Bill Text: IA HF623 | 2015-2016 | 86th General Assembly | Introduced

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Bill Title: A bill for an act concerning the apportionment of certain gross receipts of a broadcaster for purposes of Iowa income tax, and including retroactive applicability provisions. (Formerly HSB 213)

Spectrum: Committee Bill

Status: (Introduced - Dead) 2015-04-14 - Withdrawn. H.J. 830. [HF623 Detail]

Download: Iowa-2015-HF623-Introduced.html

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House File 623 - Introduced




                                 HOUSE FILE       
                                 BY  COMMITTEE ON WAYS AND
                                     MEANS

                                 (SUCCESSOR TO HSB 213)

                                 (COMPANION TO SF479 by
                                     COMMITTEE ON WAYS AND
                                     MEANS)

                                      A BILL FOR

  1 An Act concerning the apportionment of certain gross receipts
  2    of a broadcaster for purposes of Iowa income tax, and
  3    including retroactive applicability provisions.
  4 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
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PAG LIN



  1  1    Section 1.  Section 422.33, subsection 2, paragraph a,
  1  2 subparagraph (2), Code 2015, is amended by adding the following
  1  3 new subparagraph division:
  1  4    NEW SUBPARAGRAPH DIVISION.  (0e)  (i)  Notwithstanding
  1  5 subparagraph division (c), where income is derived by a
  1  6 broadcaster from broadcasting, the part attributable to
  1  7 business within the state shall be in the proportion that the
  1  8 gross receipts from broadcasting derived from customers whose
  1  9 commercial domicile is in this state bears to the total gross
  1 10 receipts from broadcasting.
  1 11    (ii)  Notwithstanding subparagraph subdivision (i) or
  1 12 subparagraph division (c), where income is derived by a
  1 13 broadcaster from national or local political advertising that
  1 14 is directed exclusively at one or more markets in this state,
  1 15 all gross receipts from such advertising shall be attributable
  1 16 to business within the state.
  1 17    (iii)  For purposes of this subparagraph division:
  1 18    (A)  "Broadcaster" means a taxpayer who is engaged in
  1 19 the business of broadcasting.  "Broadcaster" includes a
  1 20 television network, a cable program network, and a television
  1 21 distribution company.  "Broadcaster" does not include a cable
  1 22 system operator, a direct broadcast satellite system operator,
  1 23 or a television or radio station licensed by the federal
  1 24 communications commission.
  1 25    (B)  "Broadcasting" means the transmission of film
  1 26 programming by an electronic or other signal conducted by
  1 27 microwaves, wires, lines, coaxial cables, wave guides, fiber
  1 28 optics, satellite transmissions, or through any other means of
  1 29 communication directly or indirectly to viewers and listeners.
  1 30    (C)  "Customer" means a person who has a direct contractual
  1 31 relationship with a broadcaster from whom the broadcaster
  1 32 derives gross receipts.  "Customer" includes but is not limited
  1 33 to an advertiser or licensee.
  1 34    (D)  "Gross receipts from broadcasting" means gross receipts
  1 35 of a broadcaster from transactions and activities in the
  2  1 regular course of its business, including but not limited to
  2  2 advertising, licensing, and distribution, but excluding gross
  2  3 receipts from the sale of real property or tangible personal
  2  4 property.
  2  5    Sec. 2.  Section 422.33, subsection 2, paragraph a,
  2  6 subparagraph (2), subparagraph division (e), Code 2015, is
  2  7 amended to read as follows:
  2  8    (e)  Where income consists of more than one class of income
  2  9 as provided in subparagraph divisions (a) through (d) (0e)
  2 10  of this subparagraph, it shall be reasonably apportioned by
  2 11 the business activity ratio provided in rules adopted by the
  2 12 director.
  2 13    Sec. 3.  RETROACTIVE APPLICABILITY.  This Act applies
  2 14 retroactively to January 1, 2015, for tax years beginning on
  2 15 or after that date.
  2 16                           EXPLANATION
  2 17 The inclusion of this explanation does not constitute agreement with
  2 18 the explanation's substance by the members of the general assembly.
  2 19    This bill relates to the apportionment of income of a
  2 20 broadcaster for purposes of Iowa corporate income tax.
  2 21    A corporation doing business both within and without Iowa is
  2 22 required to apportion its business income among Iowa and the
  2 23 other states in which it does business.  The amount of business
  2 24 income apportioned to Iowa is generally in the same percentage
  2 25 as the business's gross sales made within Iowa if the business
  2 26 involves the manufacture or sale of goods and products, or in
  2 27 the same percentage as the business's gross receipts earned
  2 28 within Iowa if the business involves something other than the
  2 29 manufacture or sale of goods and products.
  2 30    Under current law pursuant to Iowa Administrative Code
  2 31 701=54.7(5), a radio or television company doing business
  2 32 within and without Iowa is required to apportion its business
  2 33 income to Iowa in the same proportion that the Iowa population
  2 34 served by its broadcasting bears to the total population
  2 35 served by its broadcasting.  The calculation is made using all
  3  1 residents of the applicable broadcasting area, regardless of
  3  2 whether or not the residents individually elect to receive the
  3  3 broadcasts.
  3  4    The bill specifies that when income is derived by a
  3  5 broadcaster from broadcasting, the business income apportioned
  3  6 to Iowa shall be in the same proportion that the broadcaster's
  3  7 gross receipts from broadcasting derived from customers whose
  3  8 commercial domicile is in Iowa bears to the broadcaster's
  3  9 total gross receipts from broadcasting. However, where the
  3 10 income derived by the broadcaster is from national or political
  3 11 advertising directed exclusively at one or more markets in
  3 12 the state, all gross receipts from such advertising shall be
  3 13 apportioned to Iowa.
  3 14    "Broadcaster" is defined in the bill as a taxpayer who
  3 15 is engaged in the business of broadcasting.  A broadcaster
  3 16 includes a television network, a cable program network, and
  3 17 a television distribution company. A broadcaster does not
  3 18 include a cable system operator, a direct broadcast satellite
  3 19 system operator, or a television or radio station licensed by
  3 20 the federal communications commission.
  3 21    "Broadcasting" is defined in the bill as the transmission of
  3 22 film programming by an electronic or other signal conducted by
  3 23 microwaves, wires, lines, coaxial cables, wave guides, fiber
  3 24 optics, satellite transmissions, or through any other means of
  3 25 communication directly or indirectly to viewers and listeners.
  3 26    "Customer" is defined in the bill as a person who has a
  3 27 direct contractual relationship with a broadcaster from whom
  3 28 the broadcaster derives gross receipts.
  3 29    By operation of law, the method of apportioning gross
  3 30 receipts from broadcasting provided in the bill will also
  3 31 apply for purposes of the individual income tax to a resident
  3 32 individual who is an owner of a broadcaster organized for
  3 33 federal tax purposes as an S corporation, and for a nonresident
  3 34 individual who is an owner of a broadcaster organized for
  3 35 federal tax purposes as an S corporation or a partnership.
  4  1 The bill applies retroactively to tax years beginning on or
  4  2 after January 1, 2015.
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