House Study Bill 273 - Introduced
HOUSE FILE _____
BY (PROPOSED COMMITTEE ON
WAYS AND MEANS BILL BY
CHAIRPERSON HEIN)
A BILL FOR
1 An Act relating to the administration of the tax and related
2 laws by the department of revenue by requiring composite
3 returns for pass-through entities, restricting public
4 disclosure of certain information, providing penalties, and
5 including applicability provisions.
6 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
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1 DIVISION I
2 ADMINISTRATION, PENALTIES, AND CANCELLATION OF UNUSED PERMITS
3 Section 1. Section 421.17, subsection 13, Code 2021, is
4 amended by striking the subsection.
5 Sec. 2. Section 421.27, Code 2021, is amended to read as
6 follows:
7 421.27 Penalties.
8 1. Failure to timely file a return or deposit form.
9 a. If a person fails to file a return with the department
10 on or before the due date, a return or deposit form there shall
11 be added to the tax shown due or required to be shown due
12 remaining unpaid by the due date a penalty of ten five percent
13 of the remaining unpaid tax shown due or required to be shown
14 due.
15 b. In the case of a specified business with no tax shown
16 due or required to be shown due that fails to timely file an
17 income return, the specified business shall pay the greater of
18 the following penalty amounts:
19 (1) Two hundred dollars.
20 (2) An amount equal to ten five percent of the imputed Iowa
21 liability of the specified business, not to exceed twenty-five
22 thousand dollars.
23 c. The penalty, if assessed pursuant to paragraph “a” or
24 “b”, shall be in addition to any other penalty provided by law.
25 d. The penalty, if assessed pursuant to paragraph “a” or
26 “b”, shall be waived by the department upon a showing by the
27 taxpayer of any of the following conditions:
28 (1) An amount of tax greater than zero is required to be
29 shown due and at least ninety percent of the tax required to be
30 shown due has been paid by the due date of the tax.
31 (2) (a) Those taxpayers who are A taxpayer who is
32 required to file a monthly or quarterly returns, or monthly or
33 semimonthly deposit forms return may have one late return or
34 deposit form one late payment within a three-year period.
35 (b) If the taxpayer receives a waiver of a penalty under
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1 this subparagraph, the taxpayer must make timely filings
2 and payments for three years prior to being eligible for
3 receiving another waiver under this subparagraph. If the
4 taxpayer receives a waiver under this subparagraph, the waiver
5 shall apply to penalties assessed under this subsection and
6 subsection 2.
7 (c) The use of any other penalty exception will shall
8 not count as a late return or deposit form late payment for
9 purposes of this exception receiving a waiver by the taxpayer
10 under this subparagraph.
11 (3) The death of a taxpayer, death of a member of the
12 immediate family of the taxpayer, or death of the person
13 directly responsible for filing the return and paying the tax,
14 when the death interferes with timely filing of a return or
15 timely payment of tax.
16 (4) The onset of serious, long-term illness or
17 hospitalization of the taxpayer, of a member of the immediate
18 family of the taxpayer, or of the person directly responsible
19 for filing the return and paying the tax when such illness or
20 hospitalization interferes with the timely filing of a return
21 or timely payment of tax.
22 (5) Destruction of records by fire, flood, or other act of
23 God when the destruction interferes with the timely filing of a
24 return or timely payment of tax.
25 (6) The taxpayer presents proof that the taxpayer relied
26 upon applicable, documented, written advice specifically
27 made to the taxpayer, to the taxpayer’s preparer, or to an
28 association representative of the taxpayer from the department,
29 state department of transportation, county treasurer, or
30 federal internal revenue service, whichever is appropriate,
31 that the reliance was the direct cause of the failure to file
32 or failure to pay, and that the advice has not been superseded
33 by a court decision, ruling by a quasi-judicial body, or the
34 adoption, amendment, or repeal of a rule or law.
35 (7) Reliance upon results in a previous audit was a direct
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1 cause for the failure to file or the failure to pay where the
2 previous audit expressly and clearly addressed the issue and
3 the previous audit results have not been superseded by a court
4 decision, or the adoption, amendment, or repeal of a rule or
5 law.
6 (8) Under rules prescribed by the director, the taxpayer
7 presents documented proof of substantial authority to rely
8 upon a particular position or upon proof that all facts and
9 circumstances are disclosed on a return or deposit form.
10 (9) The return, deposit form, or payment is timely, but
11 erroneously, mailed with adequate postage to the internal
12 revenue service, another state agency, or a local government
13 agency and the taxpayer provides proof of timely mailing with
14 adequate postage.
