Posts Tagged ‘Iowa bonus depreciation’

Tax Roundup, 2/15/2013: Governor couples Iowa taxes to fiscal cliff bill. Also: 19 years for municipal thief.

Friday, February 15th, 2013 by Joe Kristan

20130117-1Governor Branstad has signed the bill conforming Iowa’s tax law to federal changes enacted last month.  The Governor signed SF 106 yesterday afternoon.

The bill allows taxpayers to use several federal provisions in computing their 2012 Iowa taxes, including:

- The federal Section 179 deduction of up to $500,000.

- The federal above-the-line deductions for tuition and educator expenses.

- The exclusion for IRA distributions to charity for taxpayers who have reached age 70 1/2, and the transitional rules for January 2013 charitable rollovers of IRA distributions.

- The optional deduction for state and local sales taxes.

The bill does not conform Iowa to federal bonus depreciation; Iowa filers will normally use federal standard MACRS depreciation instead.

 

Tony Nitti,  Senate Proposal for Tax Reform Part II: Democrats Seek To End S Corporation Payroll Tax Loophole.  It’s similar to nonsensical proposals put forward in prior years to tax S corporation K-1 income when 75% or more of revenues are “attributable” to three or fewer shareholders — an impossible standard to evaluate in many cases, and one that discriminates against the smallest S corporations.  It shows they are lazy — the problems with the approach are well known, yet the won’t make the effort to correct, instead trotting out the same old bill.  It just shows they aren’t serious.

David Cay Johnston finds the cuts to IRS funding that would result from the impending sequester “Particularly Devastating” (Tax.com)

 

Going Concern,  Former Dixon Comptroller Rita Crundwell Gets Nearly 20 Years.  She stole over $50 million from an Illinois municipality of 15,000 people going back to 1990.  And nobody noticed for over 20 years.

Kay Bell,  IRS’ Where’s My Refund? site swamped by impatient refund tracking taxpayers.

Taxpayers overwhelmed with compliance demands, asks government to slow down.  IRS Overwhelmed With Refund Requests, Asks Taxpayers To Slow Down(TaxGrrrl)

Paul Neiffer, Another Bill to Reduce Farm Payments is Introduced!

Jack Townsend, Swiss and US Sign IGA.  An agreement under the “FATCA” foreign bank reporting rules.

Patrick Temple-West, Married couples face tough taxes, and more (Tax Break)

Russ Fox, Nevada Looks to Tax Online Poker Tournaments

Donald Marron,  The Balanced Budget Amendment’s $300 Billion Error

News you can use.  Retire Rich: The Forbes 2013 Antiretirement Guide (Janet Novack)

Nick Kasprak,  Happy Valentine’s Day! Will You Marry Me (For Tax Reasons?) (Tax Policy Blog).

20130215-1

Some people are just incurable romantics!

Share

ISU Ag Law Center rounds up Iowa tax changes

Monday, April 25th, 2011 by Joe Kristan

All of the recent Iowa tax legislation, including Section 179 and bonus depreciation changes, is rounded up by the ISU Center for Agricultural Law and Taxation.
Related: The morning after the Iowa bonus depreciation veto

Share

The morning after the Iowa bonus depreciation veto

Friday, April 22nd, 2011 by Joe Kristan

Now that the Governor has vetoed bonus depreciation for Iowa, what happens now?
From the Des Moines Register coverage, it sounds like the Democrats are truly unhappy with the veto message because it also blocks an increase in Iowa’s Earned Income Tax Credit:

Rep. Tyler Olson, D-Cedar Rapids, accused Branstad of reckless action that unraveled a carefully crafted compromise. “His insistence on rewarding special interests and big corporations at the expense of small businesses and middle-class families is bad for Iowa and a serious blow to bipartisanship,” Olson said.

The Republicans, in contrast, don’t sound like they are all that upset:

Iowa House Speaker Kraig Paulsen, R-Hiawatha, said: “I’m pleased the governor signed the Taxpayers Trust Fund, giving Iowa taxpayers a seat at the table. Obviously, I’m disappointed that he chose to veto portions of the bill. House Republicans will continue to fight for tax relief for Iowans.”

