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Senate
File
2250
-
Introduced
SENATE
FILE
2250
BY
LOFGREN
A
BILL
FOR
An
Act
making
modifications
to
tax
deadlines
and
tax
disputes.
1
BE
IT
ENACTED
BY
THE
GENERAL
ASSEMBLY
OF
THE
STATE
OF
IOWA:
2
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Section
1.
Section
421.59,
subsection
1,
paragraph
a,
Code
1
2026,
is
amended
to
read
as
follows:
2
a.
A
taxpayer
may
authorize
an
individual
to
act
on
3
behalf
of
the
taxpayer
by
filing
a
power
of
attorney
with
4
the
department,
on
a
form
prescribed
by
the
department.
The
5
department
may
prescribe
a
separate
form
or
shall
integrate
the
6
requirements
of
the
form
into
a
return
when
feasible.
7
Sec.
2.
Section
421.59,
subsection
1,
Code
2026,
is
amended
8
by
adding
the
following
new
paragraph:
9
NEW
PARAGRAPH
.
c.
(1)
If
a
due
date
has
not
yet
passed,
10
the
running
of
the
time
period
leading
up
to
the
due
date
shall
11
be
tolled
on
the
date
a
power
of
attorney
form
is
filed
with
the
12
department.
13
(2)
The
tolling
of
the
time
period
pursuant
to
subparagraph
14
(1)
ceases
upon
the
date
the
power
of
attorney
is
authorized
15
or
denied.
16
(3)
This
paragraph
shall
not
be
construed
to
toll
any
time
17
period
in
a
criminal
proceeding.
18
Sec.
3.
Section
421.60,
subsection
2,
paragraph
b,
Code
19
2026,
is
amended
by
striking
the
paragraph
and
inserting
in
20
lieu
thereof
the
following:
21
b.
(1)
The
department
shall
furnish
to
the
taxpayer
an
22
explanation
of
the
reasons
for
a
proposed
notice
of
assessment
23
or
refund
claim
denial
no
less
than
thirty
days
before
issuing
24
the
notice.
If
the
taxpayer
requests
a
meeting
before
the
25
issuance
of
the
notice
of
assessment
or
refund
claim
denial,
26
the
department
auditor
and
policy
director,
or
compliance
27
supervisor
or
manager,
if
the
policy
director
is
not
available
28
for
the
appropriate
tax
type
in
dispute,
shall
meet
with
the
29
taxpayer
to
discuss
the
explanation
of
the
proposed
assessment
30
or
refund
claim
denial
before
issuing
the
notice.
The
meeting
31
shall
be
held
in
a
format
requested
by
the
taxpayer
that
is
32
conducive
to
effective
and
efficient
tax
administration.
33
(2)
An
inadequate
explanation
shall
not
invalidate
the
34
notice
in
subparagraph
(1).
However,
if
the
notice
does
not
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present
a
particular
factual
or
legal
basis
for
the
assessment
1
or
refund
claim
denial,
the
department
shall
not
allege
a
new
2
factual
or
legal
basis
for
the
assessment
after
the
taxpayer
3
has
timely
filed
an
appeal.
For
purposes
of
this
paragraph,
4
an
explanation
by
the
department
shall
be
sufficient
where
5
each
factual
and
legal
basis
for
the
assessment
or
refund
6
claim
denial
is
stated
in
the
notice,
and
when
applicable
the
7
amount
of
tax,
interest,
and
penalty
is
stated
together
with
8
an
attachment
setting
forth
the
computation
of
the
tax
by
the
9
department.
10
Sec.
4.
Section
421.60,
subsection
2,
paragraph
i,
Code
11
2026,
is
amended
to
read
as
follows:
12
i.
The
director
shall
adopt
rules
for
setting
times
and
13
places
for
taxpayer
interviews
and
to
permit
any
taxpayer
.
Any
14
taxpayer
shall
be
allowed
to
record
the
interviews.
15
Sec.
5.
Section
421.60,
subsection
4,
Code
2026,
is
amended
16
by
striking
the
subsection
and
inserting
in
lieu
thereof
the
17
following:
18
4.
Costs.
19
a.
