing of a disclaimer by the beneficiary of the estate refusing to take the property or right or interest in the property.
If any person fails to pay the tax required to be shown due with the filing of a return or deposit and the department discovers the underpayment, there shall be added to the tax required to be shown due a penalty of five percent of the unpaid tax required to bo shown duo, which shall be in lieu of the penalty in subsection 2.
If any person fails to pay the tax required to be shown due with the filing of a return or deposit and the department discovers the underpayment, there shall be added to the tax required to be shown due a penalty of five percent of the unpaid tax required to be shown due , which shall be in lieu of the penalty in subsection 2.
The taxpayer presents proof that the taxpayer relied upon applicable, documented, written advice specifically made to the taxpayer, to the taxpayer's preparer, or to an association representative of the taxpayer from the department, state department of transportation, county treasurer, or federal internal revenue service, whichever is appropriate, that the reliance was the direct cause for the failure to pay, and that the advice has not been superseded by a court decision, ruling by a quasi-judicial body, or the adoption, amendment, or repeal o fa r u l o rl a w .
The taxpayer presents proof that the taxpayer relied upon applicable, documented, written advice specifically made to the taxpayer, to the taxpayer’s preparer, or to an association representative of the taxpayer from the department, state department of transportation, county treasurer, or federal internal revenue service, whichever is appropriate, that the reliance was the direct cause for the failure to pay, and that the advice has not been superseded by a court decision, ruling by a quasi-judicial body, or the adoption, amendment, or repeal of a rule or law.
Under rules prescribed by the director, the taxpayer presents documented proof of substantial authority to rely upon a particular position or upon proof that all facts and circumstances are disclosed on a return or deposit form.
Under rules prescribed by the director, the taxpayer presents documented proof of substantial authority to rely upon a particular position or upon proof that all facts and circumstances are disclosed on a return or deposit form .
Willful failure to file or dcposit pay.
Willful failure to file or deposit pay.
(2) In case of a willful failure by a specified business to file an income return with no tax shown duo or required to bo shown due with intent to evade a filing requirement, or in case of willfully filing a false income return with no tax shown duo or required to be shown due with the intent to evade reporting of Iowa-source income, the penalty imposed shall be the greater of the following amounts:
(2) In case of a willful failure by a specified business to file an income return with no tax shown due or required to be shown due with intent to evade a filing requirement, or in case of willfully filing a false income return with no tax shown due or required to be shown due with the intent to evade reporting of Iowa-source income, the penalty imposed shall be the greater of the following amounts:
-t3-)—If penalties are applicable for failure to file a return or deposit form and failure to pay the tax shown duo or required to be shown duo on the return or deposit form,—the penalty provision for failure to file shall bo in lieu of the penalty provisions for failure to pay the tax shown due or required to be shown due on the return or deposit form, except in the case of willful failure to file a return or deposit form or willfully filing a false return or deposit form with intent t oe v a dt a x .
(3) If penalties are applicable for failure to file a return or deposit form and failure to pay the tax shown due or required to be shown due on the return or deposit form, the penalty provision for failure to file shall be in lieu of the penalty provisions for failure to pay the tax shown due or required to be shown due on the return or deposit form, except in the case of willful failure to file a return or deposit form or willfully filing a false return or deposit form with intent to evade tax.
Liability — fraudulent practice.
Liability —— fraudulent practice.
A person who makes an erroneous application for refund, credit, reimbursement, rebate, or other payment shall be liable for any overpayment received or tax liability reduced plus interest at the rate in e f f e u n d s e c t 4 2 1 .
A person who makes an erroneous application for refund, credit, reimbursement, rebate, or other payment shall be liable for any overpayment received or tax liability reduced plus interest at the rate in effect under section 421.7.
