Iowa Department of Revenue Notice of Intended Action ARC 2178C Copyright 2014
City of Dubuque Consent Items # 7.
ITEM TITLE: Iowa Department of Revenue Notice of Intended Action ARC 2178C
SUMMARY: City Manager recommending approval of the City's response to the Iowa
Department of Revenue's proposed amendments to the Iowa tax statutes.
SUGGESTED DISPOSITION: Suggested Disposition: Receive and File; Approve
ATTACHMENTS:
Description Type
❑ Letter to Iowa Department of Revenue ARC 2178C Supporting Documentation
Dubuque City Manager's Office
THE CITY OF City Hall
DUDT TB 50 West 13th Street
UB Dubuque, IA 52001-4805
Masterpiece on the Mississippi Office (563) 589-4110
Fax (563) 589-4149
TTY (563) 690-6678
c,tymgr@cityofdubuque.org
www.cityofdubuque.org
October 19, 2015
Courtney M. Kay-Decker
Director of the Department of Revenue
Iowa Department of Revenue
c/o Victoria Daniels at victoria.daniels@iowa.gov
Re: ARC 2178C, Notice of Intended Action to amend Chapter 15, "Determination of a
Sale and Sale Price," Chapter 18, 'Taxable and Exempt Sales Determined by Method
of Transaction or Usage," Chapter 219, "Sales and Use Tax on Construction Activities,"
and Chapter 230, "Exemptions Primarily Benefiting Manufacturers and Other Persons
Engaged in Processing," Iowa Administrative Code.
Dear Ms. Kay-Decker:
The purpose of this letter is to respond to the Revenue Department Notice of Intended
Action ARC 2178C, and to provide comments on behalf of the City of Dubuque. The
City has a number of concerns with the proposed amendments and requests that the
proposals be withdrawn.
First, the Notice of Intended Action states that "The proposed changes will expand the
number of items that qualify as exempt computers, machinery, or equipment." While the
City acknowledges the Director's authority under Iowa Code Chapter 423 to administer
the Iowa tax statutes, the City has serious questions with the Director's claim of
authority to create new exemptions from taxation which the legislature has not
approved. Some of the proposed changes appear to change laws rather than clarify or
interpret statutes or court decisions.
Second, the Notice of Intended Action states further that "the Department finds that the
changes to the program are likely to have a positive impact on jobs" and also notes that
"Reducing the tax burden on business inputs for manufacturers is likely to have a
positive impact on jobs". Again, while we acknowledge the Director's broad grant of
statutory authority, Chapters 422 and 423 of the Iowa Code say nothing about job
creation being a basis for Department rulemaking. As such, the proposed rulemaking
goes beyond the appropriate scope of such authority.
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Third, the reference in the Notice of Intended Action to the reduction of taxes and tax
burdens similarly indicates that other reasons, outside the scope of the Director's
delegated authority, may be prompting the proposed rulemaking. Even if that were a
lawful basis upon which to exercise rulemaking authority, the proposed amendments
won't "reduce" taxes; they will simply shift the tax burden from manufacturing concerns
to residential property taxpayers. The projected magnitude of the shift, estimated in the
Notice to be $35 million to $40 million annually, shows that this would be a significant
policy decision. The proposed amendments are a substantial modification of
established rules upon which reliance has been placed, and cannot be described as
merely administering the tax laws.
Finally, as you know, amendments such as those proposed will have a very significant
adverse impact on the repayment of sales tax secured bonds, including those which the
City issued in connection with the sales tax increment flood grant made by the State of
Iowa under the Flood Mitigation Program. For that reason, if our tax laws are to be
significantly modified to the detriment of local governments, it should be done by
legislation.
On behalf of the City of Dubuque, I urge you to withdraw or substantially revise the
proposed amendments.
Sincerely,
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Mi ael C. Van Milligert
City Manager
Cc: Mayor Roy Buol
Dubuque City Council
Barry Lindahl, City Attorney
Service People Integrity Responsibility Innovation Teamwork