8 Livestock production credit refunds for corporate taxpayers and individual

taxpayers. For tax years beginning on or after January 1, 1996, corporate and individual taxpayers who own certain livestock, who have livestock production operations in Iowa in the tax year, and who meet certain qualifications are eligible for a livestock production credit refund. The amount of a livestock production credit refund is determined by adding together for each head of livestock in the taxpayer’s operation the product of 10 cents for each corn equivalent deemed to have been consumed by that animal in the taxpayer’s operation in the tax year. For tax years beginning on or after January 1, 1998, only qualified taxpayers that have cow-calf livestock operations described in paragraph “o” of subrule 305.8(2) will be eligible for the livestock production refunds, notwithstanding the other types of livestock operations mentioned in this rule. Note that the livestock production credit refund is also available to taxpayers who meet the qualifications described in subrule 305.8(1) and operate certain types of poultry operations in this Revenue[701] IAC 2/5/25 Ch 305, p.5 state and own the poultry in the operations. The amounts of the livestock production credit refunds for these taxpayers are determined on the basis of 10 cents for each corn equivalent deemed to have been consumed by the chickens or the turkeys in the taxpayers’ poultry operations in the tax year. However, the amount of livestock production credit refund may not exceed $3,000 per livestock or poultry operation for a tax year. In addition, the amount of livestock production credit refund per taxpayer for a tax year may not exceed $3,000. Therefore, if a particular taxpayer is involved in a cow-calf beef operation, a sheep-ewe flock operation, and a farrow-to-finish hog operation, the maximum livestock production credit refund for this taxpayer may not exceed $3,000. General references in this rule to livestock, livestock production, and livestock production operations also apply to poultry, poultry production, and poultry production operations. In the case of married taxpayers, each of the spouses may be eligible for a livestock production refund of up to $3,000 if each of the spouses was involved in a livestock production operation independently from the other spouse and independently from other taxpayers in the tax year. If both spouses are involved in the same livestock operation, the maximum refund from that operation is $3,000 which may be allocated between the individuals in the ratio of each spouse’s ownership interest in the operation. If a livestock production operation is conducted by a partnership, limited liability company, subchapter S corporation, estate, or a trust, the livestock production credit refund from the entity is to be allocated to the owners of the entity in the same ratio as earnings are allocated to the owners. In situations where a livestock production operation is conducted partly within and partly without Iowa, only the livestock production activity in Iowa during the tax year will be considered for purposes of the livestock credit refund. The livestock production refund amounts for these taxpayers is to be allocated on the basis of sales of Iowa livestock which qualify taxpayers for the livestock production refund to total sales of livestock which qualify taxpayers for the refund. However, the refunds from any operations may not exceed $3,000. The following subrules outline how the livestock production credit refund program is to be administered by the department of revenue: 305.8(1) Qualifications for the livestock production credit refunds. For tax years beginning on or after January 1, 1997, individual and corporate taxpayers will be eligible for the livestock production credit refund if the taxpayer’s federal taxable income is $99,600 or less. In the case of married taxpayers, their combined federal taxable income must be considered to determine if they are eligible for the credit. For each tax year beginning after 1997, the federal taxable income specified previously in this subrule shall be multiplied by the cumulative index factor for that tax year to calculate the federal taxable income that will be used to determine whether a taxpayer is eligible for the livestock production refund that is authorized for that tax year. “Cumulative