Ways & Means – All-Bill Summary 2017

All tax-related bills passed by the Legislature & signed into law for 2017. #ialegis #iagov #taxes #statetaxes #revenue

The following bills were passed by the Legislature and signed into law by the Governor.

SF 488 – Workforce Housing Tax Credit program set aside for small communities
SF 489 – Legalizing consumer fireworks
SF 493 – Additional bonding options for benefited recreational lake district
SF 501 – Increasing certain fees collected by the county sheriff
SF 502 – Consumer Credit Code update
SF 503 – Deferral of unpaid installments on certain consumer credit loans
SF 504 – County mental health and developmental disability property taxes
SF 505 – First-time Homebuyer Savings Accounts
HF 242 – Repealing the individual income tax checkoff for the Iowa election campaign fund
HF 478 – Striking future repeal of the Property Assessment Appeal Board (PAAB)/assessment appeal procedures
HF 607 – Alcohol Policy Omnibus
HF 608 – DOR technical bill – IRC clarifications and flood mitigation fix
HF 609 – Allowing a land use district to impose a local hotel and motel tax
HF 617 – IDALS code clean- up
HF 625 – Eliminating requirement to indicate health coverage for children on tax return
HF 626 – IID long-term-care insurance filing fee elimination

SF 488 sets aside $5 million in tax credits under the Workforce Housing Incentive Program for projects in communities outside of Iowa’s 11 most populated counties. The 11 most populated counties include all major metropolitan areas plus their suburbs and ring cities. If that amount is not fully claimed, the remainder will be available for projects in the larger cities.
[4/18: 50-0]


SF 493 allows a benefited recreational district to issue the same types of bonds as cities and counties. The only district in the state, which is located around Lake Delhi in Delaware County, has been restricted to issuing only general obligation or revenue bonds. The new law gives Lake Delhi the opportunity to refinance bonds to save money over the term of the bond.

It also allows a benefited recreational district to refinance bonds without a public vote. The law would still require a public vote for the district to bond for new debt or an increase in the amount of debt.
[3/28: 49-0 (Rozenboom absent)]


SF 501 increases a number of fees charged by county sheriffs for services they are required to provide. Many of these services involve private parties for civil processes, including serving notices, warrants and subpoenas; and making and executing bills of sale and certificates or deeds for land sold. Fees were last increased in 2001.

Sheriffs asked the Legislature in 2015 for an increase in fees. The Legislature requested that sheriffs provide additional information on the cost of providing services and how much the counties subsidize them through property taxes. In December, the sheriffs detailed this information in a report. This law increases fees to make them more closely match the cost of services, taking the burden off the backs of county property taxpayers.
[4/12: 48-1 (Bisignano “no”; Bertrand absent)]


SF 502 is an agreement among the Iowa Attorney General, Iowa Bankers Association and Iowa Credit Union League to modernize the Iowa Consumer Credit Code. Many fees for creditors and remedy awards for debtors have not been adjusted since the Code was created in 1974. The legislation:

  • Allows the Attorney General greater latitude to declare supervised loans void when made by parties who do not have proper authorization to make them.
  • Provides for a credit reporting charge, a $30 charge for returned checks and over-limit violations on credit cards.
  • Increases the allowable late-payment charge cap from $15 to $30 on all consumer credit and changes the rebate rules for deposit-taking lenders, which will make it easier to provide smaller consumer loans.
  • Raises the remedy award for a consumer’s private right of action for violations of the consumer credit code along with violations of disclosure provisions from a minimum of $100 to $200 and from a maximum of $1,000 to $2,000. It also raises the civil remedy for the Attorney General to bring an action against a creditor from no more than $5,000 to no more than $10,000.
  • Raises the annual notification fee for credit sellers and debt collectors from $10 to $50, and increases the allowable charge for late filing by these credit sellers and debt collectors from $20 to $75.
    [4/12: 49-0 (Bertrand excused)]


