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Federal deductibility survives; Corporate NOL carrybacks don't.
April 27, 2009
The General Assembly went home for the year after 5 a.m. yesterday without killing the Iowa deduction for federal taxes paid. They were never able to get the 51st vote they needed to get this tax increase through the Iowa House of Representatives.
Yet Iowa taxpayers didn't escape undamaged. Perhaps the nastiest knock was the repeal of corporate NOL carrybacks starting with 2009 losses. So all you corporations with losses, you just better hope that they'll cut you in on the big bonding boondoggle, as they won't let you get back your own taxes just because you are losing money.
The Department of Revenue will also get to keep your tax refunds an extra month without paying you interest. Like the NOL carryback repeal, this was part of a bill that put a cap on certain corporate welfare tax credits - a morsel of fiscal sanity wrapped in a poop sandwich.
The legislature never did conform with the latest federal extenders, so taxpayers taking the educator expense deduction or the tuition deductions on their federal returns will be out of luck on their Iowa returns.
They did manage to find time to expand the Microsoft/Google boondoggle to more server farms and to worsen the glut of unrented real estate by increasing the cap on historic rehab credits.
It always could have been worse. The legislature never did pass the proposal to allow counties and municipalities to impose their own income taxes, for example. Unfortunately, they'll be back again next year for a new round of fiscal incontinence.
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