7 .
(2) Willfully submits any false information, document, or document containing false information in support of an application for refund, credit, exemption, reimbursement, rebate, or other payment or benefit with the intent to evade tax or with intent to receive a refund, credit exemption, reimbursement, rebate, or other payment or benefit, to which the person is not entitled.
(2) Willfully submits any false information, document, or document containing false information in support of an application for refund, credit, exemption, reimbursement, rebate, or other payment or benefit with the intent to evade tax or with intent to receive a refund, credit exemption, reimbursement, rebate, or other payment or benefit, to which the person is not entitled .
(3) Willfully submits with any false information, document, or document containing false information in support of an application for refund with the intent to evade tax or with intent to receive a refund, credit, exemption, reimbursement, rebate, or other payment benefit, to which the person is not e n t i t l e d .
(3) Willfully submits with any false information, document, or document containing false information in support of an application for refund with the intent to evade tax or with intent to receive a refund, credit, exemption, reimbursement, rebate, or other payment benefit, to which the person is not entitled.
Penalties imposed under this subsection are not subject t ow a i v e r .
Penalties imposed under this subsection are not subject to waiver.
If a person fails to remit payment of taxes in the form or manner required by the rules of the director, there shall be added to the amount of the tax a penalty of five percent of the amount of tax shown due or required to be shown due the payment remitted in the incorrect form or manner not to exceed five hundred dollars per instance of incorrect form or manner of payment.
If a person fails to remit payment of taxes in the form or manner required by the rules of the director, there shall be added to the amount of the tax a penalty of five percent of the amount of tax shown due or required to be shown due the payment remitted in the incorrect form or manner not to exceed five hundred dollars per instance of incorrect form or manner of payment .
In addition to the penalties imposed by this section, if a taxpayer fails to file a return within ninety days of written notice demand issued by the department pursuant to the rules implementing this subsection that the taxpayer is required to do so, there shall be added to the amount shown due or required to bo shown due a penalty in the amount of one thousand dollars.
In addition to the penalties imposed by this section, if a taxpayer fails to file a return within ninety days of written notice demand issued by the department pursuant to the rules implementing this subsection that the taxpayer is required to do so, there shall be added to the amount shown due or required to be shown due a penalty in the amount of one thousand dollars.
9.
A s used in this s e c t i o n :
As used in this section:
"^Imputed Iowa liability" means any of the following:
“Imputed Iowa liability” means any of the following:
(1) In the case of corporations other than corporations described in section 422.34 or section 422.36, subsection 5 , the corporation's Iowa net income after the application of the Iowa business activity ratio, if applicable, multiplied by the top income tax rate imposed under section 422.33 for the tax y e a r .
(1) In the case of corporations other than corporations described in section 422.34 or section 422.36, subsection 5, the corporation’s Iowa net income after the application of the Iowa business activity ratio, if applicable, multiplied by the top income tax rate imposed under section 422.33 for the tax year.
(2) In the case of financial institutions as defined in section 422.61, the financial institution's Iowa net income after the application of the Iowa business activity ratio, if applicable, multiplied by the franchise tax rate imposed under section 422.63 for the tax year.
(2) In the case of financial institutions as defined in section 422.61, the financial institution’s Iowa net income after the application of the Iowa business activity ratio, if applicable, multiplied by the franchise tax rate imposed under section 422.63 for the tax year.
(3) In this case of all other entities, including corporations described in section 422.36, subsection 5, and all other entities required to file an information return under section 422.15, subsection 2, the entity's Iowa net income after the application of the Iowa business activity ratio, if applicable, multiplied by the top income tax rate imposed under section 422.5A for the tax year.