SF 503 clarifies the Iowa Consumer Credit Code related to deferred payment on a closed-end, simple interest loan. Currently, the parties to a pre-computed consumer credit transaction may agree in writing to a partial or full deferral of any unpaid installments and the creditor may receive a deferral charge. The bill adds deferrals with respect to interest-bearing consumer credit transactions that are not pursuant to open-end credit arrangements, and other than consumer lease or consumer rental purchase agreements. The parties may agree in writing to a partial or full deferral of any unpaid installments in addition to any interest accrued, pursuant to the terms of the transaction. The creditor may receive a deferral charge not to exceed $30 (this mirrors the fee language in SF 502).
[4/12: 49-0 (Bertrand excused]


SF 504 updates the system that governs how Iowa counties levy property taxes to fund regional mental health and developmental disability services. Under the system, county expenditures have been capped at a level based on their expenditures, as established in 1996. The caps are at dollar levels, not property tax rates. The spending levels are also limited by the $47.28 per-capita levy cap on county spending.

The system has meant a number of counties have much lower per capita levy rates for mental health and developmental disability funding than what is allowed under law. Counties with growing populations and increasing property tax values have seen their per-capita funding level lowered as a result of the expenditure limits established in 1996.

The mental health and developmental disability services system was redesigned in 2011, creating regions to provide services. Counties within a region can pool their resources to provide services. However, individual counties within the region are still limited by the old system when it comes to levying property taxes. Counties within a region have ended up “subsidizing” other counties that max out on the dollars they are allowed to generate for expenditures.

The two most prominent examples of this are the East Central Iowa Region and the Eastern Iowa region. In the East Central region, Johnson County is generating the lowest amount of funding per capita because it is at its county expenditure cap. Other counties in the region generate more per capita through property taxes, with nearly half of the counties levying at the $47.28 per-capita cap. In the Eastern region, three of the other four counties are levying at the per-capita cap to fund regional services, while Scott County is generating only $19.22 per capita because of the expenditure limitation. Polk County is its own region and is restricted to the county expenditure cap for spending on services even though it is well below the $47.28 per capita cap. For more on funding for the adult mental health and disability services system, go to www.legis.iowa.gov/docs/publications/IR/798981.pdf

The new law addresses inequities on property taxes within regions and allows increases in regional expenditures on mental health and developmental disability services. It also establishes a procedure for enforcing the 25-percent limit on operating reserves held by counties.

It equalizes the per-capita levy rate among all counties within a region. Counties will no longer be restricted by the base-year expenditure, so counties like Johnson and Scott can increase their contribution, and the region can reduce the contribution by other counties that are contributing at a higher level. Population numbers used for determining per-capita spending is based on the most recent federal census or population estimate. This does not allow for more spending on services in a region.

The statewide per-capita cap will remain at $47.28. The inflation factor is not allowed if it puts expenditures above the per-capita spending cap.

It allows Polk County to use funds from the county hospital levy to supplement its county services fund in an amount up to the $47.28 per capita expenditure cap. This allows Polk County to use up to $7 million from their county hospital levy to meet their service expenditures. Broadlawns must contribute $2.8 million per year for three years. Broadlawns must provide $3.5 million in covered services to residents of Polk County.

It establishes a process for amounts in the county services fund that are in excess of the 25 percent reserve allowed under law (20 percent for regions with populations above 100,000). The county would reduce its mental health levy rate to expend funds in reserve until the limit is reached. This process cannot be used to exceed regional expenditure limitations. The draw-down is based on a county’s contribution to the excess reserves and spread over three years.

The law should make the regional system stable for the near future and address the need for more flexibility for Polk County to meet its needs for funding services. It does not address the long-term viability of the funding system for mental health and disability services. The new law establishes workgroups to address existing concerns about the need for improvements in delivery and access of services. A fiscal viability review of mental health and disability services funding will take place in 2018, and will make recommendations to the Legislature.

