DOR Issues Updated Guidance and Rules on Research Activities Credit and 179 Expensing

The Iowa Department of Revenue has released instructions on how to fully comply with changes made to the Research Activities Credit. The updated guidance is being issued because of the significant tax reform legislation, SF2417, signed into law by Gov. Reynolds on May 30. Several modifications were made to RAC, including which businesses and individuals now qualify for the credit, which types of businesses may have to amend their 2017 tax returns and a clarification on how the credit is calculated. Click here to read a current draft of the administrative rules the department has filed with the Legislative Services Agency. If you have questions about amending a return or the Penalty Waiver Request, contact the department at 515-281-0763 or IDRAR@iowa.gov. Comments on the rules can be submitted to Tim Reilly until 4:30 p.m. on October 17. A hearing will be held on the rules October 17, 10-11 a.m., in the auditorium of the Wallace State Office Building in Des Moines.

In addition, DOR filed 179 expensing rules to conform with federal section 179 expensing and to conform with the state-level tax reform bill. According to the department, “these provisions phase-in full conformity with the federal deduction limitations over several years and implement new provisions that help prevent owners of pass-through entities from losing 179 deductions that comply with the federal limits but exceed the Iowa limits.” The noticed rule can be found here. Comments can be submitted on the rules to the department until 4:30 p.m. on October 17 and should be directed to Ben Clough. A hearing on these rules will also be held October 17, 9-10 a.m., in the auditorium of the Wallace State Office Building in Des Moines. You may also provide feedback to Nicole Crain at ABI.