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WILL IOWA ALLOW 2003 BONUS DEPRECIATION ON 2004 RETURNS?

January 13, 2005

Danny Carroll (R-Grinnell), Iowa House Speaker Pro Tempore, has introduced a bill (HF 23) to allow Iowans to take their 2003 "bonus" depreciation on 2004 returns. The bill would also allow taxpayers to "catch up" their 2003 Iowa Section 179 deductions on 2004 returns.

Legislation enacted last September allows Iowans to take "bonus" depreciation on assets placed in service after May 5, 2003; the legislation also conformed the limit for Iowa Section 179 deduction to the federal level of $100,000 for 2003. Of course, most Iowans had already filed their 2003 returns by the time this law was enacted.

The Department of Revenue has taken the misguided position that the only way for Iowans to take advantage of the law change is to amend their 2003 returns. It would be much more reasonable to permit Iowans to "catch up" the depreciation on 2004 returns, eliminating the need to pay preparers to amend returns. The cost of amending returns effectively denies the advantage of the deduction to many Iowans.

The bill to do legislatively what the Department refuses to do administratively is co-sponsored by Linn County Democrat Rob Hogg, so it doesn't appear to be a partisan issue. With Rep. Carroll pushing the bill, we can hope it will move quickly; otherwise it will be too late in the filing season to be of much use. No Senate counterpart of the bill has yet been introduced, as far as we can tell.

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