The law allows a sheriff or sheriff’s deputy to inform a hospital where they transport an individual for involuntary hospitalization that an arrest warrant has been issued or charges are pending against the individual and request that the hospital notify the sheriff or sheriff’s deputy about the discharge of the individual prior to the discharge.
[4/18: 46-4 (Bisignano, Boulton, McCoy, Petersen “no”)]


SF 505 creates a new state income tax exemption for qualified deposits to a First-time Homebuyer Savings Account. Withdrawals from the account are tax-free if the money is used for a down payment and closing costs for a single-family, owner-occupied home in Iowa. To set up an account, a person must submit a form to the Department of Revenue designating the account as a First-time Homebuyer Savings Account. The beneficiary may access the fund to purchase their first home. The account holder may change the beneficiary at any time or may designate himself as the beneficiary. Contributions may be made by any person, in any amount. There is no cap on donations/contributions to the account. The account holder may withdraw funds at any time.

An account holder may deduct contributions from their income taxes. The deducted amount may not exceed $2,000 per year for an individual or $4,000 for married taxpayers. These amounts are adjusted for inflation each calendar year. The new law exempts any interest or earnings received from the holder’s accounts. The total amount that may be deducted from one’s income tax for these two tax incentives cannot exceed an aggregate lifetime limit of 10 times the maximum deduction determined above for the applicable year ($20,000 for 2016), or double that amount for married taxpayers with a joint account ($40,000 for 2016).

The account holder can claim the tax incentives for 10 tax years from opening the account, or on the date when account funds are withdrawn, whichever comes first. Any amount remaining in the account after the 10th year must be added to net income of the account holder that tax year. Nonqualified withdrawals from the account will be added to net income and are subject to a 10-percent penalty unless the withdrawal was made because of death, disability or bankruptcy. The law prohibits money for house/closing costs from being allowed as an itemized deduction on Iowa individual income taxes. The tax provisions will begin on or after January 1, 2018.
[4/17: 49-1 (Bolkcom “no”)]


HF 242 removes the political checkoff from Iowa state income tax forms for taxes prior to January 1, 2017. The political checkoff is repealed and no longer available. It had generated approximately $65,000 for qualified state political parties, which include the Republican Party of Iowa and the Iowa Democratic Party.
[4/19: 37-13 (Bisignano, Bolkcom, Boulton, Dotzler, Dvorsky, Hogg, Horn, Jochum, Lykam, McCoy, Petersen, Quirmbach, Taylor “no”)]


HF 478 eliminates the future repeal date for the Property Assessment Appeal Board. The board was established in 2005 to hear and review appeals of property valuation assessments by property owners after the local board of review process takes place. The board was initially scheduled to cease operations after July 1, 2013, but was extended through various pieces of legislation to July 1, 2021.

Changes are also made to the process for filing an appeal with the board, notifications of appeals and decisions by the board, including aligning the district court review of board decisions with existing review procedures under Code 17A, which governs review of state agency decisions.

The new law prevents an assessor from requesting or requiring a property owner to provide information in the form of balance sheets, earnings statements, revenue reports or other information that would be used by the assessor to determine the profitability of the company occupying the building. Pro-taxpayer changes to the assessment appeal process and improvements in assessor and deputy assessor qualifications include:

  • An applicant for assessor must complete preliminary education requirements to be eligible for the appointment to assessor. The Department of Revenue must prescribe the preliminary education requirements by rule.
  • Changing the definition of misconduct as a reason for removal of a county assessor. Misconduct is knowingly engaging in assessment practices that contravene applicable law, rule or court order. Removal is not mandatory and would be done by a vote of the majority of the county conference board.
  • Providing for preliminary education requirements for deputy assessors as established by the Department of Revenue.
  • Changing the burden of proof in situations when a complainant offers competent evidence that is different than the market value established by the assessor. In that situation, the burden of proof is on the assessor or those seeking to uphold the valuation. The burden of proof is changed when the assessor seeks a change in the class of a property if the property class was adjudicated within the previous four years. The assessor must present information on changes to the property to support the change.
  • The director of revenue will prescribe uniform forms for appeals of property assessments.
  • Removing different grounds for appeal based on even year or odd year.
  • Eliminating the requirement that the aggrieved taxpayer must present information/reasoning regarding the challenge they are filing. Instead the aggrieved taxpayer would simply check a box indicating the grounds on which they are challenging the assessment (inequitable, over-valued, exempt from assessment, error in the assessment, or in cases of fraud or misconduct by the assessor).
  • Establishing misconduct is a new grounds for appeal. If an aggrieved taxpayer wins on a challenge based on fraud or misconduct, the assessor is liable for the costs incurred by the taxpayer. Costs are paid from the assessment expense fund in 441.16.
  • Directing the Department of Revenue to study the current system for assessor and deputy assessor continuing education and make recommendations by December 15.
    [4/20: 50-0]

HF 607 contains a number of technical and changes to the Alcoholic Beverages Division. The technical changes include removing redundant language, clarifying current practices, and standardizing language regarding the contents of applications for liquor control licenses, wine permits and beer permits.

