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

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In 2008, Iowa’s legislature passed a bill that was worded in such a way that it accidentally repealed the section of the tax code that imposed a sales tax on heavy machinery.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Lawmakers were suddenly faced with a dilemma: if they acknowledged that the tax had indeed been repealed, they would have to refund the more than $20 million they had collected.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.


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