Fiscal Note
Fiscal Services Division
SF 2054 – Administrative Dissolution of Business Entities, Requirements (LSB5870XS.1)
Staff Contact: Joey Lovan (515.242.5925) joey.lovan@legis.iowa.gov
Fiscal Note Version – Final Action
Description
Senate File 2054 eliminates the requirement for an administratively dissolved business entity to
submit its federal tax identification number on the application for administrative reinstatement to
the Office of the Secretary of State (SOS). The Bill also eliminates the requirement for the SOS
to refer the applicant’s federal tax identification number to the Department of Workforce
Development (IWD). The Bill eliminates the federal tax identification requirement from the
following business entity types:
• Limited liability companies under Iowa Code section 489.710.
• Business corporations under Iowa Code section 490.1422.
• Closed cooperatives under Iowa Code section 501.813.
• Nonprofit cooperatives under Iowa Code section 504.1423.
Background
The SOS may conduct administrative dissolution proceedings for entities that fail to meet
statutory requirements found in Iowa Code section 489.708. A business entity that has been
subject to administrative dissolution that later seeks reinstatement must currently include its
federal tax identification number as part of the application for reinstatement, pursuant to Iowa
Code section 489.710. The SOS is then required to refer the tax identification number to the
IWD so that the IWD can report to the SOS whether a filing delinquency or liability exists against
the entity. If a delinquency or liability exists, the SOS will not cancel the certificate of dissolution
until the filing delinquency or liability is resolved by the entity. The workflow for reinstatements
is filed online through the SOS’s Fast Track Filing System. Information is automatically sent to
the IWD to review and approve or reject based on the corporation’s unemployment insurance
tax status.
Over the last 10 years, there have been 1,404 entities that underwent administrative dissolution
that did not move for administrative reinstatement. The debt owed by these entities is
approximately $8.9 million.
Assumptions
• The estimated tax debt recovered in the last 10 years by the IWD through the administrative
reinstatement process was approximately $3.0 million from 1,400 businesses or $300,000
annually.
• The IWD anticipates, but in unable to calculate, additional resources or full-time equivalent
(FTE) positions needed to collect outstanding debt without the current administrative
reinstatement process.
• The cost to the SOS to remove the IWD from the Fast Track Filing System is estimated at
$2,000. Any costs will be paid from the Technology Modernization Fund.
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Fiscal Impact
Senate File 2054 may result in a reduction in the amount of current tax debt recovered for the
Unemployment Insurance Trust Fund and may require the IWD to hire additional FTE positions
to collect outstanding debt; however, the fiscal impact cannot be estimated.
Sources
Secretary of State
Iowa Workforce Development
/s/ Jennifer Acton
April 17, 2024
Doc ID 1448853
The fiscal note for this Bill was prepared pursuant to Joint Rule 17 and the Iowa Code. Data used in developing this
fiscal note is available from the Fiscal Services Division of the Legislative Services Agency upon request.
www.legis.iowa.gov
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