Iowa Legislative Update
The 2019 legislative session is in full swing, and several bills of interest to agricultural producers have been signed into law so far.
SF 220 - Section 179 Parity
Signed by Governor Reynolds on March 15 and effective for tax years beginning on or after January 1, 2018, but before January 1, 2019, the law allows corporations and financial institutions the same Section 179 deduction as others ($70,000 deduction / $280,000 investment limitation). The bill only applies to the 2018 tax year because all entities and individuals are subject to a $100,000 Section 179 deduction limit with a $400,000 reduction limitation for 2019. In 2020, Iowa law is scheduled to fully couple with federal law for the Section 179 deduction. For more information on this issue, read this blogpost.
SF 519 - Ag Production Facility Trespass
On March 14, 2019, the Iowa Governor signed into law a new agricultural production facility trespass statute. It was effective immediately. Senate File 519 makes it a crime to obtain access to or employment with an agricultural production facility by use of deception with the intent to cause “physical or economic harm or other injury.” A person who violates this law is guilty of a serious misdemeanor for the first offense and an aggravated misdemeanor for any subsequent offense. The bill also criminalizes conspiracy to commit agricultural production facility trespass. For more information, read this post.
Other Bills - Not Law
SF 555 passed both chambers, but it has not been signed by the Governor. This bill would standardize weight limitations for certain implements of husbandry.
SF 599 – which has not yet come up for a vote – would create the Iowa Hemp Act, authorizing the production and marketing of industrial hemp in Iowa in compliance with federal law and administered by the Department of Agriculture and Land Stewardship. The related House bill is HF 733.
HF 647, not on the debate calendar, would restore enhanced funding for the beginning farmer tax credit, and make some administrative changes to the program.
IDOR and IRS Extend Filing Deadline for Flood Disaster Areas
In a March 19 announcement and a March 29 update, the Iowa Department of Revenue has granted a 30-day extension and suspension of any penalty or interest for taxpayers whose principal residence or business is located in the disaster areas and whose payment or return is due on or before March 31. This includes all tax types. The notice lists the 58 impacted counties.
New Iowa Lawsuit Seeks Mandatory Agricultural Pollution Controls
On March 27, 2019 two environmental groups—Iowa Citizens for Community Improvement and Food and Water Watch—filed a petition in state court seeking injunctive and declaratory relief against the State of Iowa, the Department of Natural Resources and others. It’s not the Des Moines Water Works lawsuit, but it is another legal action asserting that agricultural activity has significantly impaired the quality of the Raccoon River. As compared to the Des Moines Water Works lawsuit, however, the new lawsuit has different legal claims, different parties, and a new venue. It’s a whole different approach to a similar allegation.
The petition states that a meandered portion of the Raccoon River is “impaired for nitrate” because it does not meet the Class C drinking water standards. It also alleges that increased nitrate levels result in adverse health risks to the people of Iowa and increased costs to Des Moines Water Works, which passes those costs to its customers. The petition contends that the Iowa Nutrient Reduction Strategy’s voluntary approach for controlling nonpoint source pollution (affirmed by the passage of SF 512 in 2018) has allowed nitrogen and phosphorus discharges from agricultural sources, including animal feeding operations, to “substantially impair recreational and drinking water use.” Specifically, the lawsuit contends that the State has “abdicated control in favor of the interests of private parties and has allowed agricultural sources to discharge nitrogen and phosphorus without restriction” into the Raccoon River.
Continue reading here.
Law Offers Continued Protection to Agricultural Production Facilities
Iowa has a new agricultural production facility trespass law. This new law—effective March 14, 2019—was passed shortly after a federal district court declared unconstitutional the Iowa Agricultural Production Facility Fraud statute enacted in 2012. These so-called “ag-gag” laws are designed to protect agricultural producers from unauthorized and arguably dangerous intrusion. Opponents contend that these laws violate the First Amendment by preventing whistleblowers from conducting undercover investigations at animal production facilities. Ultimately, the courts will decide the merits of each position. But final answers will not come soon. The U.S. Supreme Court may ultimately have the final word.
The new Iowa law, Senate File 519, provides that people commit “agricultural production facility trespass” if they "use deception to (1) gain access to or (2) obtain employment with an agricultural production facility “with the intent to cause physical or economic harm or other injury.” The new crime is punishable as a serious misdemeanor for the first offense and an aggravated misdemeanor for subsequent offenses. Those who conspire to commit the crime can also be prosecuted.
Continue reading here.
Justice Department Will Argue Against ACA on Appeal
The United States Justice Department has changed its position and is now supporting the position that the Affordable Care Act (ACA) was rendered unconstitutional when Congress set the individual shared responsibility payment to zero in the 2017 Tax Cuts and Jobs Act.
On December 14, 2018, United States District Court Judge Reed O’Connor ruled that when Congress set the individual shared responsibility payment to zero, beginning in 2019, it invalidated the Affordable Care Act in its entirety. Texas v. United States, No. 4:18-cv-00167-O (N.D. Tex. Dec. 14, 2018). Although the federal government filed a notice of appeal with the Fifth Circuit Court of Appeals on January 4, 2019, to challenge the Texas court's decision, it reversed course on March 25, 2019. Assistant Attorney General Joseph Hunt filed a letter with the United States Court of Appeals for the Fifth Circuit stating that the Department of Justice had "determined that the district court's judgment should be affirmed." The letter states that the United States intends to file a brief on the appellees' schedule, in support of the district court's ruling.
Continue reading here.
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Two Weeks and Counting...
April 15 is fast approaching, and our tax professionals will be ready for a well-deserved break! (Hang in there, everyone!) In the meantime, there are a few recurring questions we want to address to save some research time.
- Proposed extender legislation has not gone anywhere. This means no expired tax provisions have been revived.
- Technical correction legislation has not been passed.
- No guidance has been issued for the cooperative provisions.
- Although no formal guidance has been issued since IRS Notice 2018-61, Publication 559 says that beneficiaries of an estate can claim excess deductions, and the Form 1040, K-1 Instructions state "you may deduct the beneficiary’s share of the excess deductions on line 16 of Schedule A (Form 1040)."
Seventh Circuit Says Minister's Housing Exclusion Constitutional
On March 15, 2019, the United States Court of Appeals for the Seventh Circuit reversed a 2017 district court ruling and found that the minister's housing allowance provided under IRC § 107(2) is constitutional. The court ruled that the provision that allows ministers to exclude their housing allowance from taxable income is neither commanded by the Free Exercise Clause nor proscribed by the Establishment Clause of the First Amendment. The court thus applied the historical significance test to find the law constitutional. This (for now) ends concern regarding the continued viability of this tax benefit for minister clients. It is likely further challenge will come down the road. For background information, read this post.
IRS Lowers Penalty Relief Threshold to 80 Percent
The Center for Agricultural Law and Taxation does not provide legal advice. Any information provided on this website is not intended to be a substitute for legal services from a competent professional. The Center's work is supported by fee-based seminars and generous private gifts. Any opinions, findings, conclusions or recommendations expressed in the material contained on this website do not necessarily reflect the views of Iowa State University.