(3) In this case of all other entities, including corporations described in section 422.36, subsection 5, and all other entities required to file an information return under section 422.15, subsection 2, the entity’s Iowa net income after the application of the Iowa business activity ratio, if applicable, multiplied by the top income tax rate imposed under section 422.5A for the tax year.
"^Income r e t u r n " means an income tax return or information return required under section 422.15, subsection 2, or section 422.36, 422.37, or 422.62.
“Income return” means an income tax return or information return required under section 422.15, subsection 2, or section 422.36, 422.37, or 422.62.
a.
c.
"^Specified business" means a partnership or other entity required to file an information return under section 422.15, subsection 2, a corporation required to file a return under section 422.36 or 422.37, or a financial institution required Senate File 608, p.
“Specified business” means a partnership or other entity required to file an information return under section 422.15, subsection 2, a corporation required to file a return under section 422.36 or 422.37, or a financial institution required Senate File 608, p.
10 t o f i l ereturn under section 4 2 2 .
10 to file a return under section 422.62.
6 2 .
Section 421.60, subsection 2, paragraph d.
Section 421.60, subsection 2, paragraph d, Code 2021, is amended to read as follows:
Code 2021, is amended to read as follows:
(2) As used in this paragraph, ^tax period" means a period of time for which a return is required.
(2) As used in this paragraph, “tax period” means a period of time for which a return is required.
Section 422.25, subsection 4, Code 2021, is amended t or e aa sf o l l o w s :
Section 422.25, subsection 4, Code 2021, is amended to read as follows:
a.
As used in this subsection, "^tax period" means a period of time for which a return is required.
As used in this subsection, “tax period” means a period of time for which a return is required.
Section 422.75, Code 2021, is amended to read as f o l l o w s :
Section 422.75, Code 2021, is amended to read as follows:
422.75 Statistics — publication.
422.75 Statistics —— publication.
11 also include the reports and information required pursuant to section 421.17^—subsection 13, and section 421.60, subsection 2, paragraphs ^i^and Sec.
11 also include the reports and information required pursuant to section 421.17, subsection 13 , and section 421.60, subsection 2, paragraphs “i” and “l”.
Sec.
Section 423.14, subsection 2, paragraph b.
Section 423.14, subsection 2, paragraph b, Code 2021, is amended to read as follows:
Code 2021, is amended to read as follows:
The tax upon the use of all tangible personal property and specified digital products other than that enumerated in paragraph ^a", which is sold by a seller who is a retailer or its agent that is not otherwise required to collect sales tax under the provisions of this chapter, shall may be collected by the retailer or agent and remitted to the department, pursuant to the provisions of paragraph "^e", and sections 423.24, 423.29, 423.30, 423.32, and 423.33.
The tax upon the use of all tangible personal property and specified digital products other than that enumerated in paragraph “a”, which is sold by a seller who is a retailer or its agent that is not otherwise required to collect sales tax under the provisions of this chapter, shall may be collected by the retailer or agent and remitted to the department, pursuant to the provisions of paragraph “e”, and sections 423.24, 423.29, 423.30, 423.32, and 423.33.
D I V I SI IO N P A S S - T H E N T I T I EC O M P O R E T U R N S Sec.
DIVISION II PASS-THROUGH ENTITIES —— COMPOSITE RETURNS Sec.
Section 422.9, subsection 2A, paragraph b.
Section 422.9, subsection 2A, paragraph b, Code 2021, is amended by striking the paragraph.
Code 2021, is amended by striking the paragraph.
Section 422.13, subsection 5 , Code 2021, is amended Senate Pile 608, p.
Section 422.13, subsection 5, Code 2021, is amended Senate File 608, p.
Section 422.13, subsection 6, Code 2021, is amended t or e aa s f o l l o w s :
Section 422.13, subsection 6, Code 2021, is amended to read as follows:
Notwithstanding subsections 1 through •&£ and sections 422.14 and 422.15, a return is not required by a taxpayer as provided in section 29C.24.
Notwithstanding subsections 1 through 5 4 and sections 422.14 and 422.15, a return is not required by a taxpayer as provided in section 29C.24.
Section 422.16, subsection 12, paragraph a.
Section 422.16, subsection 12, paragraph a, Code 2021, is amended to read as follows:
Code 2021, is amended to read as follows:
