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House File 976 - Introduced HOUSE FILE 976 BY COMMITTEE ON WAYS AND MEANS (SUCCESSOR TO HSB 89) A BILL FOR An Act relating to the administration of the tax by the department of revenue by modifying provisions related to personal income, property, sales and use, motor fuel, and inheritance taxes, changing tax expenditure reviews, and including effective date and retroactive applicability provisions.
House File 976 - Enrolled House File 976 AN ACT RELATING TO THE ADMINISTRATION OF THE TAX BY THE DEPARTMENT OF REVENUE BY MODIFYING PROVISIONS RELATED TO PERSONAL INCOME, PROPERTY, SALES AND USE, MOTOR FUEL, AND INHERITANCE TAXES, CHANGING TAX EXPENDITURE REVIEWS, AND INCLUDING EFFECTIVE DATE AND RETROACTIVE APPLICABILITY PROVISIONS.
TLSB 1390HV (2) 91 jm/jh H.F.
DIVISION I DISCLOSURE OF TAX INFORMATION Section 1.
976 DIVISION I DISCLOSURE OF TAX INFORMATION Section 1.
d.
House File 976, p.
2 d.
Unless otherwise expressly permitted by section 8G.4, section 11.41, section 96.11, subsection 6, section 421.17, subsections 22, 23, and 26, section 421.17, subsection 27, paragraph “k”, section 421.17, subsection 31, section 252B.9, section 321.40, subsection 6, sections 321.120, 421.19, 421.28, 421.59, 421.65, 422.72, and 452A.63, and 556.19, subsection 2, this section, or another provision of law, a tax return, return LSB 1390HV (2) 91 -1- jm/jh 1/39 H.F.
Unless otherwise expressly permitted by section 8G.4, section 11.41, section 96.11, subsection 6, section 421.17, subsections 22, 23, and 26, section 421.17, subsection 27, paragraph “k”, section 421.17, subsection 31, section 252B.9, section 321.40, subsection 6, sections 321.120, 421.19, 421.28, 421.59, 421.65, 422.72, and 452A.63, and 556.19, subsection 2, this section, or another provision of law, a tax return, return information, or investigative or audit information shall not be divulged to any person or entity, other than the taxpayer, the department, or internal revenue service for use in a matter unrelated to tax administration.
976 information, or investigative or audit information shall not be divulged to any person or entity, other than the taxpayer, the department, or internal revenue service for use in a matter unrelated to tax administration.
DIVISION II ANNUAL REPORTING Sec.
DIVISION II ANNUAL REPORTING House File 976, p.
3 Sec.
DIVISION III PROPERTY TAX —— CHANGES LSB 1390HV (2) 91 -2- jm/jh 2/39 H.F.
DIVISION III PROPERTY TAX —— CHANGES Sec.
976 Sec.
In case of sickness, absence, or other disability of the claimant or if, in the judgment of the director of revenue or the director of health and human services, as applicable, good cause exists and the claimant requests an extension, the director of health and human services may extend the time for filing a claim for reimbursement and the director of revenue may extend the time for filing a claim for credit .
In case of sickness, absence, or other disability of the claimant or if, in the judgment of the director of revenue or the director of health and human services, as applicable, good cause exists and the claimant requests an extension, the director of health and human services may extend the time for filing a claim for reimbursement and the director of revenue may extend the time for filing a claim for credit.
A refund shall not be ordered or made unless a claim for refund is presented to the board within two years of the date the tax was due, or if appealed to the board of review, the property assessment appeal board, director of revenue, or district court, within two years of the final decision.
A refund shall not be ordered or made unless a claim for refund is presented to the board within two years of the date the tax was due, or if appealed to the board of review, the property assessment appeal board, House File 976, p.
4 director of revenue, or district court, within two years of the final decision.
LSB 1390HV (2) 91 -3- jm/jh 3/39 H.F.
a.
976 a.
The provisions of sections 6222, 6223, and 6227 of the Internal Revenue Code and the regulations thereunder shall also apply to a partnership or pass-through entity and its direct or indirect partners in the same manner as provided in such sections unless a different treatment is specifically provided in this title.
The provisions of sections 6222, 6223, and 6227 of the Internal Revenue Code and the regulations thereunder shall also apply to a partnership or pass-through entity and its direct or indirect House File 976, p.
5 partners in the same manner as provided in such sections unless a different treatment is specifically provided in this title.
The adjustment provided by section 6221(a) of the Internal Revenue Code shall be determined as provided in such section but shall LSB 1390HV (2) 91 -4- jm/jh 4/39 H.F.
The adjustment provided by section 6221(a) of the Internal Revenue Code shall be determined as provided in such section but shall be based on Iowa taxable income or other tax attributes of the partnership or pass-through entity as determined pursuant to this chapter for the reviewed year.
976 be based on Iowa taxable income or other tax attributes of the partnership or pass-through entity as determined pursuant to this chapter for the reviewed year.
