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2018 Legislative Successes

2018 Session Highlights

The session ultimately ended with several successes for FUELIowa members:

  • DRAM liability insurance was not forced onto c-stores.
  • No increases were made to tobacco taxes.
  • The UST fund remained whole.
  • Renewable fuel income tax credits remained whole.
  • $3 million was allocated to grants under the renewable fuel infrastructure program.
  • $750,000 in funding was provided for IDALS fuel quality testing program.
  • Geothermal tax credits ended effective 1/1/2019.
  • Retailers are now better protected from persons using scanning devices at card payment processors.
  • Corporate tax cuts and individual tax cuts were adopted.

Senate File 2169 was signed into law by the Governor without any additional requirements placed on c-stores licensed to sell alcohol. The legislation was pursued by restaurants and bars seeking a limit on their liability for damages resulting from an intoxicated person if the licensee sold or served alcohol to the intoxicated person. There were numerous attempts to require c-stores to carry dram insurance which would have added additional insurance expense and exposure for retailers selling alcohol.  Over the past six years, restaurants and bars have attempted to change the law by requiring c-stores to also carry dram insurance. C-stores were brought up in every subcommittee and every conversation about dram insurance, leading lawmakers to conclude c-stores should be more regulated. Amendments were filed to require c-stores to purchase dram insurance before being issued a Class C beer permit and also to prohibit c-stores from selling cold beer. FUELIowa opposed the amendments and eliminated the threat to c-stores.

There was interest in increasing tobacco taxes to generate more state revenue early on and various interest groups were pursuing the tax increase for health reasons. This legislation did not move forward this year. There continues to be a strong push for this by a large number of health and wellness advocates. We believe this issue will likely be reintroduced next year and aggressively pushed. Retailers near the border will be hurt by lower tax rates in other states should another tax increase be adopted in the future. Iowa’s current tax is $1.36/20-pack. Tobacco tax rates in the states bordering Iowa are as follows: MO – $0.17; NE - $0.64; KS - $1.29; SD - $1.53; IL - $1.98; WI $2.52 and MN $3.614.

The Iowa Comprehensive Petroleum Underground Storage Tank Fund was not tapped into by lawmakers. The state’s goal, communicated by Governor Branstad in 2015, is to terminate the program, the fund, the board and eliminate the liabilities. The program was created in 1989 to provide financial assistance for the cleanup of pre-existing petroleum releases in order to comply with federal environmental regulations, create a financial responsibility mechanism to pay for future releases and provide loan financing for UST locations. The UST Fund Board has been working on a plan to terminate the program, and the legislature has affirmed that work by allowing the Board to responsibly continue to close claims and eliminate liabilities.

Legislation introduced last year would have eliminated renewable fuel income tax credits received by retailers meeting biofuel sales objectives or it would have dramatically altered the effectiveness of the credits by eliminating the refundability of the credits. Lawmakers discussed the credits for months and ultimately determined that a more thoughtful approach and study of the credits should occur before taking action. Senate File 2417 includes a section authorizing a study committee to evaluate tax credits available under Iowa law, including Iowa’s utilization of tax credits as a tool for promoting and supporting economic growth and development. The study committee shall also consider new or different tax credits or incentive programs, or tax rate or structure changes, that will foster economic growth and improve Iowa’s overall tax and economic development climate. The committee shall meet during the 2019 legislative interim to make recommendations for consideration during the 2020 legislative session in a report submitted to the general assembly.

Senate File 2414 provided for $3 million to be appropriated from the Rebuild Iowa Infrastructure Fund (RIIF) to continue funding the Renewable Fuels Infrastructure Program (RFIP) used for cost-share grant awards to help retailers with the costs of installing equipment compatible with renewable fuels.

House File 2491 provided continued funding for the Iowa Department of Agriculture and Land Stewardship (IDALS) through a $500,000 appropriation for the purpose of auditing motor fuel including biofuel processing and production plants, screening and testing motor fuel, including renewable fuel, and the inspection of motor fuel sold by dealers including retail dealers who sell and dispense motor fuel from motor fuel pumps. This $500,000 is in addition to the $250,000 the department receives for fuel quality inspections. (IDALS receives $250,000 annually from the UST Fund for the sole and exclusive purpose of inspecting fuel quality at pipeline terminals and renewable fuel production facilities.) This is a statutory allocation Iowa Code 455G.3(7)(a)-(b)

Senate File 2417 includes an end to the tax credit for qualified geothermal heat pump property installations occurring on or after January 1, 2019. The tax credit was equal to 20% of the federal residential energy efficient property tax credit allowed for geothermal heat pumps for residential property, and it could be carried forward for ten years or until depleted.  This was an important competitive issue for FUELIowa’s propane marketers. In the final day of session, both the House and Senate floor managers of their respective tax reform bills “double-barreled” their strike and replace amendments so that all other amendments would be ruled out of order. It is a masterful move to ensure that the version presented by the floor manager is controlled without changes. Each amendment was identical and replaced all 150 pages of the original legislation up for consideration.

