Roth & Company Tax Updates: Iowa Department Of Revenue: Foreign Exchange Police?
Excerpted from this post at Roth & Company Tax Updates
Just when you think that the Iowa Legislature couldn't possibly find stupider tax legislation to propose, they surprise you. Consider SF 547, introduced yesterday by Dubuque's Senator Michael Connolly. It would add the following to Iowa's tax law: "422.76 TAX HAVENS AND SHELL CORPORATIONS. ..." There is so much wrong with this bill that it's hard to know where to begin. The bill in effect imposes state-level foreign exchange controls on Iowa businesses and financial institutions - an economic approach usually associated with failing third-world dictatorships. It would give the Department of Revenue almost unreviewable power ("beyond a reasonable doubt") to impose punitive taxes on offshore investments. Never mind that it's entirely normal to conduct cross-border operations using corporations set up in the country where operations take place. If the sophisticated financial geniuses at the Hoover Building decide you are doing it to avoid taxes, you are out of luck.