(1) Sales of building materials, supplies, and equipment to owners, contractors, subcontractors, or builders for the erection of buildings or the alteration, repair, or improvement of real property are retail sales of tangible personal property in whatever quantity sold .
(1) Sales of building materials, supplies, and equipment to owners, contractors, subcontractors, or builders for the erection of buildings or the alteration, repair, or improvement House File 976, p.
Where the owner, contractor, LSB 1390HV (2) 91 -5- jm/jh 5/39 H.F.
6 of real property are retail sales of tangible personal property in whatever quantity sold.
976 subcontractor, or builder is also a retailer holding a sales or use tax permit and transacting retail sales of building materials, supplies, and equipment, the person shall purchase such items of tangible personal property without liability for the tax if such property will be subject to the tax at the time of resale or at the time it is withdrawn from inventory for construction purposes.
Where the owner, contractor, subcontractor, or builder is also a retailer holding a sales or use tax permit and transacting retail sales of building materials, supplies, and equipment, the person shall purchase such items of tangible personal property without liability for the tax if such property will be subject to the tax at the time of resale or at the time it is withdrawn from inventory for construction purposes.
(2) Where the owner, contractor, subcontractor, or builder is also a retailer holding a sales and use tax permit and transacting retail sales of building materials, supplies, and equipment, the person shall purchase such items of tangible personal property without liability for the tax if such LSB 1390HV (2) 91 -6- jm/jh 6/39 H.F.
(2) Where the owner, contractor, subcontractor, or builder is also a retailer holding a sales and use tax permit and transacting retail sales of building materials, supplies, and equipment, the person shall purchase such items of tangible personal property without liability for the tax if such property will be subject to sales tax at the time of resale or subject to use tax at the time the retailer withdraws House File 976, p.
976 property will be subject to sales tax at the time of resale or subject to use tax at the time the retailer withdraws such property from inventory for use by the retailer in erecting buildings and other structures or for reconstruction, alteration, expansion, or remodeling of buildings and other structures.
7 such property from inventory for use by the retailer in erecting buildings and other structures or for reconstruction, alteration, expansion, or remodeling of buildings and other structures.
LSB 1390HV (2) 91 -7- jm/jh 7/39 H.F.
On and after July 1, 2030, an excise tax of thirty cents is imposed on each gallon of ethanol blended gasoline classified as E-15 or higher.
976 On and after July 1, 2030, an excise tax of thirty cents is imposed on each gallon of ethanol blended gasoline classified as E-15 or higher.
Before July 1, 2030, the rate of the excise tax on ethanol blended gasoline classified as E-15 or higher shall be based on the number of gallons of ethanol blended gasoline classified as E-15 or higher that are distributed House File 976, p.
Before July 1, 2030, the rate of the excise tax on ethanol blended gasoline classified as E-15 or higher shall be based on the number of gallons of ethanol blended gasoline classified as E-15 or higher that are distributed in this state as expressed as a percentage of the number of gallons of motor fuel distributed in this state, which is referred to as the distribution percentage.
8 in this state as expressed as a percentage of the number of gallons of motor fuel distributed in this state, which is referred to as the distribution percentage.
On and after July 1, 2030, the rate of the excise tax on each gallon of biodiesel blended fuel classified as B-20 or higher is thirty-two and LSB 1390HV (2) 91 -8- jm/jh 8/39 H.F.
On and after July 1, 2030, the rate of the excise tax on each gallon of biodiesel blended fuel classified as B-20 or higher is thirty-two and five-tenths cents.
976 five-tenths cents.
The department shall determine the percentage basis for each determination period beginning January 1 and ending December 31 based on information from reports submitted to the department for filing pursuant to section 452A.33.
The department shall determine the percentage basis for each determination period beginning January 1 and ending December 31 based on information from House File 976, p.
9 reports submitted to the department for filing pursuant to section 452A.33.
The report shall compile LSB 1390HV (2) 91 -9- jm/jh 9/39 H.F.
The report shall compile information reported by retail dealers to the department as provided in this section and shall at least include all of the following:
976 information reported by retail dealers to the department as provided in this section and shall at least include all of the following:
The return shall show, with reference to each location at which fuel is delivered or placed by the dealer or user into the battery or other energy storage device of any electric motor vehicle during the next preceding six calendar months, information as required by the department.
The return shall show, with reference to each location at which fuel is delivered or placed by the dealer or user into the battery or other energy storage device of any House File 976, p.
10 electric motor vehicle during the next preceding six calendar months, information as required by the department.
LSB 1390HV (2) 91 -10- jm/jh 10/39 H.F.
3.
976 3.
a.
House File 976, p.
11 a.
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If a decedent died testate, and either the will is not probated or is admitted to probate without administration, the persons entitled to the possession and ownership of a vehicle owned in whole or in part by the decedent may LSB 1390HV (2) 91 -11- jm/jh 11/39 H.F.