That doesn’t sound like somebody ready to lead a veto override battle, and the Democrats won’t be able to override the veto without help.
While tax conformity is always good, Iowa has been non-conforming with bonus depreciation for so long that one more year probably isn’t that big of a deal. I do like this part of the veto message:

As earlier indicated, it is my desire to approach tax policy in a comprehensive and holistic manner. As such, I urge members of the House and Senate to continue to work with my office on an overall tax reduction package that both fits within our sound budgeting principles while reducing those taxes that are impeding our state

Share

Legislature sends 2011 Iowa bonus depreciation to Governor

Wednesday, April 20th, 2011 by Joe Kristan

The Iowa House of Representatives yesterday sent SF 209 to Governor Branstad for signature. The bill allows Bonus depreciation on Iowa returns for tax years beginning on or after January 1, 2011.
2011 will be the first year that Iowa has coupled with federal bonus depreciation since 2005.
Earlier this month the Governor approved “coupling” provisions of SF 512. That bill tied Iowa’s 2010 tax rules to federal rules, with the exception of bonus depreciation. That means the Iowa Section 179 limit is $500,000 for 2010 and 2011. Bonus depreciation, though, is only available on Iowa returns starting in 2011.
O Kay Henderson has more.
Update, 4/21/2011 Maybe not.

Share

Conference Committee agrees to bonus depreciation for Iowa for 2011

Saturday, April 16th, 2011 by Joe Kristan

It looks like Iowa will couple with bonus depreciation for 2011 after all.
The long-dormant conference committee working to reconcile the differing versions of the indigent defense appripriation bill (SF 209), passed over a month ago in each house, finally came to an agreement yesterday. We’ve confirned through a conference member that, in addition to finally paying the public defenders, the bill links allows federal bonus depreciation on Iowa returns for assets placed in service in 2011.
Just last week the Governor enacted the “code coupling” provisions of SF 512. These provisions had originally been included in SF 209, but were enacted separately when that bill bogged down in conference. SF 512 couples federal law for Iowa with the Internal Revenue Code as of January 1, 2011, except for bonus depreciation; it allows the $500,000 Section 179 limit for 2010 and 2011 assets on Iowa returns.
The conference bill text isn’t yet available; we will link to it when it is. It is expected to pass both houses next week.
Related: Iowa Department of Revenue issues release on new Iowa rules enacted yesterday

Share

Governor uses item veto on SF 512; ties Iowa law to federal tax law for 2010

Tuesday, April 12th, 2011 by Joe Kristan

Governor Branstad has used his item veto authority on SF 512, the bill containing the “code conformity” provisions for the Iowa income tax. The item veto removes budget transfer authority included in the bill; the item veto therefore enacts the federal code coupling language.
As a result, we finally have a 2010 Iowa tax law. Key points:
- Iowa conforms to the $500,000 Section 179 deduction limit for 2010 and 2011.
- Iowa adopts federal tax computation rules in effect as of 1/1/2011, including things like the educator expense deduction that have been a problem in other years.
- Iowa DOES NOT adopt federal bonus depreciation for 2010 or 2011.
I don’t think the legislature can now undo the parts approved by the Governor in his item veto, but I’ll let you know if I hear otherwise. I will update this post as events may warrant.
UPDATE, 5:46 pm: A reader asks in the comments:

So we can deduct front page tuition deduction and educator costs now on 2010 Iowa tax returns? Was it retroactive back to tax year 2008 by any chance?

The SF 512 provisions adopting the Internal Revenue Code changes through 1/1/11 “apply retroactively to January 1, 2010, for tax years beginning on or after that date” (Sec. 6 of the bill). So it goes back to 2010, but not further, if I understand it correctly, and the tuition deduction, the IRA donation exclusion, and the like are good now for Iowa 2010 1040s.
UPDATE, 4/13/2011: Iowa Department of Revenue issues release on new Iowa rules enacted yesterday
Links:
SF 512
Veto message
More coverage:
Radio Iowa
Des Moines Register

Share

So we don’t have a 2010 Iowa tax law after all?