In the case of nonresidents having income subject to taxation by Iowa, but not subject to withholding of such tax under subsection 1 hereof or subject to the provisions of section 422.16B, withholding agents shall withhold from such income at the same rate as provided in subsection 1 hereof, and such withholding agents and such nonresidents shall be subject to the provisions of this section, according to the context, except that such withholding agents may be absolved of such requirement to withhold taxes from such nonresident's income upon receipt of a certificate from the department issued in accordance with the provisions of section 422.17, as hereby amended.
In the case of nonresidents having income subject to taxation by Iowa, but not subject to withholding of such tax under subsection 1 hereof or subject to the provisions of section 422.16B, withholding agents shall withhold from such income at the same rate as provided in subsection 1 hereof, and such withholding agents and such nonresidents shall be subject to the provisions of this section, according to the context, except that such withholding agents may be absolved of such requirement to withhold taxes from such nonresident’s income upon receipt of a certificate from the department issued in accordance with the provisions of section 422.17, as hereby amended.
In the case of nonresidents having income from a trade or business carried on by them in whole or in part within the state of Iowa, such nonresident shall be considered to be subject to the provisions of this subsection unless such trade or business is of such nature that the business entity itself, as a withholding agent, is required to and does withhold Iowa income tax from the distributions made to such nonresident from s u ct r a do rb u s i n e s s .
In the case of nonresidents having income from a trade or business carried on by them in whole or in part within the state of Iowa, such nonresident shall be considered to be subject to the provisions of this subsection unless such trade or business is of such nature that the business entity itself, as a withholding agent, is required to and does withhold Iowa income tax from the distributions made to such nonresident from such trade or business.
Section 422.16, subsection 12, paragraph c.
Section 422.16, subsection 12, paragraph c, Code 2021, is amended by striking the paragraph.
Code 2021, is amended by striking the paragraph.
422.16B Pass-through entity composite r e t u r n s .
422.16B Pass-through entity composite returns.
"^Nonresident member" means a partner in a partnership as defined in section 422.25A, a shareholder of an S corporation, or a beneficiary of an estate or trust, who is any of the following:
“Nonresident member” means a partner in a partnership as defined in section 422.25A, a shareholder of an S corporation, or a beneficiary of an estate or trust, who is any of the following:
13 s t a t e .
13 state.
( 3 )A trust or estate without a situs in this state.
(3) A trust or estate without a situs in this state.
(4) A C corporation or S corporation without a commercial domicile in t h i s s t a t e .
(4) A C corporation or S corporation without a commercial domicile in this state.
'^Pass-through entity" includes any entity that is a partnership or a pass-through entity as those terms are defined i n4 2 2 .
“Pass-through entity” includes any entity that is a partnership or a pass-through entity as those terms are defined in 422.25A.
2 5 A .
"^Tiered pass-through entity" means a member of a pass- through entity that is itself a pass-through entity.
“Tiered pass-through entity” means a member of a pass- through entity that is itself a pass-through entity.
(1) A pass-through entity shall file a composite return on behalf of all nonresident members and shall report and pay the income or franchise tax imposed under this chapter at the maximum state income or franchise tax rate applicable to the member under section 422.5A, 422.33, or 422.63 on the nonresident members' distributive shares of the income from the pass-through entity.
(1) A pass-through entity shall file a composite return on behalf of all nonresident members and shall report and pay the income or franchise tax imposed under this chapter at the maximum state income or franchise tax rate applicable to the member under section 422.5A, 422.33, or 422.63 on the nonresident members’ distributive shares of the income from the pass-through entity.
(2) The tax rate applicable to a tiered pass-through entity shall be the maximum state income tax rate under section 2 2 .
(2) The tax rate applicable to a tiered pass-through entity shall be the maximum state income tax rate under section 422.5A.
5 A .
The composite return is due and shall be filed by the due date of the pass-through entity's annual return required under section 422.14, 422.15, or 422.36, including extensions.
