The Deyoe Dispatch

By State Representative Dave Deyoe

 

End of Session

 

The 2008 legislative session came to an end at 2:38 am Saturday morning, April 26. The end came after an exhausting week filled with many late nights and lots of wrangling between the House, the Senate, and the Governor. With Democrats in control of the Governorship and both Houses most of the negotiation occurred behind closed doors and Republicans had little input.

 

The legislature continued to find new ways to spend money right up until the last minute. Right now it appears that for this two year term spending will be up about $906 million, or 17% over the previous year. Assuming state revenue only grows 2% next year as the Revenue Estimating Conference predicts, we will be looking at about a $500 million hole in the budget for FY 2010.

 

I will write more about how the money was spent and the major legislation that was passed in a future column.

 

House Okays Renewable Fuel Infrastructure Program Update

 

On Tuesday, April 22, 2008, the House passed House File 2689 by unanimous 96-aye vote.  House File 2689 makes a number of changes to the state’s biofuels Renewable Fuel Infrastructure Program (RFI).  The bill accommodates the use of retail motor fuel blender pumps, requiring state government entities to use biofuels in their governmental vehicle when available, and authorizing a state renewable fuel marketing plan and campaign effort. 

 

The bill includes provisions to enable the use of so-called ‘blender pumps” that would allow a motorist to individually select the proportion of biofuel mix in the motor fuel that they desire to fill their flex-fuel and diesel vehicle tanks. 

 

The second aspect of the bill tweaked Code provisions on how biodiesel retail tax credits are calculated to move to a station-station basis, which would make the biodiesel calculation consistent with the way the ethanol retail tax credit is calculated.  Retail motor fuel sites seeking to qualify for this tax credit still have to sell at least 50% of the diesel sales as biodiesel fuel blends and could earn 3-cents per gallon tax credit for each biodiesel blend gallon sold. 

 

The third aspect of the bill added new Department of Revenue reporting requirements for biofuel producers on their production volume and the amount they export out-of-state to corroborate biofuel sales in Iowa. 

 

The fourth aspect of the bill expands the existing ethanol renewable fuel use by state vehicles to include biodiesel fuel use when commercially available and practical.  The final aspect of the bill creates a renewable fuel marketing plan and campaign to be conducted by the state Office of Energy Independence.  The plan is to assess why Iowa owners of diesel and flex-fuel vehicles aren’t using more biofuels, and the marketing campaign is to education Iowans on the advantages of using biofuels in their vehicles.  The marketing plan and campaign will be funded with a portion of funds appropriated to the Iowa Power fund.

 

 

New Identity Theft Scam Threatens Americans Receiving Stimulus Checks

 

Now that Tax Day has passed, Americans are now waiting for the federal government to begin distributing the $600 economic stimulus checks.  But the stimulus checks have also created another opportunity for scam artists to trick taxpayers into providing them with their Social Security numbers and bank account information.

 

One of the newest scams involves an e-mail claiming to come from the IRS about the "2008 Economic Stimulus Refund".  The email tells recipients to click on a link to fill out a form, apparently for direct deposit of the payment into their bank account. This appears to be an identity theft scheme to obtain recipients' personal and financial information so the scammers can clean out their victims' financial accounts.

 

In reality, taxpayers do not have to fill out a separate form to get a stimulus payment or have it directly deposited; all they had to do was file a tax return and provide direct deposit information on the return.  Anyone who receives one of these emails should forward it to phishing@irs.gov.  This will allow the IRS and federal law enforcement to track down and prosecute the senders of the emails.

 

Another scam, which is preying on seniors, is a phone call supposedly from the IRS.  The caller asks the taxpayer for their Social Security and bank account numbers, claiming that the IRS needs the information to complete the processing of the taxpayer's payment.  The call also may say that the only way to get the stimulus payment is through direct deposit of the funds.  Anyone who receives these calls should contact law enforcement or contact the IRS.

 

The Internal Revenue Service has made it clear that they will be using the information submitted on a person’s tax return this spring to send out the stimulus checks.  They will not be seeking any other information via letter, fax, email, or phone call so that a taxpayer will get their payment.  As always, Iowans should be wary when someone asks for this information.

