On May 23, 2022, the Iowa General Assembly passed Senate File 2367 which Governor Reynolds signed on June 17, 2022. Among other changes, this new law affects the method by which the Iowa Department of Revenue will distribute sales tax revenues deposited into the Secure an Advanced Vision for Education (SAVE) fund which was remitted by the Department to Iowa’s school districts.
Historically, the Department has, annually prior to August 15, estimated the amount of sales tax revenue that will be remitted to school districts for the fiscal year beginning each July l. The Department was required to remit 95% of the annual estimate of SAVE revenues to be remitted to school districts in monthly installments over the fiscal year and retained 5% of the estimate until the end of the fiscal year, at which time the Department would complete an audit of the actual receipts and the actual remittances of the tax. The Department would then reconcile the difference between the actual receipts and the estimated remittances and would remit the remaining balance to school districts on or around November 1 for the fiscal year ending the previous July 30.
As amended by SF 2367, the Act requires the Department to transfer monthly to each school district the actual amount of SAVE revenue remitted to the Department which is attributable to each school district from the preceding month. The transition to the transfer system established by SF 2367 will occur in the first four months of fiscal year 2023: The Department will transfer estimated amounts of revenue attributable to each school district for the months of July, August, and September 2022. Any reconciliation required for these estimated amounts to reflect the accurate attributable amounts shall be made by the Department by close of business on December 30, 2022. Beginning with the October 2022 transfer, the Department will transfer the actual amount of revenue attributable to each school district for the sales tax remitted in the preceding month.
School districts should contact their legal counsel with questions regarding this new law.
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