index factor” means the product of the annual index factor for the 1997 calendar year and all annual index factors for subsequent calendar years. The annual index factor equals the annual inflation factor for that calendar year as computed in Iowa Code section 422.4 for purposes of indexation of the tax rates for individual income tax. 305.8(2) Definitions related to the livestock production credit refunds. The following definitions explain livestock and poultry for purposes of this rule. The definitions also describe the various types of livestock operations of taxpayers which may qualify the taxpayers for the livestock production credit refunds and specify how the refunds are to be computed for the various types of livestock operations: a. For the purposes of this rule, the term “livestock” means domestic bovine animals which will be referred to as bulls, heifers, cattle, calves, or cows in this rule, domestic ovine animals which will be referred to as sheep, lambs, rams, or ewes, or domestic swine which will be referred to as hogs or pigs. That is, for purposes of this rule, “livestock” includes only those farm animals which may qualify their owners for the livestock production credit refund. “Livestock” does not include horses, goats, donkeys, mules, oxen, furbearing mammals, other mammals, or other classes of animals, although some of these animals or species may be considered to be “livestock” in other contexts or situations. b. For purposes of this rule the term “poultry” means only domestic chickens and domestic turkeys as only these types of birds may qualify their owners for the livestock production credit refunds. “Poultry” does not include ducks, geese, wild turkeys, emus, ostriches, or other fowl or birds, although some of these species may be considered to be poultry in other contexts or situations. Revenue[701] Ch 305, p.6 IAC 2/5/25 c. For purposes of this rule, the term “farrow-to-finish” hog operations comprises those hog production operations where the majority of the hogs sold from the operation are from animals farrowed and raised in the operation which are sold at a prime market weight of 200 pounds or more. In order to compute the livestock production credit refund amounts for the “farrow-to-finish” hog production operations, the corn equivalent factor of 13 per animal sold, or $1.30, is multiplied by the number of hogs sold at prime market weight in the tax year which were farrowed and raised in the operation. No corn equivalent credits are given for hogs sold at the prime market weight which have been in the operation less than three months on the date of sale. In the “farrow-to-finish” operations, hogs sold at a weight that is less than the prime market weight also are considered for purposes of computing the livestock production credit refund for the operation, but only at the corn equivalent factor of 2.6 or $.26 per pig sold. In “farrow-to-finish” hog operations, if any pigs are purchased at the feeder pig weight of less than 60 pounds and are sold at prime market weight (200 pounds or more), see paragraph “e” in this subrule for the corn equivalent factor which applies to these transactions. d. For purposes of this rule, the term “farrow-to-feeder-pig” hog operations includes those operations where essentially all the pigs farrowed in the operation are sold at an average weight of less than 60 pounds per pig, or at “feeder pig” weight. The potential livestock production credit refunds for these operations are computed by multiplying the corn equivalent factor of 2.6 or $.26 times the number of pigs sold at the “feeder pig” weight from these operations in the tax year. However, the corn equivalent factor of 13 or $1.30 per animal sold can be used for hogs sold at the prime market weight (200 pounds or more) from these operations for those animals where there is documentation that the hogs were born and raised in the operation or that the hogs were in the operation for a minimum of three months at the time the hogs were sold. e. The term “finishing feeder pigs” hog operations comprises those operations where the majority of the hogs in this operation are purchased when these animals weighed less than 60 pounds or at the “feeder pig” weight and the animals are sold at the time the animals are at the prime market weight of 200 pounds or more per hog. The potential livestock production