ABI Public Policy Staff Continues to Communicate the Adverse Impact of Marketable Food Products for Human Consumption Administrative Rule

June 18, 2021

ABI public Policy staff has been engaged on behalf of members in the food processing industry seeking to change the course of Iowa Department of Revenue proposed rule ARC 5614C.

The rule relates to the sales taxation of inputs used to produce marketable foods for human consumption. At issue is the definition of what is marketable food for human consumption. Iowa law exempts such inputs and has done so since 1985, revisiting the law only once in 2005 to broaden the exemption. Since that time taxpayers and collectors have operated with a shared understanding of what qualifies for the exemption and an explicit definition is not written in Iowa law or rules. Audits and settlement agreements have further clarified this shared understanding. In May, the Iowa Department of Revenue filed a rulemaking notice that many believe expands revenue collections by creating a definition that would restrict the application of the exemption.

ABI public policy staff testified at a hearing before the Iowa Department of Revenue and Finance and in front of the Administrative Rules Review Committee (ARRC) of the Iowa Legislature to that effect. At the request of the Governor’s office, the Department of Revenue will hold an additional hearing on July 8. The Department re-noticed the rule with a new number, but the same content. A second opportunity to present to ARRC will come on July 13.

If you believe your company could be impacted by this rule, to testify before the Department of Revenue or the Administrative Rules Review Committee or simply for more information please contact JD Davis: jddavis@iowaabi.org.

In addition to the food products rule, the DOR has also noticed a rule on refund requests for data centers and voluntary disclosure as it relates to excise taxes. If you have concerns about either of those rules, please contact JD Davis.