If a decedent died testate, and either the will is not probated or is admitted to probate without administration, the persons entitled to the possession and ownership of a vehicle owned in whole or in part by the decedent may file an affidavit and, upon complying with the other title transfer requirements of this chapter, shall be issued a registration card for the decedent’s interest in the vehicle and a certificate of title to the vehicle.
976 file an affidavit and, upon complying with the other title transfer requirements of this chapter, shall be issued a registration card for the decedent’s interest in the vehicle and a certificate of title to the vehicle.
Sec.
House File 976, p.
12 Sec.
LSB 1390HV (2) 91 -12- jm/jh 12/39 H.F.
Sec.
976 Sec.
A final account of a personal representative, as defined in section 450.1, shall not be allowed by any court unless the account shows, and the judge of the court finds, that all taxes imposed by this subchapter upon the personal representative, which have become payable, have been paid, and that all taxes which may become due are secured by bond or deposit, or are otherwise secured.
A final account of a personal representative, as defined in section 450.1, shall not be allowed by any court unless the House File 976, p.
13 account shows, and the judge of the court finds, that all taxes imposed by this subchapter upon the personal representative, which have become payable, have been paid, and that all taxes which may become due are secured by bond or deposit, or are otherwise secured.
This subsection does not apply if all property in the estate of a decedent is held in joint tenancy with right of survivorship by husband LSB 1390HV (2) 91 -13- jm/jh 13/39 H.F.
This subsection does not apply if all property in the estate of a decedent is held in joint tenancy with right of survivorship by husband and wife alone.
976 and wife alone.
Notwithstanding the provisions of this section, payment of any part of the purchase price for shares of a deceased shareholder shall not be required until the executor or administrator of the deceased shareholder provides any indemnity, release, or other document from any taxing authority, which is reasonably necessary to protect the corporation against liability for any estate, inheritance, and death taxes tax, or any inheritance tax for a death occurring before January 1, 2025 .
Notwithstanding the provisions of this section, payment of any part of the purchase price for shares of a deceased shareholder shall not be required until the executor or administrator of the deceased shareholder provides any indemnity, release, or other document from any taxing authority, which is reasonably necessary to protect the corporation against liability for any estate, inheritance, and death taxes tax, or any inheritance tax for a death occurring before January 1, 2025.
After payment by the state bank, the proceeds shall remain subject to the any debts of the decedent and the any payment of Iowa inheritance tax, if any for a death occurring prior to January 1, 2025.
After payment by the state bank, the proceeds shall remain subject to the any debts of the decedent and the any payment of Iowa inheritance tax, if any for a death occurring prior to January 1, 2025 .
An individual development account closed in accordance with this subsection is not subject to the limitations and benefits provided by this chapter but is subject to state tax in accordance with the provisions of section 422.7, subsection 17, and in accordance with the provisions of section 450.4, LSB 1390HV (2) 91 -14- jm/jh 14/39 H.F.
House File 976, p.
976 subsection 6, for a death occurring before January 1, 2025.
14 An individual development account closed in accordance with this subsection is not subject to the limitations and benefits provided by this chapter but is subject to state tax in accordance with the provisions of section 422.7, subsection 17, and in accordance with the provisions of section 450.4, subsection 6, for a death occurring before January 1, 2025 .
For services performed in short form probates pursuant to sections 450.22 and 450.44 for deaths occurring before January 1, 2025 ..................................$ 15.00 Sec.
For services performed in short form probates pursuant to sections 450.22 and 450.44 for deaths occurring before January 1, 2025..................................$ 15.00 Sec.
When the gross value of the decedent’s personal property that would otherwise be distributed by will or intestate succession is or has been, at any time since the decedent’s death, fifty thousand dollars or less and there is no real property, or for deaths occurring before January 1, 2025, the real property passes to persons exempt from inheritance tax as joint tenants with full rights of survivorship pursuant to chapter 450, and if forty days have elapsed since the death of the decedent, a successor as defined in subsection 2 may, by furnishing an affidavit prepared pursuant to subsection 3 or 8, and without procuring letters of appointment, do any of the following with respect to one or more items of such personal LSB 1390HV (2) 91 -15- jm/jh 15/39 H.F.
When the gross value of the decedent’s personal property that would otherwise be distributed by will or intestate succession is or has been, at any time since the decedent’s death, fifty thousand dollars or less and there is no real property, or for deaths occurring before January 1, 2025, the real property passes to persons exempt from inheritance tax as joint tenants with full rights of survivorship pursuant to chapter 450 , and if forty days have elapsed since the death of the decedent, a successor as defined in subsection 2 may, by furnishing an affidavit prepared pursuant to subsection 3 or 8, and without procuring letters of appointment, do any of the House File 976, p.
976 property:
15 following with respect to one or more items of such personal property:
(3) That the gross value of the decedent’s personal property that would otherwise be distributed by will or intestate succession is, or has been at any time since the decedent’s death, fifty thousand dollars or less and there is no real property, or for deaths occurring before January 1, 2025, the real property passes to persons exempt from inheritance tax as joint tenants with full rights of survivorship pursuant to chapter 450 .
