Bill Text: IA SF2417 | 2017-2018 | 87th General Assembly | Amended
Bill Title: A bill for an act relating to state and local revenue and finance by modifying the individual and corporate income taxes, the franchise tax, tax credits, the sales and use taxes and local option sales tax, the hotel and motel excise tax, the automobile rental excise tax, the Iowa educational savings plan trust, providing for other properly related matters, making penalties applicable, and including immediate and contingent effective date and retroactive and other applicability provisions. (Formerly SSB 3195.) Various effective dates; see bill.
Spectrum: Committee Bill
Status: (Passed) 2018-05-30 - Signed by Governor. S.J. 1088. [SF2417 Detail]
Download: Iowa-2017-SF2417-Amended.html
Senate File 2417 - Reprinted SENATE FILE BY COMMITTEE ON WAYS AND MEANS (SUCCESSOR TO SSB 3195) (As Amended and Passed by the Senate May 5, 2018) A BILL FOR 1 An Act relating to state and local revenue and finance by 2 modifying the individual and corporate income taxes, the 3 franchise tax, tax credits, the sales and use taxes and 4 local option sales tax, the hotel and motel excise tax, the 5 automobile rental excise tax, the Iowa educational savings 6 plan trust, providing for other properly related matters, 7 making penalties applicable, and including immediate 8 and contingent effective date and retroactive and other 9 applicability provisions. 10 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: SF 2417 (3) 87 mm/jh PAG LIN 1 1 DIVISION I 1 2 INTEREST ACCRUAL ON CERTAIN TAX REFUNDS 1 3 Section 1. Section 15.335, subsection 8, Code 2018, is 1 4 amended to read as follows: 1 5 8. Any credit in excess of the tax liability for the 1 6 taxable year shall be refunded with interestcomputed under 1 7 section 422.25in accordance with section 421.60, subsection 1 8 2, paragraph "e". In lieu of claiming a refund, a taxpayer may 1 9 elect to have the overpayment shown on its final, completed 1 10 return credited to the tax liability for the following year. 1 11 Sec. 2. NEW SECTION. 421.6 Definition of return. 1 12 For purposes of this title, unless the context otherwise 1 13 requires, "return" means any tax or information return, 1 14 amended return, declaration of estimated tax, or claim for 1 15 refund that is required by, provided for, or permitted under, 1 16 the provisions of this title and which is filed with the 1 17 department by, on behalf of, or with respect to any person. 1 18 "Return" includes any amendment or supplement to these items, 1 19 including supporting schedules, attachments, or lists which are 1 20 supplemental to or part of the filed return. 1 21 Sec. 3. Section 421.60, subsection 2, paragraph e, Code 1 22 2018, is amended to read as follows: 1 23 e.Unless otherwise provided by law, allAll Iowa taxes 1 24 which are administered by the department and which result in 1 25 a refund shall accrue interest at the rate in effect under 1 26 section 421.7 from the first day of the second calendar month 1 27 following the date of payment or the date the return upon 1 28 which the refund is claimed was due to be filed, including any 1 29 extensions, or was filed, whichever is the latest. 1 30 Sec. 4. Section 422.10, subsection 4, Code 2018, is amended 1 31 to read as follows: 1 32 4. Any credit in excess of the tax liability imposed by 1 33 section 422.5 less the amounts of nonrefundable credits allowed 1 34 under this division for the taxable year shall be refunded 1 35 with interestcomputed under section 422.25in accordance 2 1 with section 421.60, subsection 2, paragraph "e". In lieu of 2 2 claiming a refund, a taxpayer may elect to have the overpayment 2 3 shown on the taxpayer's final, completed return credited to the 2 4 tax liability for the following taxable year. 2 5 Sec. 5. Section 422.16, subsection 9, Code 2018, is amended 2 6 to read as follows: 2 7 9. The amount of any overpayment of the individual income 2 8 tax liability of the employee taxpayer, nonresident, or other 2 9 person which may result from the withholding and payment of 2 10 withheld tax by the employer or withholding agent to the 2 11 department under subsections 1 and 12, as compared to the 2 12 individual income tax liability of the employee taxpayer, 2 13 nonresident, or other person properly and correctly determined 2 14 under the provisions of section 422.4, to and including section 2 15 422.25, may be credited against any income tax or installment 2 16 thereof then due the state of Iowa and any balance of one 2 17 dollar or more shall be refunded