The composite return is due and shall be filed by the due date of the pass-through entity’s annual return required under section 422.14, 422.15, or 422.36, including extensions.
The return shall be on a form prescribed by the department showing the total amounts paid or credited to the pass-through entity's nonresident members, the amounts of income or franchise tax remitted in accordance with this section, if any, and such other information as the department may require.
The return shall be on a form prescribed by the department showing the total amounts paid or credited to the pass-through entity’s nonresident members, the amounts of income or franchise tax remitted in accordance with this section, if any, and such other information as the department may require.
a.
c.
The Iowa income or franchise tax on the composite return is due on and shall be paid by the due date of the pass-through entity's annual return required under section 422.14, 422.15, or 422.36, without extensions.
The Iowa income or franchise tax on the composite return is due on and shall be paid by the due date of the pass-through entity’s annual return required under section 422.14, 422.15, or 422.36, without extensions.
14 section, together with applicable interest and penalties, but is not liable to any nonresident member for any amount withheld from distributions to or from the distributive share of such nonresident member and remitted in compliance with this s e c t i o n .
14 section, together with applicable interest and penalties, but is not liable to any nonresident member for any amount withheld from distributions to or from the distributive share of such nonresident member and remitted in compliance with this section.
a .
4.
A nonresident member t h a t h a s been included on a composite return filed pursuant to this section shall receive credit for Iowa income or franchise tax paid on the nonresident member's behalf by the pass-through entity, and any amounts in excess of the nonresident member's Iowa tax liability for the applicable tax period may be refunded to the nonresident member with interest in accordance with section 421.60, subsection 2, paragraph ""e".
a.
The nonresident member's Iowa return shall constitute a claim for refund for this purpose.
A nonresident member that has been included on a composite return filed pursuant to this section shall receive credit for Iowa income or franchise tax paid on the nonresident member’s behalf by the pass-through entity, and any amounts in excess of the nonresident member’s Iowa tax liability for the applicable tax period may be refunded to the nonresident member with interest in accordance with section 421.60, subsection 2, paragraph “e”.
In lieu of claiming a refund, the nonresident member may elect to have the overpayment shown on the nonresident member's final, completed return for the taxable year credited to the taxpayer's tax liability for the following taxable year.
The nonresident member’s Iowa return shall constitute a claim for refund for this purpose.
In lieu of claiming a refund, the nonresident member may elect to have the overpayment shown on the nonresident member’s final, completed return for the taxable year credited to the taxpayer’s tax liability for the following taxable year.
A tiered pass-through entity shall be subject to the same requirements to file a composite return and pay tax under this section with respect to the distributive shares of the tiered pass-through entity's income.
A tiered pass-through entity shall be subject to the same requirements to file a composite return and pay tax under this section with respect to the distributive shares of the tiered pass-through entity’s income.
Any Iowa income or franchise tax paid on the tiered pass-through entity's behalf by another pass-through entity may be applied against that tiered pass-through entity's own composite tax remittance obligation imposed under this section.
Any Iowa income or franchise tax paid on the tiered pass-through entity’s behalf by another pass-through entity may be applied against that tiered pass-through entity’s own composite tax remittance obligation imposed under this section.
A nonresident individual included on a composite tax return filed pursuant to this section shall be relieved of the requirement to file an individual income tax return under section 422.13 if income from the pass-through entity is the nonresident individual's only Iowa-source income.
A nonresident individual included on a composite tax return filed pursuant to this section shall be relieved of the requirement to file an individual income tax return under section 422.13 if income from the pass-through entity is the nonresident individual’s only Iowa-source income.
15 income or franchise tax on behalf of a nonresident member if any of the following apply;