15 (10) The tax has been paid by the wrong licensee and the
16 payments were timely remitted to the department for one or more
17 tax periods prior to notification by the department.
18 (11) The failure to file was discovered through a sanctioned
19 self-audit program conducted by the department.
20 (12) If the availability of funds in payment of tax required
21 to be made through electronic funds transfer is delayed and the
22 delay of availability is due to reasons beyond the control of
23 the taxpayer. “Electronic funds transfer” means any transfer
24 of funds, other than a transaction originated by check, draft,
25 or similar paper instrument, that is initiated through an
26 electronic terminal telephone, computer, magnetic tape, or
27 similar device for the purpose of ordering, instructing, or
28 authorizing a financial institution to debit or credit an
29 account.
30 (13) The failure to file a timely inheritance tax return
31 resulting solely from a disclaimer that required the personal
32 representative to file an inheritance tax return. The penalty
33 shall be waived if such return is filed and any tax due is paid
34 within the later of nine months from the date of death or sixty
35 days from the delivery or filing of the disclaimer pursuant to
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1 section 633E.12.
2 (14) That an Iowa inheritance tax return is filed for
3 an estate within the later of nine months from the date of
4 death or sixty days from the filing of a disclaimer by the
5 beneficiary of the estate refusing to take the property or
6 right or interest in the property.
7 2. Failure to timely pay the tax shown due, or the tax
8 required to be shown due, with the filing of a return or deposit
9 form. If a person fails to pay the tax shown due or required
10 to be shown due, on a return or deposit form on or before the
11 due date, there shall be added to the tax shown due or required
12 to be shown due remaining unpaid by the due date a penalty of
13 five percent of the unpaid tax due. The penalty shall be in
14 addition to any other penalty provided by law. The penalty, if
15 assessed, shall be waived by the department upon a showing by
16 the taxpayer of any of the following conditions:
17 a. At least ninety percent of the tax required to be
18 shown due has been paid by the due date of the tax Any reason
19 listed under subsection 1, paragraph “d”, except subsection 1,
20 paragraph “d”, subparagraph (11).
21 b. The taxpayer voluntarily files an amended return and pays
22 all tax shown to be due on the return prior to any contact by
23 the department, except under a sanctioned self-audit program
24 conducted by the department.
25 c. (1) Except in the case of a final federal partnership
26 adjustment governed by subparagraph (2), the taxpayer
27 voluntarily files an amended return which includes a copy of
28 the federal document showing the final disposition or final
29 federal adjustments and pays any additional Iowa tax due within
30 one hundred eighty days of the final determination date of the
31 federal government’s audit. For purposes of this subparagraph,
32 “final determination date” means the same as defined in section
33 422.25.
34 (2) (a) In the case of a final federal partnership
35 adjustment arising from a partnership level audit, with respect
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1 to the audited partnership or a direct partner or indirect
2 partner of the audited partnership, the audited partnership,
3 direct partner, or indirect partner voluntarily and timely
4 complies with its reporting and payment requirements under
5 section 422.25A, subsection 4 or 5.
6 (b) As used in this subparagraph, all words and phrases
7 defined in section 422.25A shall have the same meaning given
8 them by that section.
9 d. The taxpayer presents proof that the taxpayer relied
10 upon applicable, documented, written advice specifically
11 made to the taxpayer, to the taxpayer’s preparer, or to an
12 association representative of the taxpayer from the department,
13 state department of transportation, county treasurer, or
14 federal internal revenue service, whichever is appropriate,
15 that has not been superseded by a court decision, ruling by a
16 quasi-judicial body, or the adoption, amendment, or repeal of
17 a rule or law.
18 e. Reliance upon results in a previous audit was a direct
19 cause for the failure to pay the tax required to be shown due
20 where the previous audit expressly and clearly addressed the
21 issue and the previous audit results have not been superseded
22 by a court decision, or the adoption, amendment, or repeal of
23 a rule or law.
24 f. Under rules prescribed by the director, the taxpayer
25 presents documented proof of substantial authority to rely
26 upon a particular position or upon proof that all facts and
27 circumstances are disclosed on a return or deposit form.
28 g. The return, deposit form, or payment is timely, but
29 erroneously, mailed with adequate postage to the internal
30 revenue service, another state agency, or a local government
31 agency and the taxpayer provides proof of timely mailing with
32 adequate postage.
33 h. The tax has been paid by the wrong licensee and the
34 payments were timely remitted to the department for one or more
35 tax periods prior to notification by the department.
