Senate Study Bill 3172



                                    SENATE FILE       
                                    BY  (PROPOSED COMMITTEE ON
                                        REBUILD IOWA BILL BY
                                        CHAIRPERSON HOGG)

                                         A BILL FOR

     1 An Act providing for the waiver of tax penalties and interest
     2    under certain disaster loss circumstances and including
     3    effective date and retroactive applicability provisions.
     4 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
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PAG LIN



  1  1    Section 1.  WAIVER OF PENALTIES AND INTEREST ==
  1  2 DISASTER=RELATED LOSSES == REFUNDS.
  1  3    1.  Notwithstanding Code sections 421.8, 421.27, and 422.25,
  1  4 if a taxpayer has filed a return for tax year 2008 relying in
  1  5 good faith on the expectation that the state of Iowa would
  1  6 conform to the federal treatment of disaster=related casualty
  1  7 losses under section 165(h) of the Internal Revenue Code, as
  1  8 modified by the Heartland Disaster Relief Act of 2008, Pub. L.
  1  9 No. 110=343, in computing net income for state tax purposes,
  1 10 the director of revenue shall, for any taxpayer amending the
  1 11 return in the time permitted by statute, waive any penalty or
  1 12 interest due as a result of either a failure to timely pay the
  1 13 tax due or the filing of a defective or incorrect return.
  1 14    2.  If, prior to the effective date of this Act, a taxpayer
  1 15 paid penalties or interest as a result of a good=faith reliance
  1 16 on the state conforming to section 165(h) of the Internal
  1 17 Revenue Code, the department of revenue shall refund such
  1 18 penalties and interest to the taxpayer.
  1 19    Sec. 2.  EFFECTIVE UPON ENACTMENT AND RETROACTIVE
  1 20 APPLICABILITY.  This Act, being deemed of immediate importance,
  1 21 takes effect upon enactment and applies retroactively to
  1 22 January 1, 2008, for tax years beginning on or after that date
  1 23 and before January 1, 2009.
  1 24                           EXPLANATION
  1 25    This bill relates to the assessment of penalties and
  1 26 interest against taxpayers who filed returns expecting the
  1 27 state of Iowa to conform with certain federal income tax
  1 28 provisions.
  1 29    In 2008, the midwest suffered significant property casualty
  1 30 losses due to natural disasters. In response, the federal
  1 31 government passed the Heartland Disaster Relief Act which
  1 32 amended the casualty loss provisions of the Internal Revenue
  1 33 Code. In 2009, the state of Iowa did not conform to the federal
  1 34 provisions related to the computation of net income. This
  1 35 bill allows the director of revenue to waive the assessment
  2  1 of penalties and interest against taxpayers who relied in
  2  2 good faith on the state conforming to the federal provisions
  2  3 and who timely amend their return. The waiver relates only
  2  4 to the casualty loss provisions in section 165(h) of the
  2  5 Internal Revenue Code. Any penalty and interest paid are to
  2  6 be refunded.
  2  7    The bill takes effect upon enactment and applies only to tax
  2  8 year 2008.
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