to the employee taxpayer, 2 18 nonresident, or other person with interestat the rate in 2 19 effect under section 421.7 for each month or fraction of a 2 20 month, the interest to begin to accrue on the first day of 2 21 the second calendar month following the date the return was 2 22 due to be filed or was filed, whichever is the later date 2 23in accordance with section 421.60, subsection 2, paragraph 2 24 "e". Amounts less than one dollar shall be refunded to the 2 25 taxpayer, nonresident, or other person only upon written 2 26 application, in accordance with section 422.73, and only if 2 27 the application is filed within twelve months after the due 2 28 date of the return. Refunds in the amount of one dollar 2 29 or more provided for by this subsection shall be paid by 2 30 the treasurer of state by warrants drawn by the director of 2 31 the department of administrative services, or an authorized 2 32 employee of the department, and the taxpayer's return of 2 33 income shall constitute a claim for refund for this purpose, 2 34 except in respect to amounts of less than one dollar. There 2 35 is appropriated, out of any funds in the state treasury not 3 1 otherwise appropriated, a sum sufficient to carry out the 3 2 provisions of this subsection. 3 3 Sec. 6. Section 422.25, subsection 3, Code 2018, is amended 3 4 to read as follows: 3 5 3. a. If the amount of the tax as determined by the 3 6 department is less than the amount paid, the excess shall be 3 7 refunded with interest, the interest to begin to accrue on the 3 8 first day of the second calendar month following the date of 3 9 payment or the date the return was due to be filed, or the 3 10 extended due date by which the return was due to be filed if 3 11 ninety percent of the tax was paid by the original due date, 3 12 or was filed, whichever is the latest, at the rate in effect 3 13 under section 421.7 counting each fraction of a month as an 3 14 entire month under the rules prescribed by the director. If 3 15 an overpayment of tax results from a net operating loss or 3 16 net capital loss which is carried back to a prior year, the 3 17 overpayment, for purposes of computing interest on refunds, 3 18 shall be considered as having been made on the date a claim 3 19 for refund or amended return carrying back the net operating 3 20 loss or net capital loss is filed with the department or on the 3 21 first day of the second calendar month following the date of 3 22 the actual payment of the tax, whichever is later. However,in 3 23 accordance with section 421.60, subsection 2, paragraph "e". 3 24 b. Notwithstanding section 421.60, subsection 2, paragraph 3 25 "e", and paragraph "a" of this subsection, when the net 3 26 operating loss or net capital loss carryback to a prior year 3 27 eliminates or reduces an underpayment of tax due for an earlier 3 28 year, the full amount of the underpayment of tax shall bear 3 29 interest at the rate in effect under section 421.7 for each 3 30 month counting each fraction of a month as an entire month from 3 31 the due date of the tax for the earlier year to the last day of 3 32 the taxable year in which the net operating loss or net capital 3 33 loss occurred. 3 34 Sec. 7. Section 422.28, Code 2018, is amended to read as 3 35 follows: 4 1 422.28 Revision of tax. 4 2 A taxpayer may appeal to the director for revision of 4 3 the tax, interest, or penalties assessed at any time within 4 4 sixty days from the date of the notice of the assessment of 4 5 tax, additional tax, interest, or penalties. The director 4 6 shall grant a hearing and if, upon the hearing, the director 4 7 determines that the tax, interest, or penalties are excessive 4 8 or incorrect, the director shall revise them according to 4 9 the law and the facts and adjust the computation of the tax, 4 10 interest, or penalties accordingly. The director shall notify 4 11 the taxpayer by mail of the result of the hearing and shall 4 12 refund to the taxpayer the amount, if any, paid in excess of 4 13 the tax, interest, or penalties found by the director to be 4 14 due, with interest accruingfrom the first day of the second 4 15 calendar month following the date of payment by the taxpayer 4 16 at the rate in effect under section 421.7 for each month 4 17 or fraction of a monthin accordance with section 421.60, 4 18 subsection 2, paragraph "e". 