credit refunds for these operations are computed by multiplying the corn equivalent factor of 10.4 or $1.04 times the number of animals sold in the year at the prime market weight. However, only those animals that were in the operation for a minimum of three months at the time the hogs were sold at prime market weight can be considered for purposes of the livestock production credit refund. Corn equivalent factor credits of 2.6 or $.26 are given for animals which are purchased at the “feeder pig” weight of less than 60 pounds and were in the operation for a minimum of three months when the hogs were sold at a weight which is less than the prime market weight of 200 pounds or more per hog. f. For purposes of this rule, the term “layer poultry operations” includes operations where the eggs produced by the chickens in the operation are sold for human consumption. The livestock production credit refunds for these operations are computed on the basis of the average number of chickens in the operation in the tax year multiplied by the corn equivalent factor of .88 or $.088. The average number of chickens in the operation in the tax year is the aggregate of the number of chickens in the operation on the first day in the tax year that the operation was in production and the number of chickens in the operation on the last day of the tax year in which the operation was in production divided by 2. However, in a situation where the operation was started or was shut down sometime during the tax year, the livestock refund amount otherwise computed must be reduced by 8.33 percent for each month in the tax year in which the operation was not in production. Thus, in the case where the computed livestock refund amount was $2,000 and the operation was in production for only nine months of the tax year, the adjusted refund amount would be $1,500 ($2,000 x .0833 x (3) = $500). ($2,000 - 500 = $1,500) g. For purposes of this rule, the term “turkey production operations” means operations involved in raising domestic turkeys for sale for human consumption and where the turkeys are sold at a prime market weight. The prime market weight for male or tom turkeys is between 30 and 35 pounds. The prime market weight for hen turkeys is between 22 and 25 pounds. The livestock production credit refund for this type of operation is computed by multiplying the number of turkeys sold in the tax year at the prime market weight times the corn equivalent factor of 1.5 or $.15. However, only those turkeys that were in the operation for a Revenue[701] IAC 2/5/25 Ch 305, p.7 minimum of three months on the date the turkeys were sold may be considered for purposes of computing the livestock production credit for the turkey operation. h. For purposes of this rule, the term “broiler poultry operations” means poultry production operations whereby the chickens raised in the operations are sold for human consumption at a prime market weight or broiler weight between 3 pounds and 6 pounds depending on the breed or breeds of chickens. The livestock production credit refund for this type of operation is computed by multiplying the number of chickens sold in the tax year at broiler weight by the corn equivalent factor of .15 or $.015. However, only chickens that are in the broiler operation for a minimum of six weeks before the chickens are sold at broiler weight may be considered for purposes of computing the livestock production credit for these operations. i. Reserved. j. For purposes of this rule, “stocker cattle operations” are beef cattle operations where essentially all cattle in the operations are purchased as calves, raised in the operation at least two months, and the cattle are sold in a range from 700 to 900 pounds per head which is deemed to be the “stocker weight.” Cattle in the operation that were sold at a weight of less than 700 pounds may not be counted for purposes of computing the livestock production credit refund for the operation. The livestock production credit refunds for these operations is computed on the basis of the number of cattle sold in the year at the stocker weight times the corn equivalent factor of 41.5 or $4.15 per head. Cattle sold in the tax year must be reported on a first-in, first-out basis unless records of the taxpayer can support a different order of sale of the animals. If this operation includes calves that were raised