Iowa Collects $20 Million From Tax Law That Did Not Legally Exist

| by Lina Batarags

All states have laws that allow them to tax their citizens to varying degrees. That’s exactly what Iowa has been doing, except for one crucial part: the law part.

According to Fox News, over the past six years, Iowa has collected more than $20 million for a tax that didn’t exist.

In 2008, Iowa’s legislature passed a bill that was worded in such a way that it accidentally repealed the section of the tax code that imposed a sales tax on heavy machinery.

No one noticed, and the tax continued to be imposed on relevant sales. Last summer, however, a lawyer contacted the Iowa Department of Revenue, seeking clarification about the tax.

Lawmakers were suddenly faced with a dilemma: if they acknowledged that the tax had indeed been repealed, they would have to refund the more than $20 million they had collected. Furthermore, they would lose an estimated $7 million in taxes every year going forward.

So, instead of refunding all this money, lawmakers passed a bill on Thursday that reinstated the tax and made it retroactive to the date of its accidental repeal.

The governor of Iowa is expected to sign it.

Sources: http://www.foxnews.com, http://watchdog.org

Photo Sources: http://watchdog.org