This bill amends Section 421.60 of the Iowa Code to modify the process for awarding costs in administrative hearings or court proceedings related to tax disputes with the Department of Revenue. It allows a prevailing taxpayer to recover reasonable costs incurred after the issuance of a notice of assessment or denial of a claim for refund. The recoverable costs include reasonable court costs, expert witness fees, and fees for independent attorneys or accountants, among others. Notably, the bill removes the previous $25,000 cap on recoverable costs.

Additionally, the bill changes the definition of a "prevailing taxpayer." It stipulates that if a taxpayer substantially prevails regarding the amount in controversy or significant issues, the burden of proof shifts to the Department of Revenue to demonstrate that its position was substantially justified. If the Department successfully proves its justification, the taxpayer will not be considered a prevailing taxpayer and will not recover costs. This shift in burden of proof is a significant change from current law, which required the taxpayer to prove that the Department's position was not justified.

Statutes affected:
Introduced: 421.60