(3) That the gross value of the decedent’s personal property that would otherwise be distributed by will or intestate succession is, or has been at any time since the decedent’s death, fifty thousand dollars or less and there is no real property, or for deaths occurring before January 1, 2025, the real property passes to persons exempt from inheritance tax as joint tenants with full rights of survivorship pursuant to chapter 450.
An affidavit furnished for the purpose of determining whether the value of the property is, or has been at any time since the decedent’s death, fifty thousand dollars or less need not contain the language required under subsection 3, paragraph “a”, subparagraph (3), but shall state that the affiant reasonably believes that the gross value of the decedent’s personal property that would otherwise be distributed by will or intestate succession is, or has been at any time since the decedent’s death, fifty thousand dollars or less and there is no real property or for deaths occurring LSB 1390HV (2) 91 -16- jm/jh 16/39 H.F.
An affidavit furnished for the purpose of determining whether the value of the property is, or has been at any time since the decedent’s death, fifty thousand dollars or less need not contain the language required under subsection 3, paragraph “a”, subparagraph (3), but shall state that the affiant reasonably believes that the gross value of the decedent’s personal property that would otherwise be distributed by will or intestate succession is, or has been at any time since the decedent’s death, fifty thousand dollars or less and there is no real property or for deaths occurring before January 1, 2025, the real property passes to persons exempt from inheritance tax as joint tenants with full rights of survivorship pursuant to chapter 450 .
976 before January 1, 2025, the real property passes to persons exempt from inheritance tax as joint tenants with full rights of survivorship pursuant to chapter 450 .
House File 976, p.
Sec.
16 Sec.
provided, however, that in the event said real property has been sold at private sale without an appraisal for inheritance tax purposes for a death occurring before January 1, 2025, or for purpose of such sale, or, if it has been so appraised and has been sold at private sale for less than the appraised value thereof, then, upon the filing of such report, the court may enter an order fixing a time and place for hearing thereon and prescribe a notice of LSB 1390HV (2) 91 -17- jm/jh 17/39 H.F.
provided, however, that in the event said real property has been sold at private sale without an appraisal for inheritance tax purposes for a death occurring before January 1, 2025, or for purpose of such sale, or, if it has been so appraised and has been sold at private sale for less than the appraised value thereof, then, upon the filing of such report, the court may enter an order fixing a time and place for hearing thereon and prescribe a notice of such hearing to be served upon all interested persons, any one of whom, prior to the time fixed for such hearing, may file written objections to the entry of an order approving said sale.
976 such hearing to be served upon all interested persons, any one of whom, prior to the time fixed for such hearing, may file written objections to the entry of an order approving said sale.
If not satisfied that the sale, mortgage, exchange, or lease has been made in conformity with law and that it is to the best interests of the estate, the court may reject the sale, mortgage, exchange, or lease, and enter such orders as the House File 976, p.
If not satisfied that the sale, mortgage, exchange, or lease has been made in conformity with law and that it is to the best interests of the estate, the court may reject the sale, mortgage, exchange, or lease, and enter such orders as the court may deem advisable.
17 court may deem advisable.
The county LSB 1390HV (2) 91 -18- jm/jh 18/39 H.F.
The county recorder shall deliver the certificates to the county auditor as provided in section 558.58.
976 recorder shall deliver the certificates to the county auditor as provided in section 558.58.
This chapter does not exempt the personal representative from complying with the requirements of section 422.27, 450.22 , 450.58, 633.480, or 633.481, and the administration of an estate whether converted to or from a small estate shall be considered one proceeding pursuant to section 633.330.
This chapter does not exempt the personal representative from complying with the requirements of section 422.27, 450.22 , 450.58, 633.480, or 633.481, and the administration of an estate whether converted to or from a small estate shall be House File 976, p.
18 considered one proceeding pursuant to section 633.330.
A statement that all statutory requirements pertaining to taxes have been complied with, including whether federal estate tax due has been paid, whether a lien continues to exist for any federal estate tax, and whether inheritance tax was paid or a tax return was filed in this state for a death occurring before January 1, 2025 .
A statement that all statutory requirements pertaining to taxes have been complied with, including whether federal estate tax due has been paid, whether a lien continues to exist for any federal estate tax, and whether inheritance tax was paid or a tax return was filed in this state for a death occurring before January 1, 2025.
This division of this LSB 1390HV (2) 91 -19- jm/jh 19/39 H.F.
This division of this Act applies retroactively to January 1, 2025, to the estates of decedents dying on or after January 1, 2025.
976 Act applies retroactively to January 1, 2025, to the estates of decedents dying on or after January 1, 2025.
A nonresident is liable for this tax only on that portion of the lump sum distribution allocable to Iowa.
A nonresident is liable for this tax only on that portion of the lump sum distribution allocable to House File 976, p.
