Hite Capitol Update – February 26th, 2021
by Dustin Hite
Week 7 of the legislative session was packed full with committee and subcommittee meetings as we prepare for funnel week next week. One of the subcommittee’s I chaired this week was for HF 47, a bill introduced by Representative Lohse, relating to the filing requirements for the business property tax credit. The House passed a number of bipartisan bills on the Floor this week, and during debate Tuesday night I had the opportunity to sit in the Speaker’s chair and preside over debate. There is quite a bit of work going on behind the scene by the Chief Clerk and her staff, as well as the Speaker’s page. Thank you to all of them for keeping things running smoothly.
One of the committees I sit on is Ways and Means, which deals with taxes and fees. I always enjoy this committee because we see all sorts of different topics come before us, and this week was no different.
The House Ways and Means Committee this week passed Senate File 364 with an amendment. This bill provides three very important pandemic related tax exemptions. House Republicans maintain collecting tax on pandemic related payments to Iowa’s small businesses and families is not the right the thing to do and not the right thing for Iowa.
First—the bill makes a fix for fiscal year filers related to the federal paycheck protection program. Current law, for the tax year 2020 and later, Iowa law fully conforms with the federal treatment of forgiven paycheck protection program loans and excludes such amounts from net income and allows certain deductions for business expenses paid using those loans. For fiscal-year filers who received paycheck protection program loans during the 2019 tax year, current law excludes such amounts from net income, but does not allow certain deductions for business expenses paid using those loans. The bill fully conforms with federal law for those fiscal-year filers who previously were excluded from such conformity and allows such filers to take business expense deductions using federal paycheck protection program loan proceeds that were forgiven. This is crucial equity treatment for our Iowa businesses.
Second—the bill (with amendment) exempts from income tax any qualifying COVID-19 grant issued to an individual by the economic development authority, the Iowa finance authority, or the department of agriculture and land stewardship. A “qualifying COVID-19 grant” includes any grant identified by the department of revenue by rule that was issued under a grant program administered by the economic development authority, Iowa finance authority, or the department of agriculture and land stewardship to provide financial assistance to individuals or businesses economically impacted by the COVID-19 pandemic. Under current law, financial assistance grants provided to small businesses by the economic development authority under the Iowa small business COVID-19 relief grant program are already excluded from the calculation of Iowa individual and corporate income tax. This provision is extremely important to Iowa’s businesses and farmers.
Finally, the bill (with amendment) exempts the extra $600 of federal pandemic unemployment compensation received pursuant to the federal CARES ACT from income tax. Those were payments made by the federal government to Iowa families who lost jobs during the pandemic.
In closing, I encourage you to visit the Capitol this year, or plan a trip for next year. The Iowa Capitol is one of the best in the nation and belongs to the people of Iowa. As always, please email me at dustin.hite@legis.iowa.gov if you would like to schedule a visit, or if you have any questions, comments, or concerns.