Wednesday, April 6th, 2011 by Joe Kristan

The bill to set Iowa tax rules for last year for the returns we are filing this month — and, not incidentally, to pay public defenders who have been unwillingly pro bono since February — has had a big week. It was amended and passed by the Iowa House last Thursday. The Iowa Senate amended and passed it yesterday, sending it back to the Iowa House, which didn’t like what the Senate did, and sent it back. The Senate backed off and passed the House version. So now we can file our returns and the public defenders can get paid, right?
Not so fast. O Kay Henderson reports:

Senate Democrats have accepted a plan from House Republicans for paying the state

Share

Whither the Iowa ‘coupling’ bill? UPDATE: Senate to consider today

Monday, April 4th, 2011 by Joe Kristan

UPDATE, 1:45 P.M.: Word from the Capitol is that the Iowa Senate will take up SF 512 after they get out of a caucus. We will post when any updates come through. You can follow here.
UPDATE, 4:19 p.m. : After a tough 3 1/3 hour day, our hardworking senators have packed it in until tomorrow without picking up SF 512. Words fail.
After waiting months to do anything about resolving Iowa’s 2010 tax law, the Iowa House last Thursday in a single day passed a coupling bill through both the Ways and Means Committee and the House Floor. The bill couples the Iowa tax law to all federal provisions for 2010, with the exception of bonus depreciation. That means Iowa would recognize the new $500,000 limit for Section 179 for 2010 and 2011.
So now that this bill has been separated from the controversial tax reserve fund that had held it up, it should fly through the Senate, right? One would hope, but SF 512 isn’t on the Senate calendar for today. Let’s hope that’s just an oversight. With only two weeks left in filing season, it would be nice to know the Iowa rules.
Related: Iowa can’t decide what your 2010 tax rules are, but they can still give it away

Share

Movement on Iowa 2010 fixed asset rules?

Thursday, March 31st, 2011 by Joe Kristan

I hear that a new “coupling” bill is moving through the Iowa legislature on a fast track as an amendment to SF 512, the indigent defense appropriation. It reportedly has just passed the House Ways and Means Committee. I haven’t seen it; I’m told it doesn’t couple with bonus depreciation, but it couples to the federal Sec. 179 $500,000 limit for 2010 and 2011. I will update as soon as I learn more.
UPDATE, 5:00 PM: Senate is adjourned until Monday, so no final vote until then, at least. I will try to find out if it’s a done deal, but that’s my guess now.
UPDATE, 4:40 PM: SF 512, with coupling amendment, passes House, 98-0. This thing must really be on a fast track. Now back to Senate for approval with amendment.
UPDATE, 3:00 PM: Code conformity language. Language does make $500,000 Sec. 179 retroactive to 2010, but doesn’t couple for either 2010 or 2011 for bonus depreciation. We’ll watch this and update this post for any new developments.
Background here.

Share

Iowa legislature fails again to settle 2010 tax depreciation rules

Friday, March 25th, 2011 by Joe Kristan

Different day, same story. The Iowa General Assembly conference committee trying to reconcile House and Senate bills with differing depreciation rules has now gone two weeks without figuring out what Iowa’s tax law is for the returns we are working on now.
Both bills adopt the federal $500,000 Section 179 deduction limit retroactively to 2010. The House Bill adopts federal bonus depreciation for 2010, while the Senate bill adopts it only for 2011. If neither bill passes, the 2010 Iowa Section 179 deduction would be $134,000 and there would be no bonus depreciation on Iowa returns.
EasternIowaGovernment.com reports:

The main sticking point in the GOP insistence on creating a tax relief fund that would capture surplus dollars at the end of each fiscal year and earmark them for tax reductions. House Speaker Kraig Paulsen, R-Hiawatha, said legislative Republicans tentative had worked out their agreements but Democrats still were not on board, although he thought negotiators were “very, very close” to finalizing a package. However, Senate Majority Leader Mike Gronstal, D-Council Bluffs, told reporters “I think we

Share

Is today the day Iowa figures out its 2010 tax law?