19 Iowa.
LSB 1390HV (2) 91 -20- jm/jh 20/39 H.F.
Sec.
976 Sec.
(1) The department administering a tax expenditure described in subsection 3 shall engage in a review of the tax expenditure based upon the schedule in subsection 3, unless the tax expenditure is repealed .
House File 976, p.
20 (1) The department administering a tax expenditure described in subsection 3 shall engage in a review of the tax expenditure based upon the schedule in subsection 3, unless the tax expenditure is repealed .
Section 2.48, subsection 3, paragraph e, subparagraph (4), Code 2025, is amended by striking the LSB 1390HV (2) 91 -21- jm/jh 21/39 H.F.
Section 2.48, subsection 3, paragraph e, subparagraph (4), Code 2025, is amended by striking the subparagraph.
976 subparagraph.
(3) Section 423.3, subsection 95, paragraph “a”, subparagraph (2) or (3).
(3) Section 423.3, subsection 95, paragraph “a”, House File 976, p.
21 subparagraph (2) or (3).
(i) For backup power generation fuel purchased in connection with real property for a web search portal that began operating prior to the effective date of this division of LSB 1390HV (2) 91 -22- jm/jh 22/39 H.F.
(i) For backup power generation fuel purchased in connection with real property for a web search portal that began operating prior to the effective date of this division of this Act, there shall be no limitation on the duration of the exemption.
976 this Act, there shall be no limitation on the duration of the exemption.
(i) For electricity purchased in connection with real property for web search portals that began operating prior to the effective date of this division of this Act, there shall be no limitation on the duration of the exemption.
House File 976, p.
(ii) For electricity purchased by a web search portal in connection with real property with new construction upon the property completed on or after the effective date of this division of this Act, or additions upon existing property on or LSB 1390HV (2) 91 -23- jm/jh 23/39 H.F.
22 (i) For electricity purchased in connection with real property for web search portals that began operating prior to the effective date of this division of this Act, there shall be no limitation on the duration of the exemption.
976 after the effective date of this division of this Act, and such property is located entirely or in part within a city having a population of more than thirty thousand, according to the most recent decennial federal census, the first ten years of operation in connection with the new construction or addition upon the existing property.
(ii) For electricity purchased by a web search portal in connection with real property with new construction upon the property completed on or after the effective date of this division of this Act, or additions upon existing property on or after the effective date of this division of this Act, and such property is located entirely or in part within a city having a population of more than thirty thousand, according to the most recent decennial federal census, the first ten years of operation in connection with the new construction or addition upon the existing property.
(6) Beginning after January 31, 2026, when purchasing exempt property under paragraph “a”, the web search portal business shall present an exemption certificate, issued annually to the web search portal business after filing the annual report pursuant to subparagraph (5), to the retailer.
(6) Beginning after January 31, 2026, when purchasing exempt property under paragraph “a”, the web search portal business shall present an exemption certificate, issued annually to the web search portal business after House File 976, p.
23 filing the annual report pursuant to subparagraph (5), to the retailer.
LSB 1390HV (2) 91 -24- jm/jh 24/39 H.F.
NEW SUBPARAGRAPH .
976 NEW SUBPARAGRAPH.
(iii) For backup power generation fuel purchased by a web search portal business in connection with real property with new construction upon the property completed on or after the effective date of this division of this Act, or additions upon existing real property on or after the effective date of this division of this Act, and such real property is not located entirely or in part within a city having a population of more than thirty thousand, according to the most recent decennial federal census, the first fifteen years of operation in connection with the new construction or addition to the LSB 1390HV (2) 91 -25- jm/jh 25/39 H.F.
(iii) For backup power generation fuel purchased by a web search portal business in connection with real property with new construction upon the property completed on or after the effective date of this division of this Act, or additions upon existing real property on or after the effective date of this division of this Act, and such real property is not located entirely or in part within a city having a population of more than thirty thousand, according to the most recent decennial federal census, the first fifteen years of operation in connection with the new construction or addition to the House File 976, p.
976 existing property.
24 existing property.
To maintain its registration, the web search portal business LSB 1390HV (2) 91 -26- jm/jh 26/39 H.F.
To maintain its registration, the web search portal business shall file an annual report with the department, by January 31, 2026, and by each January 31 thereafter.
976 shall file an annual report with the department, by January 31, 2026, and by each January 31 thereafter.
The annual report shall describe the backup power generation fuel and electricity purchased and used in the previous calendar year for the House File 976, p.
The annual report shall describe the backup power generation fuel and electricity purchased and used in the previous calendar year for the purposes described in paragraph “a”, subparagraphs (2) and (3), and any other information the department requires.
25 purposes described in paragraph “a”, subparagraphs (2) and (3), and any other information the department requires.
(ii) For backup power generation fuel purchased by a data center business in connection with real property with new construction upon the property completed on or after the effective date of this division of this Act, or additions upon existing property on or after the effective date of this division of this Act, and such property is located entirely or in part within a city having a population of more than LSB 1390HV (2) 91 -27- jm/jh 27/39 H.F.