House File 2199 was signed into law by the Governor and modifies the penalties and offenses a person is subject to if possessing or directly or indirectly using a scanning device to capture payment card information. Class D felony punishable by no more than five years in prison and no more than $7,500 in fines is result of this legislation. If possessing the device, the crime is considered aggravated misdemeanor punishable by no more than two years in prison and no more than $6,250 in fines. This continues to be a threat to consumers and retailers. FUELIowa is working with a security consultant to develop training opportunities for retail employees to identify these devices.

We reported a deal on tax reform was cut two weeks ago; however, the details took some time to work out.  Senate File 2417 is the 150-page tax reform result of negotiations. It includes corporate income tax changes. It couples with some federal law tax changes but it does not couple with bonus depreciation. In 2021, the ability to deduct federal income taxes paid is completely eliminated, the alternative minimum tax is eliminated, and the rates are reduced as follows:

•    The first $100,000 is taxed at 5.5%

•    The next $150,000 is taxed at 9.0%

•    Income above $250,000 is taxed at 9.8%

There were several other programs financed through tax credits that changed.

Changes for individual income tax include some coupling with federal tax law for tax year 2018. The rates go down some for 2019 and beyond. The top tax rate is lowered slightly but all the brackets were kept in place. In 2023, the individual income tax code changes more substantially if the general fund meets its targets.

The Section 179 cap for expensing increased from $25,000 to $70,000 and investment limits from $200,000 to $280,000. Shareholders and partners can now depreciate expensing received from pass-through that exceeds the Iowa cap. Each year, the limits for these continue to increase. In 2020, Iowa will fully couple with the federal tax law on section 179, which is $1 million and $2.5 million. Like-kind exchanges (1031) are repealed for all but real property.

There is a new deduction for the federal qualified business income (QBI) beginning in tax year 2019.

•    TY 2019 and TY 2020 — Allow 25% of the federal QBI deduction from Iowa taxable income

•    TY 2021 — Allow 50% of the federal qualified business income deduction from Iowa taxable income

•    TY 2022 —- Allow 75% of the federal qualified business income deduction from Iowa taxable income

•    TY 2023 - Allow 100% of the federal qualified business income deduction from Iowa taxable income. Because the starting point would be federal taxable income. (If triggered, but not likely)

Finally, the bill reformed Iowa sales and use tax law, focusing primarily on digital goods, ride sharing, subscriptions, online sales, narrow definition of manufacturing and online travel company websites.

2018 FUELIowa Legislative Positions
The recent shortfalls in the state budget and impending elections for some state Senators and Representatives will impact what is considered this year by legislators. FUELIowa is ready to ensure your needs are represented at the statehouse. Heading into session, our legislative positions for this year include:

Fuel Tax Credits

FUELIowa supports retail fuel tax credits that have been instrumental in advancing the use of cleaner, renewable home-grown biofuels.  Two years ago, statewide research used by the legislature to review and renew these credits demonstrated these incentives were effective and should be kept in place through 2021.  Eliminating or modifying these credits before the market for such fuels has been established could set back the growth and jeopardize investments made by fuel marketers based on the certainty of these tax credits.

Iowa Motor Fuel Labeling

FUELIowa supports changing Iowa’s motor fuel labeling laws to be consistent with federal regulations for mid- and high-level ethanol blends of fuel.  Currently, state and federal regulations conflict, exposing Iowa retailers to criminal fines and potential liability for consumers who improperly fuel a vehicle.

UST Program

FUELIowa has long supported Iowa’s UST clean-up program for the remediation of contaminated soil and preservation of Iowa’s rural fuel distribution network. FUELIowa believes UST fund monies should continue to be used for these purposes.

Bottle & Can Tax

FUELIowa supports replacing the current bottle and can tax program with a more efficient, safe and economical comprehensive recycling program that protects the environment and public health.


2018 Legislative Updates

While the statehouse is in session, FUELIowa provides legislative updates to members through the weekly Fuel Insider.  


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