4 19 Sec. 8. Section 422.33, subsection 5, paragraph f, Code 4 20 2018, is amended to read as follows: 4 21 f. Any credit in excess of the tax liability for the 4 22 taxable year shall be refunded with interestcomputed under 4 23 section 422.25in accordance with section 421.60, subsection 4 24 2, paragraph "e". In lieu of claiming a refund, a taxpayer may 4 25 elect to have the overpayment shown on its final, completed 4 26 return credited to the tax liability for the following taxable 4 27 year. 4 28 Sec. 9. Section 422.33, subsection 9, paragraph a, Code 4 29 2018, is amended to read as follows: 4 30 a. The taxes imposed under this division shall be reduced by 4 31 an assistive device tax credit. A small business purchasing, 4 32 renting, or modifying an assistive device or making workplace 4 33 modifications for an individual with a disability who is 4 34 employed or will be employed by the small business is eligible, 4 35 subject to availability of credits, to receive this assistive 5 1 device tax credit which is equal to fifty percent of the 5 2 first five thousand dollars paid during the tax year for the 5 3 purchase, rental, or modification of the assistive device 5 4 or for making the workplace modifications. Any credit in 5 5 excess of the tax liability shall be refunded with interest 5 6computed under section 422.25in accordance with section 5 7 421.60, subsection 2, paragraph "e". In lieu of claiming a 5 8 refund, a taxpayer may elect to have the overpayment shown on 5 9 the taxpayer's final, completed return credited to the tax 5 10 liability for the following tax year. If the small business 5 11 elects to take the assistive device tax credit, the small 5 12 business shall not deduct for Iowa tax purposes any amount of 5 13 the cost of an assistive device or workplace modifications 5 14 which is deductible for federal income tax purposes. 5 15 Sec. 10. Section 422.91, Code 2018, is amended to read as 5 16 follows: 5 17 422.91 Credit for estimated tax. 5 18 1. Any amount of estimated tax paid is a credit against 5 19 the amount of tax due on a final, completed return, and any 5 20 overpayment of five dollars or more shall be refunded to the 5 21 taxpayer with interest, the interest to begin to accrue on 5 22 the first day of the second calendar month following the date 5 23 of payment or the date the return was due to be filed or was 5 24 filed, whichever is the latest, at the rate established under 5 25 section 421.7in accordance with section 421.60, subsection 2, 5 26 paragraph "e", and the return constitutes a claim for refund for 5 27 this purpose. Amounts less than five dollars shall be refunded 5 28 to the taxpayer only upon written application in accordance 5 29 with section 422.73, and only if the application is filed 5 30 within twelve months after the due date for the return. 5 31 2. In lieu of claiming a refund, the taxpayer may elect 5 32 to have the overpayment shown on its final, completed return 5 33 for the taxable year credited to the tax liability for the 5 34 following taxable year. 5 35 Sec. 11. Section 423.4, subsection 1, paragraph c, Code 6 1 2018, is amended to read as follows: 6 2 c. Refunds authorized under this subsection shall accrue 6 3 interestat the rate in effect under section 421.7 from the 6 4 first day of the second calendar month following the date the 6 5 refund claim is received by the departmentin accordance with 6 6 section 421.60, subsection 2, paragraph "e". 6 7 Sec. 12. Section 423.4, subsection 6, paragraph c, 6 8 subparagraph (2), Code 2018, is amended to read as follows: 6 9 (2) Refunds authorized under this subsection shall accrue 6 10 interestat the rate in effect under section 421.7 from the 6 11 first day of the second calendar month following the date the 6 12 refund claim is received by the departmentin accordance with 6 13 section 421.60, subsection 2, paragraph "e". 6 14 Sec. 13. Section 450.94, subsection 3, Code 2018, is amended 6 15 to read as follows: 6 16 3. If the amount paid is greater than the correct tax, 6 17 penalty, and interest due, the department shall refund the 6 18 excess with interest. Interest shall be computed at the rate 6 19 in effect under section 421.7, under the rules prescribed by 6 20 the director counting each fraction of a month as an entire 6 21 month and the interest shall begin to accrue on the first day 6 22 of the second calendar month following the date of payment 6 23 or on the date the return was due to be filed or was filed, 6 24 whichever is the latestin accordance with section 421.60, 6 25 subsection 2, paragraph "e". However, the director shall 6 26 not allow a claim for refund or credit that has not been 6 27 filed with the department within three years after the tax 6 28 payment upon