Thursday, March 24th, 2011 by Joe Kristan

20110324-2.jpgA lobbyist tells me of rumors that the Ieadership of the Iowa General Assembly is “almost there” in settling differences between the House and Senate on Iowa’s fixed asset cost recovery rules for 2010 and 2011. Both houses have passed bills allowing the federal Section 179 deduction limit of $500,000 retroactive to 2011. The Iowa House would also allow bonus depreciation for 2010, but the Senate would only allow it for 2011.
If there is an agreement, it is likely to be announced today, as they hate to work on Friday under the Golden Dome. We’ll let you know if we hear anything.
UPDATE, 10:50 am: Sen. Majority leader Gronstal wouldn’t say conference “is close” to a deal, per Kathie Obradovich’s Twitter feed. Boo. Hiss.
UPDATE, 11:22 am: Kathie Obradovich tweets that House Speaker Paulsen says they’re “v.v. close.” If they can’t even agree on how close they are, that may not be a good sign.
Related: Two weeks of conference committee later, we still don’t know Iowa’s 2010 depreciation rules
Image courtesy of Wikipedia

Share

No resolution of Iowa tax impasse

Tuesday, March 22nd, 2011 by Joe Kristan

The conference committee charged with resolving the impasse in Iowa’s 2010 depreciation rules did nothing yesterday. While negotiations may be going on amount statehouse leaders, no news came out for the thousands of Iowa taxpayers who don’t know what depreciation rules to use in preparing their 2010 tax returns.
The Iowa Senate did take a step backwards in tax policy yesterday, but unfortunately it is a backwards step. The Senate passed SF 506, a bill to give a refundable Iowa tax credit equal to 25% off the federal tax credit for businesses with up to 25 employees and an average compensation level of under $50,000. The credit would take effect for 2011.
Refundable credits are bad policy to begin with because they are a temptation to fraud, as our experience with the Earned Income Credit and the Homebuyer Credit illustrate. This credit is also a bad idea because it amounts to the state telling businesses how they should compensate their employees.
But the worst aspect of this complicated credit, from a policy standpoint, is that it imposes a back-door tax on employers who hire more employees or increase employee cash compensation. The credit phases out 1/15 for each new employee you hire starting with your 11th employee, and is gone entirely when you get to 25. The credit also phases out as average compensation exceeds $25,000. That makes the credit function as a tax on new employees and on employee raises — an idea so obviously bad that it was approved by the Senate on a 48-0 vote.
Link: Des Moines Register coverage.
Related:
Iowa to piggyback small employer health credit?
Weekend Update: No resolution yet for 2010 Iowa tax depreciation, Section 179 rules

Share

Weekend Update: No resolution yet for 2010 Iowa tax depreciation, Section 179 rules

Saturday, March 19th, 2011 by Joe Kristan

The conference committee trying to reconcile the different “tax coupling” bills passed by the two houses of the Iowa General Assembly has now gone a full week without finishing its work.
Meanwhile, thousands of Iowa business tax returns are in limbo, awaiting the word on what rules apply for 2010. The House bill conforms Iowa’s tax law for bonus depreciation and the Section 179 deduction to the federal rules effective for 2010. The Senate bill adopts federal Section 179 rules for 2010, but bonus depreciation for 2011.
Many business returns already filed could be affected by the conference decision; these returns might have to be amended to comply with any retroactive tax law changes.
The bills in conference also include “supplemental appropriations” for several state programs, including indigent defense. Attorneys for paupers are scrambling to pay their bills; prosecutors, in contrast, won’t miss a paycheck.
The hangup is a proposed bookkeeping account to hold any surplus state funds after the end of the budget year. Republicans want the account to get all surplus funds after reserve funds are restored, to be used for general tax reduction. Democrats want a limited effective date, with only 25% of the surplus to be set aside, and only for property tax relief.
The Governor entered the debate yesterday. In a town hall meeting in Columbus Junction, he came out for splitting the non-contentious issues from the bill so they can be enacted without more delay, reports Kathie Obradovich:

Branstad today, at a town hall meeting to promote his jobs plan, came down on the side of Democrats who want to push through the $45.7 million needed for human services, corrections and indigent defense.