Policy changes include:

  • Streamlining licensing for beer manufacturers and wholesalers who had been governed by separate classes of permits.
  • Allowing brewpubs to sell their beer for consumption off premises in a growler without the beer passing through a wholesaler. This also places on the brewpub the responsibility for remitting the barrel tax for beer sold in a growler.
  • Allowing an Iowa brewery with a taproom to sell wine by the glass for consumption on premises. Native wineries are already allowed to sell beer for consumption on premises in addition to wine.
  • Changing the terminology for Iowa distilled spirits from “micro-distilleries” and “micro-distilled spirits” to “native distilleries” and “native distilled spirits.” This mirrors current terminology for Iowa-produced wines and beer.
  • Allowing native distilleries with production of 100,000 gallons or fewer annually to sell up to nine liters per day. Previous law limited the sale of distilled spirits by native distilleries to 1.5 liters. A native distillery with production of more than 100,000 gallons annually is limited to 1.5 liters. Native distilleries with production of 100,000 gallons or fewer may sell their product at retail for consumption on premises.
    [4/17: 50-0]


HF 608 clarifies the applicability of a taxpayer to claim the Research Activities Credit. Because of the unique one-year-only IRC update/coupling legislation passed in 2016, some were concerned that the Research Activities Credit would not be available to them. It is still available. The new law also fixes a Code section reference to the flood mitigation program.
[4/18: 50-0]


HF 609 would allow a land use district to impose a local hotel/motel tax within its boundaries. A land use district has an elected board of trustees that will vote on an ordinance to impose a local hotel/motel tax within the district.

The Amana Colonies in Iowa County is currently the only land use district in the state and it has  a local hotel/motel tax. The proceeds are allocated by the county board of supervisors. Under this law, the land use district may impose its own local hotel/motel tax and capture all of the revenue generated by hotels within the district, rather than having to share it with the entire county.
[4/19: 47-3 (Bowman, D. Johnson, Taylor “no”)]


HF 617 makes a number of changes to Department of Agriculture functions, including:

  • Changing the name of the state soil conservation committee to the Soil Conservation & Water Quality Committee.
  • Excluding edge-of-field practices from the 50 percent limit on financial incentives under the cost-share program.
  • Clarifying that cover crops are an eligible practice under the cost-share program.
  • Allowing issuance of two-year licenses instead of annual licenses.
  • Vaccination procedures and standards.
  • Registration requirements for fertilizers and soil conditioners.
  • Delivery ticket requirements for commodities sold in bulk.
  • Labeling requirements for ethanol-blended gasoline.
  • Use of automatic recorders on scales.
    [4/19: 50-0]


HF 625 eliminates the option for taxpayers to indicate on their tax returns whether their dependent children have health insurance coverage. Since 2010, this has helped identify those eligible for hawk-i or Medicaid. The Department of Revenue would compile the information, and the Department of Human Services (DHS) would identify those eligible to apply for health insurance coverage for their children. Recent information on the number of new enrollees under this program is not available because of changes in the application for hawk-i and Medicaid that removed a question on how the individual heard about the program.
[4/11: 29-19 party-line (D. Johnson “no”; Allen, McCoy absent)]


HF 626 eliminates a $25 filing fee for independent review of a benefit trigger determination under a long-term-care insurance policy. Previously, the Insurance Commissioner could waive this fee, which became the practice 100 percent of the time for the past five years. The IID routinely helps Iowans with insurance issues without charging a fee, and removing the provision eliminates confusion.
[4/11: 49-0 (Allen excused]