(1)
A
prevailing
taxpayer
in
an
administrative
20
hearing
or
a
court
proceeding
related
to
the
determination,
21
collection,
or
refund
of
a
tax,
penalty,
or
interest
shall
be
22
awarded
reasonable
costs
by
the
department
or
a
court
that
are
23
incurred
subsequent
to
the
issuance
of
the
notice
of
assessment
24
or
refund
claim
denial
in
the
proceeding,
based
upon
the
25
following:
26
(a)
Reasonable
court
costs.
27
(b)
Reasonable
prevailing
market
rates
based
upon
the
28
services
provided
including
but
not
limited
to:
29
(i)
Expert
witnesses.
30
(ii)
The
cost
of
a
study,
engineering
report,
test,
31
analysis,
or
project
that
is
found
by
the
director
of
revenue
32
or
court
to
be
necessary
for
the
preparation
of
the
case
of
the
33
taxpayer.
34
(iii)
Fees
paid
or
incurred
for
the
services
of
an
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accountant.
1
(iv)
(A)
Fees
paid
or
incurred
by
the
taxpayer
for
the
2
services
of
an
independent
attorney
including
fees
paid
or
3
incurred
in
obtaining
costs
under
this
subsection.
4
(B)
The
fees
awarded
pursuant
to
this
subparagraph
5
subdivision
shall
be
based
upon
an
hourly
rate
of
two
hundred
6
fifty
dollars
an
hour,
unless
the
court
determines
a
higher
7
hourly
rate
is
justified
due
to
special
factors
such
as
8
the
limited
availability
of
qualified
attorneys
for
such
a
9
proceeding,
the
difficulty
of
the
issues
presented
in
the
case,
10
or
the
local
availability
of
tax
expertise.
Beginning
January
11
1,
2027,
and
each
January
1
thereafter,
the
hourly
rate
shall
12
be
annually
adjusted
by
the
department
of
revenue
by
adding
13
to
the
hourly
rate
in
existence
prior
to
this
calculation
14
the
product
of
the
hourly
rate
in
existence
prior
to
this
15
calculation
multiplied
by
the
most
recent
cost-of-living
16
adjustment
in
effect
under
section
1(f)(3)
of
the
Internal
17
Revenue
Code.
18
b.
An
award
under
paragraph
“a”
shall
not
be
made
with
19
respect
to
any
portion
of
the
proceedings
during
which
20
the
prevailing
taxpayer
has
unreasonably
protracted
the
21
proceedings.
22
c.
For
purposes
of
this
subsection,
“prevailing
taxpayer”
23
means
a
taxpayer
who
has
substantially
prevailed
with
respect
24
to
the
amount
in
controversy
or
has
substantially
prevailed
25
with
respect
to
the
most
significant
issue
or
set
of
issues
26
presented.
The
determination
of
whether
a
taxpayer
is
a
27
prevailing
taxpayer
is
to
be
determined
in
accordance
with
28
chapter
17A.
If
the
taxpayer
establishes
that
the
taxpayer
29
has
substantially
prevailed
with
respect
to
the
amount
in
30
controversy
or
has
substantially
prevailed
with
respect
to
the
31
most
significant
issue
or
set
of
issues
presented,
the
burden
32
of
proof
shifts
to
the
department
of
revenue
to
prove
that
the
33
position
taken
by
the
department
was
substantially
justified.
34
If
the
department
meets
the
burden
by
proving
the
position
of
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the
department
was
substantially
justified,
the
taxpayer
shall
1
not
be
considered
a
prevailing
taxpayer.
2
EXPLANATION
3
The
inclusion
of
this
explanation
does
not
constitute
agreement
with
4
the
explanation’s
substance
by
the
members
of
the
general
assembly.
5
This
bill
relates
to
the
administration
of
the
tax
by
making
6
modifications
to
tax
deadlines
and
tax
disputes.
7
Under
the
bill,
if
a
due
date
has
not
yet
passed,
the
running
8
of
the
time
period
leading
up
to
the
due
date
shall
be
tolled
on
9
the
date
a
power
of
attorney
form
is
filed
with
the
department
10
of
revenue
(department).