(ii) For backup power generation fuel purchased by a data center business in connection with real property with new construction upon the property completed on or after the effective date of this division of this Act, or additions upon existing property on or after the effective date of this division of this Act, and such property is located entirely or in part within a city having a population of more than thirty thousand, according to the most recent decennial federal census, the first ten years of operation in connection with the new construction or addition upon the existing property.
976 thirty thousand, according to the most recent decennial federal census, the first ten years of operation in connection with the new construction or addition upon the existing property.
(iii) For backup power generation fuel purchased by a data center business in connection with real property with new construction upon the property completed on or after the effective date of this division of this Act, or additions upon existing property on or after the effective date of this House File 976, p.
(iii) For backup power generation fuel purchased by a data center business in connection with real property with new construction upon the property completed on or after the effective date of this division of this Act, or additions upon existing property on or after the effective date of this division of this Act, and such property is not located entirely or in part within a city having a population of more than thirty thousand, according to the most recent decennial federal census, the first fifteen years of operation in connection with the new construction or addition upon the existing property.
26 division of this Act, and such property is not located entirely or in part within a city having a population of more than thirty thousand, according to the most recent decennial federal census, the first fifteen years of operation in connection with the new construction or addition upon the existing property.
(iii) For electricity purchased by a data center business in connection with real property with new construction upon the property completed on or after the effective date of this division of this Act, or additions upon existing property on LSB 1390HV (2) 91 -28- jm/jh 28/39 H.F.
(iii) For electricity purchased by a data center business in connection with real property with new construction upon the property completed on or after the effective date of this division of this Act, or additions upon existing property on or after the effective date of this division of this Act, and such property is not located in part within a city having a population of more than thirty thousand, according to the most recent decennial federal census, the first fifteen years of operation in connection with the new construction or addition to the property.
976 or after the effective date of this division of this Act, and such property is not located in part within a city having a population of more than thirty thousand, according to the most recent decennial federal census, the first fifteen years of operation in connection with the new construction or addition to the property.
(3) The data center business shall make a minimum investment in an Iowa physical location of two hundred million dollars within the first six years of operation in Iowa beginning with the date the data center business initiates site preparation activities, or the beginning date of the initial lease term of a data center, as applicable .
(3) The data center business shall make a minimum investment in an Iowa physical location of two hundred million dollars within the first six years of operation in Iowa beginning with the date the data center business initiates site preparation House File 976, p.
27 activities, or the beginning date of the initial lease term of a data center, as applicable.
LSB 1390HV (2) 91 -29- jm/jh 29/39 H.F.
c.
976 c.
NEW PARAGRAPH .
House File 976, p.
28 NEW PARAGRAPH .
“Data center” LSB 1390HV (2) 91 -30- jm/jh 30/39 H.F.
“Data center” includes the lease of a business facility leased by an entity operating a data center business at that location.
976 includes the lease of a business facility leased by an entity operating a data center business at that location.
NEW SUBPARAGRAPH.
NEW SUBPARAGRAPH .
Section 423.4, subsection 7, paragraph b, subparagraph (1), Code 2025, is amended to read as follows:
Section 423.4, subsection 7, paragraph b, House File 976, p.
(1) The data center business shall make an investment in an Iowa physical location within the first three years of operation in Iowa beginning with the date on which the data center business initiates site preparation activities, or within three years of the beginning date of the initial lease term of the data center, as applicable.
29 subparagraph (1), Code 2025, is amended to read as follows:
(1) The data center business shall make an investment in an Iowa physical location within the first three years of operation in Iowa beginning with the date on which the data center business initiates site preparation activities, or within three years of the beginning date of the initial lease term of the data center, as applicable .
(2) The data center business shall make a minimum LSB 1390HV (2) 91 -31- jm/jh 31/39 H.F.
(2) The data center business shall make a minimum investment of at least ten million dollars, in the case of new construction, or at least five million dollars in the case of a rehabilitated building, in an Iowa physical location within the first six years of operation in Iowa, beginning with the date on which the data center business initiates site preparation activities or the beginning date of the initial lease term, as applicable.
976 investment of at least ten million dollars, in the case of new construction, or at least five million dollars in the case of a rehabilitated building, in an Iowa physical location within the first six years of operation in Iowa, beginning with the date on which the data center business initiates site preparation activities or the beginning date of the initial lease term, as applicable.
NEW SUBSECTION .
House File 976, p.
30 NEW SUBSECTION .
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Sec.
976 Sec.
This data center business exemption applies beginning with the assessment year the investment in or construction of the facility utilizing the materials, equipment, and systems set forth in paragraph “a” are first assessed, or applies beginning with the assessment year in which the date of the initial lease term of a data center by a data center business begins, as applicable .