on the farm where they were born, these calves qualify for the corn equivalent factor of 41.5 or $4.15 per head if the calves were unsold at the end of the tax year and the calves were in the operation for a minimum of two months after the calves were weaned. k. For purposes of this rule, “beef feedlot operations” include those beef cattle operations whereby the cattle are purchased as calves approximately 60 days from the time the calves were weaned or at a “stocker weight” and are sold at a feedlot weight of 900 pounds or more after a three-month period when the animals were on a high concentrate diet. Note that any animals which are purchased for the operation and are maintained in the herd for less than four months at the time of sale do not qualify the taxpayer for the livestock production credit refund of $7.50 per head of cattle sold. The livestock production credit refund for these operations is computed by multiplying the number of cattle sold in the year at the feedlot weight times the corn equivalent amount of 75 or $7.50 per animal. However, if any cattle in the operation are sold at the “stocker” weight of at least 700 pounds but less than 900 pounds, these animals may be counted for the livestock production credit refund at a corn equivalent amount of 41.5 or $4.15 per head of cattle sold to the extent the cattle were in the operation for two months or more at the time of sale. If any cattle in the operation in the tax year were sold at a weight of less than 700 pounds, the sales of these cattle may not be counted for the livestock production credit refund. Cattle sold in the tax year must be reported on a first-in, first-out basis unless records of the taxpayer can support a different order of sale of the cattle. l. For purposes of this rule, “dairy cattle operations” includes those cattle operations where the primary purpose of the operations is the production of milk and milk products for human consumption. The livestock production credit refund is computed by multiplying the aggregate of the number of milking cows in lactation on December 31 of the tax year and the number of cows bred to calve within 60 days of December 31 and the number of breeding bulls in inventory on December 31 times the corn equivalent number of 350 or $35 per cow. However, cattle that were purchased in the period between July 1 and December 31 of the calendar year may not be considered for purposes of computation of the livestock production credit for the dairy operation. In the case of a “dairy cattle operation” which started or ceased production in the tax year, the livestock production credit refund otherwise computed must be reduced by 8.33 percent for each month in the tax year in which the livestock operation was not in production. Heifers in the operation are not counted for purposes of the credit until the animals are bred to calve. m. For purposes of this rule, “ewe flock sheep operations” are sheep operations whereby the majority of the sheep and lambs sold from the operation were born and raised in the operation. The livestock production credit refunds for these operations are computed by multiplying the number of ewes and rams in inventory on December 31 of the tax year times the corn equivalent factor of 20.5 or $2.05 per ewe or ram. Any ewes or rams purchased within three months before December 31 of the tax year may not be considered for purposes of computing the livestock production credit for the operation. In addition, lambs Revenue[701] Ch 305, p.8 IAC 2/5/25 sold in the tax year from the operation may be counted for the production credit refund at 4.1 corn equivalents or $.41 for each lamb sold to the extent the lambs were in the operation for a minimum of three months prior to the date of sale. n. For purposes of this rule, “sheep feedlot operations” are sheep production operations where lambs born and raised in the operation are sold after the lambs have been in the operation for a minimum of three months prior to the date of sale. The livestock production credit refunds are computed by multiplying the number of lambs sold in the tax year times the corn equivalent factor of 4.1 or $.41. o. For the purposes of this rule and for tax years beginning on or after January 1, 1998, “cow-calf operations” means those livestock cattle production operations that include bred cows, bred heifers, and breeding bulls. The livestock production credit refunds for cow-calf operations are determined only on the number of bred cows, bred heifers, and breeding bulls in inventory of the operations on December 31 of the tax year times the corn equivalent factor of 111.5 or $11.15. However, only those bred cows, bred heifers, and breeding bulls in inventory on December 31 which were also in inventory on July 1 of the same calendar year may be counted for purposes of computing the livestock production refunds. 