The
tolling
of
the
time
period
ceases
11
upon
the
date
the
power
of
attorney
is
authorized
or
denied
by
12
the
department.
The
bill
specifies
this
provision
shall
not
be
13
construed
to
toll
any
time
period
in
a
criminal
proceeding.
14
The
bill
amends
Code
section
421.60(2)(b)
relating
to
the
15
furnishing
of
an
explanation
for
an
assessment
of
tax
or
denial
16
of
a
refund
claim.
The
bill
requires
the
department
to
furnish
17
to
the
taxpayer
an
explanation
of
the
reasons
for
a
proposed
18
notice
of
assessment
or
refund
claim
denial
no
less
than
30
19
days
before
issuing
the
notice.
The
bill
allows
the
taxpayer
20
to
request
a
meeting
with
specified
department
personnel
before
21
the
issuance
of
the
notice
of
assessment
or
refund
claim
22
denial.
The
appropriate
department
personnel
relating
to
the
23
assessment
or
refund
claim
denial
is
required
to
meet
with
the
24
taxpayer
in
a
format
requested
by
the
taxpayer
to
discuss
the
25
explanation
of
the
proposed
assessment
or
refund
claim
denial
26
before
issuing
the
notice.
27
Under
the
bill
and
in
current
law,
an
inadequate
explanation
28
shall
not
invalidate
the
notice
of
an
assessment
or
refund
29
claim
denial.
However,
under
the
bill,
if
the
notice
does
not
30
present
a
particular
factual
or
legal
basis
for
the
assessment
31
or
refund
claim
denial,
the
department
may
not
allege
a
new
32
factual
or
legal
basis
for
the
assessment
after
the
taxpayer
33
has
timely
filed
an
appeal.
The
bill
specifies
an
explanation
34
by
the
department
is
sufficient
where
each
factual
and
legal
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basis
for
the
assessment
or
refund
claim
denial
is
stated
in
1
the
notice,
and
when
applicable
the
amount
of
tax,
interest,
2
and
penalty
is
stated
together
with
an
attachment
setting
forth
3
the
computation
of
the
tax
by
the
department.
4
The
bill
amends
Code
section
421.60(2)(i)
relating
to
5
taxpayer
interviews
by
specifying
the
taxpayer
is
permitted
to
6
record
the
interview.
7
The
bill
changes
the
costs
allowed
to
be
recovered
in
the
8
collection
of
tax
penalties
and
interest
(dispute).
The
9
bill
strikes
the
current
$25,000
cap
on
litigation
costs
10
that
are
recoverable
by
a
taxpayer
in
a
dispute
and
modifies
11
the
various
costs
to
be
recoverable
by
the
taxpayer.
The
12
costs
that
may
be
awarded
under
the
bill
include
reasonable
13
court
costs;
reasonable
prevailing
market
rates
for
expert
14
witnesses,
studies,
tests,
analysis,
or
special
projects;
and
15
reasonable
attorney
or
accountant
fees
including
fees
related
16
to
the
recovery
of
costs
allowed
under
the
bill.
However,
17
an
award
shall
not
be
made
with
respect
to
any
portion
of
18
the
proceedings
during
which
the
prevailing
taxpayer
has
19
unreasonably
protracted
the
proceedings.
The
bill
caps
20
the
hourly
rate
for
attorneys
at
$250
except
under
special
21
circumstances.
The
bill
ties
the
$250
hourly
rate
cap
to
22
consumer
price
index
as
calculated
by
the
federal
government
23
beginning
January
1,
2027.
24
Under
the
bill,
if
the
taxpayer
substantially
prevails
in
25
the
dispute
relating
to
the
amount
in
controversy
or
issues
26
involved,
the
burden
of
proof
shifts
to
the
department
to
27
prove
that
the
position
of
the
department
was
substantially
28
justified.
If
the
department
proves
the
position
of
the
29
department
was
substantially
justified,
the
bill
prohibits
30
the
taxpayer
from
recovering
an
award
in
the
dispute.
Under
31
current
law,
the
taxpayer
must
prove
the
position
of
the
32
department
was
not
substantially
justified
in
addition
to
the
33
amount
in
controversy
and
issues
involved.
34
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