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We’ve received many inquiries
regarding the status of Iowa law in regard to conformity with the Internal
Revenue Code, in particular, Section 179 expensing. We recognize that
there are many other provisions impacted by a lack of conformity, but at
present, many practitioners and taxpayers are concerned about the impending
March 1, 2016 filing due date for those who derive at least two-thirds of their income from farming or
commercial fishing.
Current Iowa law allows a $25,000
dollar limitation and a $200,000 investment limitation for Section 179
expensing. The Iowa Legislature has the ability to enact law that conforms with
the permanent federal increases to Section 179 expensing limitations.
However, even if they choose to do so, given the rules of procedure, it would
be virtually impossible for such a law to be in place and effective by March 1,
2016.
To avoid an underpayment penalty,
farming and commercial fishing taxpayers can file returns and pay in full any
tax due under current Iowa law on or before March 1, 2016. If Iowa law is
changed after March 1, 2016 to provide for different Section 179 expensing
limitations, those taxpayers can file amended returns. This could result in a
refund of tax that was overpaid. Returns filed that do not reflect Iowa
law will be subject to any applicable penalty and interest.
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