 

 

State Income Taxes Due Wednesday

 

Iowa Individual Income Tax returns are due April 30 of each year, even though federal income tax returns are due on April 15 of each year.

 

The Iowa Individual Income Tax is imposed on Iowa net income of individuals and estates and trusts. Individuals who have a net income of greater than $9,000 must file an Iowa income tax return. Married taxpayers with a combined net income of greater than $13,500 are required to pay Iowa income tax. (However, there is an increased filing threshold for Iowans over the age of 65, this is detailed below).

 

A person claimed as a dependent on another person's Iowa return and having a net income of $5,000 or more is required to pay Iowa income tax. Individuals may also be subject to the minimum tax on tax preferences and a tax on lump sum distributions from pension plans.

 

New Filing Threshold for Taxpayers 65 and Older

During the 2006 Legislative Session, Senate File 2408, which changed the income tax filing threshold for taxpayers 65 and older, was approved.  The changes established in that bill are effective on this year’s tax return. 

 

An Iowa return is not required for single persons with income of $18,000 or less, and an Iowa return is not required for all other filers with income of $24,000 or less. In the case of married persons, the higher threshold amounts apply even if only one spouse is 65 years or older as of December 31 of the tax year.

 

In order to claim this benefit, taxpayers must check an informational box. On the paper form, the box is located in the upper right corner of the first page of the IA 1040.

 

Taxpayers who are 65 years of age or older, except single taxpayers, who have income just above the new threshold amount of $24,000 should complete the alternate tax calculation worksheet for taxpayers 65 or older. In the case of married persons, the alternate tax can be applied even if only one spouse is 65 years or older as of December 31 of the tax year.

 

Changes to the Iowa Income Tax Return:

Social Security Worksheet

The phase-out of the income tax on Social Security benefits begins with the 2007 tax year. The worksheet calculates the 32% reduction established by the Legislature in 2006. 

2007 Tax Year Standard Deduction

• Filing Status 1 (Single):  $1,700
• Filing Status 3 and 4 (Married filing separately on combined return or married filing separate returns):  $1,700
• Filing Status 2, 5, or 6 (Married filing joint return, Head of Household, or Qualifying Widow(er) with Dependent Child):  $4,200

 

Earned Income Tax Credit

As a result of Senate File 590 from the 2007 Legislative Session, the Earned Income Tax Credit is now 7.0% of the Federal Earned Income Credit. The Iowa EICT is also refundable.   

Earned Income Tax Credit Background

The federal EITC is a refundable income tax credit for low-income working individuals and families.  Congress originally approved the tax credit legislation in 1975 in part to offset the burden of social security taxes and to provide an incentive to work.  When the EITC exceeds the amount of taxes owed, it results in a tax refund to those who claim and qualify for the credit (for federal tax purposes only)

A taxpayer may be eligible for the EITC based on the following general requirements:

• The taxpayer earned less than $12,120 ($14,120 if married filing jointly) and does not have an any qualifying children
• The taxpayer earned less than $32,001 ($34,001 if married filing jointly) and has one qualifying child
• The taxpayer earned less than $36,348 ($38,348 if married filing jointly) and has more than one qualifying child

In addition a taxpayer must meet a few basic rules:

• Must have a valid Social Security Number
• Must have earned income from employment or from self-employment.
• Filing status cannot be married, filing separately.
• Must be a U.S. citizen or resident alien all year, or a nonresident alien married to a U.S. citizen or resident alien and filing a joint return.
• Cannot be a qualifying child of another person.
• If the taxpayer does not have a qualifying child, they must:
              Be age 25 but under 65 at the end of the year,
              Live in the United States for more than half the year, and
              Not qualify as a dependent of another person
• Cannot file Form 2555 or 2555-EZ (related to foreign earn income)

Additionally, members of the military can elect to include their nontaxable combat pay in earned income for the earned income credit. 

Chapter 20 update 

Last month HF 2645 passed the House and the Senate and has been on hold ever since then.

This is the bill that makes Iowa’s collective bargaining laws the most liberal in the nation. On the last day of this session the bill was sent to the Governor. He will have 30 days to sign it or veto the bill.

 If you have any questions or concerns please contact me.

Home phone:   515-382-2352

E-mail: Dave.Deyoe@legis.state.ia.us