Share

Conference on 2010 depreciation rules for Iowa drags on

Friday, March 18th, 2011 by Joe Kristan

The conference committee attempting to determine whether to conform Iowa to federal rules for fixed asset cost recovery failed to reach agreement again yesterday. The committee is hung up on a plan to put any leftover money at the end of the fiscal year into a “tax relief fund.” Rod Boshart reports:

Talks stalled when House Republicans insisted on creating a tax relief fund with 100 percent of the state

Share

Returns held hostage by conference committee, day 4

Thursday, March 17th, 2011 by Joe Kristan

The third meeting of the conference committee to determine Iowa’s depreciation rules for last year broke up without agreement yesterday. They plan to get together again today.
The Iowa House of Representatives passed a bill that would adopt the federal bonus depreciation rules and Section 179 rules for 2010. The Iowa Senate passed a bill that would adopt Section 179 for 2010, but put off bonus depreciation on Iowa returns until 2011. That means we still don’t know what rules will apply to recover the cost of fixed assets on Iowa returns that we are trying to prepare now.
Why the hang-up? The sticking point is a special fund to earmark budget savings for tax relief. Rod Boshart reports:

Under the Democratic offer, the Legislature would create a new tax relief fund to receive 25 percent of excess money in the state

Share

Conference committee makes little progress on Iowa bonus depreciation bill

Friday, March 11th, 2011 by Joe Kristan

The Des Moines Register reports that the legislators trying to reconcile the separate bills passed by the houses of the Iowa General Assembly are so far too busy preening to tell us what the tax law is for the returns we are trying to prepare right now:

House Republicans said they don’t want that tax break in the bill they’re trying to reach a compromise over, saying it should be part of a larger discussion about a 20 percent income tax cut for all Iowans…
Gronstal pointed out that thousands of low-income working Iowans don’t have any state income tax liability and instead get money back

Share

Iowa Senate refuses to concur on bill that would enact bonus depreciation for 2010

Tuesday, March 8th, 2011 by Joe Kristan

With the federal corporation return due date a week away and taxpayers clamoring for their K-1s, tax preparers still don’t know what depreciation rules to use on 2010 Iowa returns. We’ll be in the dark a little longer. On a party-line vote, the Iowa Senate refused to go along with the Iowa House tax code update bill yesterday.
The bills will now go to a conference committee to iron out differences. The House bill would make bonus depreciation available for 2010; the Senate bill only allows it starting in 2011. Both bills would couple with the federal $500,000 section 179 limit for 2010.
A lobbyist tells me that the different bonus depreciation dates aren’t the hangup. The House bill has a less generous earned-income credit than the Senate bill, and that seems to be the problem. I just hope all of these legislators have big Iowa refunds that their failure to act will continue to delay.

Share

2010 Bonus Depreciation bill passes Iowa House

Wednesday, March 2nd, 2011 by Joe Kristan

The Iowa House of Representatives last night voted to allow bonus depreciation and $500,000 of Section 179 depreciation on Iowa tax returns effective for 2010.
The Senate-passed version of S. 209 increases the Iowa Section 179 limit to $500,000 effective for 2010, but only allows bonus depreciation starting in 2011. It’s not clear which bonus depreciation effective date will emerge when the two houses reconcile their versions of the bill.
This is a quandary for businesses wanting to get their 2010 returns filed. As I wrote at IowaBiz.com yesterday, it may be wise to wait a little longer before filing Iowa returns when you have bonus depreciation or over $134,000 in Section 179 deductions on your federal filings.
Many taxpayers have already filed for 2010. The House-Senate conference should add a provision to S. 209 to allow any taxpayers who have already filed under the old rules to continue to depreciate their 2010 assets that way so they don’t have to amend their already-filed 2010 returns.

Share

Iowa House Ways and Means passes coupling with $500K 2010 Section 179 limit AND bonus depreciation

Tuesday, February 22nd, 2011 by Joe Kristan

The Iowa House Ways and Means Committee has given Iowa businesses another reason to take their time finishing their 2010 returns. Rod Boshart reports at Eastern Iowa Government.com:

The House Ways and Means Committee voted 17-7 to

Share

Will states adopt the $500K Section 179 and the new bonus depreciation?

Tuesday, October 12th, 2010 by Joe Kristan

Not if they can help it. Paul Neiffer has more.
Iowa almost surely won’t go with the extended bonus depreciation. I’m also betting that they won’t couple with the enhanced Section 179 depreciation, in spite of the recent optimistic revenue estimates.

Share