This data center business exemption applies beginning with the assessment year the investment in or construction of the facility utilizing the materials, equipment, and systems set forth in paragraph “a” are first assessed, or applies beginning with the assessment year in which the date of the initial lease term of a data center by a data center business begins, as applicable.
EXPLANATION the explanation’s substance by the members of the general assembly.h This bill relates to the administration of the tax by the department of revenue by modifying provisions related to personal income, property, sales and use, motor fuel, inheritance tax, and changing tax expenditure reviews.
______________________________ ______________________________ PAT GRASSLEY AMY SINCLAIR Speaker of the House President of the Senate I hereby certify that this bill originated in the House and is known as House File 976, Ninety-first General Assembly.
DIVISION I —— DISCLOSURE OF TAX INFORMATION.
______________________________ MEGHAN NELSON Chief Clerk of the House Approved _______________, 2025 ______________________________ KIM REYNOLDS Governor
The bill specifies and updates the circumstances the department of revenue (department) may disclose state tax return and audit information to law enforcement.
The bill also makes conforming changes related to disclosure of state tax return information to the treasurer of state for purposes of determining ownership of abandoned property.
The division takes effect upon enactment.
DIVISION II —— ANNUAL REPORTING.
The bill strikes the requirement that the department annually report to the general assembly the areas of recurrent taxpayer noncompliance with the rules of the department including any recommendations relating to the noncompliance.
DIVISION III —— PROPERTY TAX —— EXTENSIONS.
Under current law, a claimant may ask the director of the department, the county treasurer, or the director of the department of health and human services for an extension to claim a reimbursement LSB 1390HV (2) 91 -33- jm/jh 33/39 H.F.
976 for rent constituting property taxes in case of sickness, absence, or disability.
The bill strikes the director of the department from involvement in the extension request by the claimant.
Under current law, when issuing a refund for an erroneous property tax paid by a taxpayer, the taxpayer must have presented a claim of refund to the board of supervisors, or if appealed, a claim to the property assessment appeal or district court within two years of the final decision on the property taxes owed.
Under the bill, a taxpayer is eligible to claim a refund for an erroneous tax if the taxpayer had previously appealed the claim for a refund of an erroneous tax to the director of revenue within two years of the director’s final decision.
This provision takes effect upon enactment.
DIVISION IV —— FARM TENANCY INCOME TAX EXCLUSION.
Currently, an eligible individual may exclude income received by the individual pursuant to a farm tenancy covering real property held by the individual for 10 or more years, if the individual materially participated in a farming business for 10 or more years.
The bill allows the eligible individual to exclude such income under such circumstances, if the individual materially participated in a farming business for 10 or more years in the aggregate.
The bill further specifies the term “held” is to be determined by the holding period provisions of section 1223 of the Internal Revenue Code and other federal regulations which is identical to the use of the term “held” under the farming business exclusion in Code section 422.7(13).
DIVISION V —— PASS-THROUGH ENTITIES.
Under current law, the department may issue a notice of adjustment (adjustment of tax) to a partnership or pass-through entity pursuant to Code section 422.25C, and specifies that the notice of adjustment is appealable pursuant to Code sections 422.28 and 422.29.
The bill specifies the notice of adjustment is not always appealable under the circumstances provided in Code section 422.25.
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976 The division takes effect upon enactment and applies retroactively to January 1, 2024.
DIVISION VI —— SALES TAX CHANGES.
The bill makes changes to the collection of sales taxes on building materials, supplies, and equipment where an owner, contractor, subcontractor, or builder is also a retailer holding a sales and use tax permit.
Under such circumstances, if a customer of the retailer purchases tangible personal property from the retailer, the bill provides that such property will not be subject to sales tax if the property will be subject to sales tax at resale at a later date or if the property will be subject to use tax at the time the retailer withdraws the property from inventory for use by the retailer in construction.
The bill makes other related changes to enhance the readability of the provision.
Under current law, a purchaser, user, and consumer of taxable property or services may be authorized to remit tax owed directly to the department instead of the tax being collected and paid by the seller.
The bill specifies that in order to qualify for the direct pay tax permit such a taxpayer must accrue a tax liability of more than $8,000 on a monthly basis.
Currently, such a taxpayer must accrue a tax liability of $4,000 on a semimonthly basis in order to qualify for the direct pay tax permit.
DIVISION VII —— MOTOR FUEL TAXES.
Under current law and before July 1, 2026, the department determines the rate of excise tax imposed on each gallon of ethanol blended gasoline based upon the distribution percentage calculated in Code section 452A.3(1)(b), and the excise tax rate imposed on each gallon of biodiesel blended fuel based on the distribution percentage calculated in Code section 453A.3(3)(a)(2).
The department determines the distribution percentage based upon data from reports filed pursuant to Code section 452A.33.
The bill allows the department to amend the initial distribution percentage due to a mistake, or if there is a late report filed by a retail dealer to the department, or the distribution LSB 1390HV (2) 91 -35- jm/jh 35/39 H.F.