15 income or franchise tax on behalf of a nonresident member if any of the following apply:
A composite return is not required as provided in section 9 C .
A composite return is not required as provided in section 29C.24.
2 4 .
The department determines by rule or through a ruling that the nonresident member's income should not be subject to composite return reporting, such as a member that is exempt f r oI o w i n c oo rf r a n c ht a x .
The department determines by rule or through a ruling that the nonresident member’s income should not be subject to composite return reporting, such as a member that is exempt from Iowa income or franchise tax.
The provisions of section 422.16, subsection 2, paragraph , and subsections 6, 10, and 14, applying to withholding agents, shall apply in the same manner to pass-through entities under this section.
The provisions of section 422.16, subsection 2, paragraph “c”, and subsections 6, 10, and 14, applying to withholding agents, shall apply in the same manner to pass-through entities under this section.
For the efficient administration of this chapter, the director may require or provide for the composite return on the same form as or combined with a pass-through entity's annual return required under section 422.14, 422.15, or 422.36, but in such case the composite return shall be considered a separate return for purposes of this chapter and section 421.27.
For the efficient administration of this chapter, the director may require or provide for the composite return on the same form as or combined with a pass-through entity’s annual return required under section 422.14, 422.15, or 422.36, but in such case the composite return shall be considered a separate return for purposes of this chapter and section 421.27.
D I V I S I I I P U B LA G E ND I S C L O S UT A X - E XE N T I T — ED E P A R T M E N T O FR E V E N U E Sec.
DIVISION III PUBLIC AGENCY DISCLOSURE —— TAX-EXEMPT ENTITIES —— DEPARTMENT OF REVENUE Sec.
22A.6 Applicability — department o fr e v e n u e .
22A.6 Applicability —— department of revenue.
b .
b.
P o w e r s e x e u n d s e c t i4 2 2 .
Powers exercised under section 422.70.
7 0 .
Information that is expressly required to be provided by the department by law including but not limited to section 2 2 .
Information that is expressly required to be provided by the department by law including but not limited to section 422.11S.
I I S .
The restrictions imposed under this chapter shall not be construed to entitle any taxpayer or tax-exempt entity to any deduction, exemption, credit, or other tax position which the taxpayer or exempt entity is unable to substantiate with s u f f i c i e n t C H A P M A N P A G R A S S L E Y ''President of the Senate Speaker of th I hereby certify that this bill originated in the Senate and is known as Senate File 608, Eighty-ninth General Assembly.
The restrictions imposed under this chapter shall not be construed to entitle any taxpayer or tax-exempt entity to any deduction, exemption, credit, or other tax position which the taxpayer or exempt entity is unable to substantiate with sufficient evidence.
u/.
______________________________ ______________________________ JAKE CHAPMAN PAT GRASSLEY President of the Senate Speaker of the House I hereby certify that this bill originated in the Senate and is known as Senate File 608, Eighty-ninth General Assembly.
W .C H A R S M I T H S O N Secretary off\he Senate Approved jJ/V^ 2 0 2 1
______________________________ W.
CHARLES SMITHSON Secretary of the Senate Approved _______________, 2021 ______________________________ KIM REYNOLDS Governor
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Action History

  1. Signed by Governor.

  2. Reported correctly enrolled, signed by President and Speaker, and sent to Governor.

  3. Explanation of vote.

  4. Explanation of vote.

  5. Explanation of vote.

  6. Message from House.

  7. Immediate message.

  8. Passed House, yeas 86, nays none.

  9. Substituted for HF 890.

  10. Read first time, passed on file.

  11. Fiscal note.

  12. Message from Senate.

  13. Immediate message.

  14. Passed Senate, yeas 48, nays 0.

  15. Fiscal note.

  16. Committee report, approving bill.

  17. Introduced, placed on Ways and Means calendar.

Sponsorship breakdown

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0 sponsors · 0 co-sponsors · 150 not signed on

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Co-sponsors (0)

None.

Not signed on (150)

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"Not signed on" means a member has not sponsored or co-sponsored this bill — it does not imply opposition. Members flagged Voted No have a recorded No vote on this bill.

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