305.8(3) Filing claims for the livestock production credit refunds. Taxpayers who are eligible for the livestock production credit refunds must file refund requests on claim forms provided by the department that must be attached to their income tax returns for the tax year in which the livestock production occurred. The claim forms must be filed with the income tax returns within ten months after the end of the tax year of the return in order for the refund claims to be timely. Thus, in the case of a taxpayer filing a livestock production refund claim form with the 1996 Iowa income tax return for calendar year 1996, the claim forms must be filed by October 31, 1997, in order for the claims to be timely. Taxpayers may not request extensions for filing claims for the livestock production refunds. The department will determine by February 28 of the year after the year in which the livestock production credit refund claims are to be filed if the total amount requested on the refund claims exceeds the amount appropriated for the refunds for that tax year. If a taxpayer’s refund claim is not payable on February 28 because the taxpayer is a fiscal year filer, that taxpayer’s claim will be considered to be a claim for the following tax year. However, in order for this claim to be considered to be a valid refund claim for the following tax year, the refund claim must have been filed within ten months after the end of the fiscal year of the taxpayer. However, in the case of livestock production credit refund claims for fiscal year periods beginning in 1996 which are not received soon enough to be considered for the refunds to be issued in February 1998, only claims for cow-calf livestock production operations will be considered with the livestock production refund claims for the 1997 tax year. If a taxpayer files a fraudulent claim for a livestock production credit refund for a tax year, the taxpayer will be considered to have forfeited any right or interest to a livestock production refund for any subsequent tax year after the year of the fraudulent claim. 305.8(4) Records needed to establish livestock production credit refunds. The burden is on the taxpayer to maintain those records and documents which support the livestock production credit refund that was claimed by the taxpayer. Necessary records and documents must include, but are not limited to, the ones mentioned in this subrule. Some of the necessary records are inventory schedules showing the number of livestock or poultry in the livestock operation on certain dates in the tax year. Sales of livestock or poultry in the tax year must be supported by scale tickets, packing house invoices, sales receipts, sales barn invoices, and similar documents. Dairy herd improvement association records and similar inventory forms can be used to establish the number of animals or the number of birds on hand in the operation on a certain day in the tax year. These documents are not to be submitted with the taxpayer’s income tax return with the livestock production credit refund claim form. Instead, the documents are to be retained with other tax records for at least three years in case of possible audit by the department of revenue. 305.8(5) Repeal of the livestock production credit refund. The livestock production credit was repealed on November 1, 2008, for refund claims filed on or after that date. Any livestock production credit refunds requested on Iowa tax returns filed on or after November 1, 2008, will not be issued. This rule is intended to implement Iowa Code sections 422.120, 422.121, and 422.122 as amended by 2009 Iowa Acts, Senate File 478, section 152. [ARC 7761B, IAB 5/6/09, effective 6/10/09; ARC 8605B, IAB 3/10/10, effective 4/14/10; Editorial change: IAC Supplement 11/2/22; Editorial change: IAC Supplement 10/18/23] Revenue[701] IAC 2/5/25 Ch 305, p.9 [Filed 12/12/74] [Filed 