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Serving: IA
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IOWA ISSUES: Two bills have been introduced in the Iowa Senate this session that propose to fully repeal Iowa’s inheritance tax.

Busy session for state lawmakers

Legal Issues: Tax reform, livestock regulation and other bills that could impact farm families are being debated.

Last month we focused on several areas the Iowa Legislature is looking to address this session with respect to agriculture, including budget issues, rural infrastructure, beginning farmer issues and proposed livestock regulation.

The legislative session is well underway, and we are monitoring a number of bills for our readers. Here is a brief summary of some of the bills that are of particular interest and the changes they propose:

SF 187, special farm trucks. Increases the gross weight limit for certain special farm trucks to 39 tons. Under current law, a special truck is a motor truck or truck tractor used for certain farming and commodity transportation purposes, but not used for hire, with a gross weight registration of between 6 and 32 tons.

SF 225, criminal surcharges. Focusing on ag theft, this bill establishes a 35% surcharge for the felony theft of crops, livestock or honeybees. These funds are to be directed to the judicial branch to support judicial branch operations.

SSB 1123, cover crop tax exemption. Establishes a property tax exemption for planting cover crops. Makes the exemption for 50% of the assessed value of the land planted to cover crops.

HF 58, COOL labeling program. This bill amends Iowa law that sets forth labeling requirements for food products and establishes a country-of-origin labeling program for food.

•​​​​​​​ HF 350, soil erosion. Among other things, it changes current residential requirements for soil and water conservation district commissioners, and requires them to live in the district. Requires commissioner to determine what constitutes serious erosion in a district and to adopt rules to limit soil loss to 5 tons per acre annually. Requires commissioners to inspect land that is the subject of a complaint.

At the beginning of the 2019 session in January, several bills relating to livestock regulation were introduced, including House Files 141,142, 143, 201 and 202 — all relating to an array of issues involving confinement animal feeding operations, including siting and proposing moratoriums for proposed sites and Master Matrix issues. We will continue to monitor these bills to determine their progress as the session continues.

Tax reform
​​​​​​​Tax reform is another area lawmakers are focusing on this session. What is happening with Section 179, income tax and state inheritance tax?

•​​​​​​​ SF 220, Section 179 expensing. Expands Section 179’s expensing available for the individual state income tax to include corporations, financial institutions, limited liability companies and partnerships for tax year 2018, up to $70,000 and $280,000 for the minimum deduction and investment limitation. It is retroactive to January 2018. Currently, for tax year 2018, the maximum expensing allowance deduction and investment limitations on Section 179 property for such entities is limited to $25,000 and $200,000, respectively.

•​​​​​​​ SF 182, repealing the income tax. This bill repeals the individual income tax and related surtaxes. It directs the Iowa department of revenue to prepare legislation on implementation of the repeal. (It takes effect July 1.) This bill would also increase the state sales tax. It raises the sales tax to 11% from 6%, effective as of July 2021.

•​​​​​​​ SF 192, farmland capital gains exemption. This bill modifies and expands who qualifies for capital gains exemptions for the sale of certain farmland set to take effect in 2023. Currently, the capital gain deduction for the sale of real property used in a "farming business" that is set to go into effect in 2023 restricts the deduction to the sale of "real property used in a farming business," provided the taxpayer "materially participated" in the farming business for at least 10 years, held the real property for at least 10 years and sold the property to a "relative."

The bill states that the deduction is available if one of the above applies and expands the definition of "relative" to include an entity in which a relative of the taxpayer has a legal or equitable interest.

•​​​​​​​ SF 5, forestland property tax exemption. This bill would repeal the forest reserve property tax exemption. More than 1.3 million acres in Iowa use this exemption. Supporters of this bill say those exemptions increase the tax burden for other property taxpayers.

As in sessions past, several bills have been introduced proposing the repeal of the Iowa state inheritance tax, which applies to property left by a decedent to “non-lineal” descendants.

Another bill to watch is House Study Bill 18, which proposes to extend the statewide school infrastructure 1-cent sales tax, called Secure an Advanced Vision for Education. The bill would extend the sunset of the program to 2051. The bill states that a portion of SAVE revenues would be required to go to the Property Tax Equity Relief Fund, as well as increasing the foundation percentage for property tax relief.

This Legal Issues column is current as of Feb. 15. We will continue to watch these issues and provide updates in the upcoming months. For updates and information on the bills mentioned above, search the bills at legis.iowa.gov.

Herbold-Swalwell is an attorney with Brick-Gentry in Des Moines. Contact erin.herbold-swalwell@brickgentrylaw.com.

 

 

 

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