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1 i. That an Iowa inheritance tax return is filed for an
2 estate within the later of nine months from the date of
3 death or sixty days from the filing of a disclaimer by the
4 beneficiary of the estate refusing to take the property or
5 right or interest in the property.
6 3. Audit and examination deficiencies. If any person
7 fails to pay the tax required to be shown due with the filing
8 of a return or deposit and the department discovers the
9 underpayment, there shall be added to the tax required to be
10 shown due a penalty of five percent of the unpaid tax required
11 to be shown due, which shall be in lieu of the penalty in
12 subsection 2. The penalty, if assessed, shall be waived by
13 the department upon a showing by the taxpayer of any of the
14 following conditions:
15 a. At least ninety percent of the tax required to be shown
16 due has been paid by the due date.
17 b. The taxpayer presents proof that the taxpayer relied upon
18 applicable, documented, written advice specifically made to
19 the taxpayer, to the taxpayer’s preparer, or to an association
20 representative of the taxpayer from the department, state
21 department of transportation, county treasurer, or federal
22 internal revenue service, whichever is appropriate, that the
23 reliance was the direct cause for the failure to pay, and that
24 the advice has not been superseded by a court decision, ruling
25 by a quasi-judicial body, or the adoption, amendment, or repeal
26 of a rule or law.
27 c. Reliance upon results in a previous audit was a direct
28 cause for the failure to pay the tax shown due or required to
29 be shown due where the previous audit expressly and clearly
30 addressed the issue and the previous audit results have
31 not been superseded by a court decision, or the adoption,
32 amendment, or repeal of a rule or law.
33 d. Under rules prescribed by the director, the taxpayer
34 presents documented proof of substantial authority to rely
35 upon a particular position or upon proof that all facts and
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1 circumstances are disclosed on a return or deposit form.
2 4. Willful failure to file or deposit pay.
3 a. (1) In case of willful failure to file a return
4 or deposit form with the intent to evade tax or a filing
5 requirement, willful failure to pay with the intent to evade
6 tax, or in case of willfully filing a false return or deposit
7 form with the intent to evade tax, in lieu of the penalties
8 otherwise provided in this section, there shall be added to the
9 tax remaining unpaid by the due date a penalty of seventy-five
10 percent shall be added to the amount shown due or required to
11 be shown as tax on the return or deposit form of the unpaid tax.
12 (2) In case of a willful failure by a specified business to
13 file an income return with no tax shown due or required to be
14 shown due with intent to evade a filing requirement, or in case
15 of willfully filing a false income return with no tax shown due
16 or required to be shown due with the intent to evade reporting
17 of Iowa-source income, the penalty imposed shall be the greater
18 of the following amounts:
19 (a) One thousand five hundred dollars.
20 (b) An amount equal to seventy-five percent of the imputed
21 Iowa liability of the specified business.
22 (3) If penalties are applicable for failure to file a
23 return or deposit form and failure to pay the tax shown due or
24 required to be shown due on the return or deposit form, the
25 penalty provision for failure to file shall be in lieu of the
26 penalty provisions for failure to pay the tax shown due or
27 required to be shown due on the return or deposit form, except
28 in the case of willful failure to file a return or deposit form
29 or willfully filing a false return or deposit form with intent
30 to evade tax.
31 b. The penalties imposed under this subsection are not
32 subject to waiver.
33 5. Failure to remit on extension. If a person fails to
34 remit at least ninety percent of the tax required to be shown
35 due by the time an extension for further time to file a return
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1 is made, there shall be added to the tax shown due or required
2 to be shown due a penalty of ten percent of the unpaid tax due.
3 6. Liability —— fraudulent practice. A person who makes
4 an erroneous application for refund, credit, reimbursement,
5 rebate, or other payment shall be liable for any overpayment
6 received or tax liability reduced plus interest at the rate in
7 effect under section 421.7.
8 a. In addition, a person commits a fraudulent practice and
9 is liable for a penalty equal to seventy-five percent of the
10 refund, credit, exemption, reimbursement, rebate, or other
11 payment or benefit being claimed if the person does any of the
12 following:
13 (1) Willfully makes a false or frivolous application for
14 refund, credit, exemption, reimbursement, rebate, or other
15 payment or benefit with intent to evade tax or with intent to
16 receive a refund, credit, exemption, reimbursement, rebate, or
17 other payment or benefit, to which the person is not entitled.
18 (2) Willfully submits any false information, document,
19 or document containing false information in support of an
20 application for refund, credit, exemption, reimbursement,
21 rebate, or other payment or benefit with the intent to evade
22 tax or with intent to receive a refund, credit exemption,
23 reimbursement, rebate, or other payment or benefit, to which