976 percentage is not accurate.
The bill changes the due date of a biannual tax return relating to electric fuel tax due in January by one day, and modifies the biannual tax period by one day.
The bill allows a person who uses electric fuel for a nontaxable purpose to provide an exemption certificate to the license holder selling or dispensing the fuel, if the certificate is produced by the department.
DIVISION VIII —— INHERITANCE TAX —— FUTURE CODE CHANGES DUE TO REPEAL.
The bill changes numerous Code sections to reflect the repeal of the inheritance tax beginning for the estates of decedents dying on or after January 1, 2025.
However, other provisions of Code chapter 450 relating to the inheritance tax have not been repealed.
The division takes effect upon enactment and applies retroactively to the estates of decedents dying on or after January 1, 2025.
DIVISION IX —— LUMP SUM DISTRIBUTION OF RETIREMENT INCOME.
Under current law, commencing with tax years beginning on or after January 1, 2023, retirement income is not subject to Iowa individual income tax.
However, under current law a lump sum distribution from a retirement account is subject to Iowa income tax under Code section 422.5(8) at a rate of 25 percent of the federal tax rate imposed on the amount of the lump sum distribution.
The bill provides that the taxation of a lump sum distribution from a retirement account is also exempt from state taxation by exempting the lump sum distribution for a person who is disabled, or 55 years of age or older, or who is the surviving spouse of an individual or is a survivor having an insurable interest in an individual who would have qualified for the exemption for the tax year.
The bill excludes the lump sum distribution exempt from state taxation from being included in calculating the individual income tax filing thresholds in Code section 422.5(2) and (3).
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976 The division takes effect upon enactment and applies retroactively to tax years beginning on or after January 1, 2025.
DIVISION X —— ESTIMATED TAX THRESHOLD.
Under the bill, a taxpayer filing a return is required to make estimated tax payments if Iowa income tax liability can reasonably be expected to exceed $1,000 or more.
Under current law, such a taxpayer filing a return is required to make estimated tax payments if Iowa income tax liability can reasonably be expected to exceed $200 or more.
The division takes effect January 1, 2026, and applies to tax years beginning on or after that date.
DIVISION XI —— TAX EXPENDITURE REVIEW.
The bill specifies that the department administering a tax expenditure (tax credit) is not required to review the tax expenditure if the tax expenditure has been repealed or if a zero amount of the tax expenditure remains available to be awarded or claimed.
The bill removes four tax expenditures from tax expenditure review:
the Iowa fund of funds program in Code chapter 15E, the wind energy production tax credits under Code chapter 476B, the ethanol promotion tax credit in Code section 422.11N (Code 2006), and the minimum tax credit under Code section 422.11B (Code 2018).
The bill amends the Acts to align the review of the renewable chemical production tax credit in Code section 2.48 with the future repeal of the renewable chemical tax credit program.
DIVISION XII —— LIMITATIONS ON SALES TAX EXEMPTIONS AND REFUNDS AND TRANSFERS TO THE ENERGY INFRASTRUCTURE FUND.
The bill modifies the sales and use tax exemptions (exemptions) related to web search portal businesses and data center businesses (data centers).
The division take effect upon enactment (effective date).
Currently, the exemptions apply to the sale of computers and equipment for the maintenance and operation of a data center, the sale of backup power generation fuel, and the LSB 1390HV (2) 91 -37- jm/jh 37/39 H.F.
976 sale of electricity for use in the data center, without any limitations.
The bill does not change the exemptions available for data centers that began operating prior to the effective date.
The bill limits the exemptions for newly constructed data centers or additions upon existing property completed on or after the effective date, to the first 10 years of operation, if the property is located entirely or partly within a city having a population of more than 30,000.
The bill limits the exemptions for newly constructed data centers or additions upon existing property completed on or after the effective date, to the first 15 years of operation, if the property is not located entirely or partly within a city having a population of more than 30,000.
Currently, the exemptions apply from the date the initial investment occurs or the initiation of site preparation activities.
The bill defines “initiation of site preparation activities”.
The bill requires a data center to register with the department of revenue beginning January 31, 2026, and file an annual report with the department describing the backup power generation fuel and electricity used to obtain the exemption, and describe any other information the department of revenue may require.
The bill requires a data center to present an exemption certificate, issued annually to the data center after filing the annual report, to the retailer selling the backup power generation fuel and the electricity to the data center.
The bill provides that a business leasing space to operate a data center as a lessee is eligible to qualify for an exemption.
A data center includes the lease of a business facility leased by an entity operating a data center at the location of the data center.
The bill specifies the exemptions apply from the beginning date of the initial lease term.
After the data center exemption period expires, the bill requires the portion of sales tax revenue attributable to LSB 1390HV (2) 91 -38- jm/jh 38/39 H.F.
976 the previously exempted sale of backup power generation fuel and electricity be transferred to the energy infrastructure revolving loan fund in Code section 476.46A.
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