9/18/78, Notice 7/26/78—published 10/18/78, effective 11/22/78] [Filed emergency 6/11/79—published 6/27/79, effective 6/11/79] [Filed 12/7/79, Notice 10/31/79—published 12/26/79, effective 1/30/80] [Filed emergency 7/17/80—published 8/6/80, effective 7/17/80] [Filed 12/5/80, Notice 10/29/80—published 12/24/80, effective 1/28/81] [Filed 5/7/82, Notice 3/31/82—published 5/26/82, effective 6/30/82] [Filed 10/22/82, Notice 9/15/82—published 11/10/82, effective 12/15/82] [Filed 12/16/83, Notice 11/9/83—published 1/4/84, effective 2/8/84] [Filed 7/27/84, Notice 6/20/84—published 8/15/84, effective 9/19/84] [Filed 8/10/84, Notice 7/4/84—published 8/29/84, effective 10/3/84] [Filed 5/31/85, Notice 4/24/85—published 6/19/85, effective 7/24/85] [Filed 9/6/85, Notice 7/31/85—published 9/25/85, effective 10/30/85] [Filed 1/24/86, Notice 12/18/85—published 2/12/86, effective 3/19/86] [Filed 8/22/86, Notice 7/16/86—published 9/10/86, effective 10/15/86] [Filed 9/5/86, Notice 7/30/86—published 9/24/86, effective 10/29/86] [Filed 10/3/86, Notice 8/27/86—published 10/22/86, effective 11/26/86] [Filed emergency 12/23/87—published 1/13/88, effective 12/23/87] [Filed 2/19/88, Notice 1/13/88—published 3/9/88, effective 4/13/88] [Filed 4/13/88, Notice 3/9/88—published 5/4/88, effective 6/8/88] [Filed 8/19/88, Notice 7/13/88—published 9/7/88, effective 10/12/88] [Filed 1/4/89, Notice 11/30/88—published 1/25/89, effective 3/1/89] [Filed 9/29/89, Notice 8/23/89—published 10/18/89, effective 11/22/89] [Filed 1/19/90, Notice 12/13/89—published 2/7/90, effective 3/14/90] [Filed 9/13/91, Notice 8/7/91—published 10/2/91, effective 11/6/91] [Filed 10/25/91, Notice 9/18/91—published 11/13/91, effective 12/18/91] [Filed 11/7/91, Notice 10/2/91—published 11/27/91, effective 1/1/92] [Filed 10/9/92, Notice 9/2/92—published 10/28/92, effective 12/2/92] [Filed 7/1/93, Notice 5/26/93—published 7/21/93, effective 8/25/93] [Filed 9/10/93, Notice 8/4/93—published 9/29/93, effective 11/3/93] [Filed 9/23/94, Notice 8/17/94—published 10/12/94, effective 11/16/94] [Filed 11/18/94, Notice 10/12/94—published 12/7/94, effective 1/11/95]◊ [Filed 6/14/96, Notice 5/8/96—published 7/3/96, effective 8/7/96] [Filed 11/15/96, Notice 10/9/96—published 12/4/96, effective 1/8/97] [Filed 9/19/97, Notice 8/13/97—published 10/8/97, effective 11/12/97] [Filed 5/15/98, Notice 4/8/98—published 6/3/98, effective 7/8/98] [Filed 10/2/98, Notice 8/26/98—published 10/21/98, effective 11/25/98] [Filed 9/17/99, Notice 8/11/99—published 10/6/99, effective 11/10/99] [Filed 12/23/99, Notice 11/17/99—published 1/12/00, effective 2/16/00] [Filed 1/5/01, Notice 11/29/00—published 1/24/01, effective 2/28/01] [Filed 3/15/02, Notice 1/23/02—published 4/3/02, effective 5/8/02] [Filed 10/24/03, Notice 9/17/03—published 11/12/03, effective 12/17/03] [Filed 1/30/04, Notice 12/24/03—published 2/18/04, effective 3/24/04]◊ [Filed 8/27/04, Notice 7/21/04—published 9/15/04, effective 10/20/04] [Filed 11/4/04, Notice 9/29/04—published 11/24/04, effective 12/29/04] [Filed 12/13/06, Notice 11/8/06—published 1/3/07, effective 2/7/07] [Filed 10/5/07, Notice 8/29/07—published 10/24/07, effective 11/28/07] [Filed 3/7/08, Notice 1/30/08—published 3/26/08, effective 4/30/08] [Filed 10/31/08, Notice 9/24/08—published 11/19/08, effective 12/24/08] [Filed ARC 7761B (Notice ARC 7632B, IAB 3/11/09), IAB 5/6/09, effective 6/10/09] Revenue[701] Ch 305, p.10 IAC 2/5/25 ◊ [Filed ARC 8605B (Notice ARC 8481B, IAB 1/13/10), IAB 3/10/10, effective 4/14/10] [Filed ARC 9103B (Notice ARC 8944B, IAB 7/28/10), IAB 9/22/10, effective 10/27/10] [Filed ARC 9876B (Notice ARC 9796B, IAB 10/5/11), IAB 11/30/11, effective 1/4/12] [Filed ARC 0251C (Notice ARC 0145C, IAB 5/30/12), IAB 8/8/12, effective 9/12/12] [Filed ARC 0337C (Notice ARC 0232C, IAB 7/25/12), IAB 9/19/12, effective 10/24/12] [Filed ARC 1303C (Notice ARC 1231C, IAB 12/11/13), IAB 2/5/14, effective 3/12/14] [Filed ARC 1665C (Notice ARC 1590C, IAB 8/20/14), IAB 10/15/14, effective 11/19/14] [Filed ARC 3527C (Notice ARC 3413C, IAB 10/25/17), IAB 12/20/17, effective 1/24/18] [Filed ARC 6148C (Notice ARC 6033C, IAB 11/17/21), IAB 1/12/22, effective 2/16/22] [Editorial change: IAC Supplement 11/2/22] [Editorial change: IAC Supplement 10/18/23] [Filed ARC 7192C (Notice ARC 7101C, IAB 10/18/23), IAB 12/13/23, effective 1/17/24] Two or more ARCs Revenue[701] IAC 2/5/25 Ch 305, p.11