which a refund or credit is claimed became due, 6 29 or one year after the tax payment was made, whichever time is 6 30 later. A determination by the department of the amount of 6 31 tax, penalty, and interest due, or the amount of refund for 6 32 excess tax paid, is final unless the person aggrieved by the 6 33 determination appeals to the director for a revision of the 6 34 determination within sixty days from the date of the notice 6 35 of determination of tax, penalty, and interest due or refund 7 1 owing or unless the taxpayer contests the determination by 7 2 paying the tax, interest, and penalty and timely filing a claim 7 3 for refund. The director shall grant a hearing, and upon the 7 4 hearing the director shall determine the correct tax, penalty, 7 5 and interest or refund due, and notify the appellant of the 7 6 decision by mail. The decision of the director is final unless 7 7 the appellant seeks judicial review of the director's decision 7 8 under section 450.59 within sixty days after the date of the 7 9 notice of the director's decision. 7 10 Sec. 14. Section 452A.65, subsection 1, Code 2018, is 7 11 amended to read as follows: 7 12 1. In addition to the tax or additional tax, the taxpayer 7 13 shall pay a penalty as provided in section 421.27. The 7 14 taxpayer shall also pay interest on the tax or additional 7 15 tax at the rate in effect under section 421.7 counting each 7 16 fraction of a month as an entire month, computed from the date 7 17 the return was required to be filed. If the amount of the tax 7 18 as determined by the appropriate state agency is less than the 7 19 amount paid, the excess shall be refunded with interest, the 7 20 interest to begin to accrue on the first day of the second 7 21 calendar month following the date of payment or the date the 7 22 return was due to be filed or was filed, whichever is the 7 23 latest, at the rate in effect under section 421.7 counting 7 24 each fraction of a month as an entire month under the rules 7 25 prescribed by the appropriate state agencyin accordance with 7 26 section 421.60, subsection 2, paragraph "e". Claims for 7 27 refund filed under sections 452A.17 and 452A.21 shall accrue 7 28 interest beginning with the first day of the second calendar 7 29 month following the date the refund claim is received by the 7 30 department. 7 31 Sec. 15. EFFECTIVE DATE. This division of this Act, being 7 32 deemed of immediate importance, takes effect upon enactment. 7 33 Sec. 16. RETROACTIVE APPLICABILITY. This division of this 7 34 Act applies retroactively to January 1, 2018, for tax years 7 35 beginning on or after that date, and for refunds issued on or 8 1 after that date. 8 2 DIVISION II 8 3 TAX PENALTIES 8 4 Sec. 17. Section 421.27, subsection 6, Code 2018, is amended 8 5 to read as follows: 8 6 6. Improper receipt ofrefund or creditpayments. A person 8 7 who makes an erroneous application for refund,orcredit, 8 8 reimbursement, rebate, or other payment shall be liable for any 8 9 overpayment received or tax liability reduced plus interest 8 10 at the rate in effect under section 421.7. In addition, a 8 11 person who willfully makes a false or frivolous application 8 12 for refund,orcredit, reimbursement, rebate, or other payment 8 13 with intent to evade tax or with intent to receive a refund, 8 14orcredit, reimbursement, rebate, or other payment to which 8 15 the person is not entitled is guilty of a fraudulent practice 8 16 and is liable for a penalty equal to seventy=five percent of 8 17 the refund,orcredit, reimbursement, rebate, or other payment 8 18 being claimed. Payments, penalties, and interest due under 8 19 this subsection may be collected and enforced in the same 8 20 manner as the tax imposed. 8 21 Sec. 18. Section 425.29, Code 2018, is amended to read as 8 22 follows: 8 23 425.29 False claim ==== penalty. 8 24 A person who makes a false affidavit for the purpose 8 25 of obtaining credit or reimbursement provided for in this 8 26 division or who knowingly receives the credit or reimbursement 8 27 without being legally entitled to it or makes claim for the 8 28 credit or reimbursement in more than one county in the state 8 29 without being legally entitled to it is guilty of a fraudulent 8 30 practice. The claim for credit or reimbursement shall be 8 31 disallowed in full and if the claim has been paid the amount 8 32 shall be recovered in the manner provided in section 425.27. 8 33 The department of revenue may impose penalties under section 8 34 421.27. The department of revenue shall send a notice of 8 35 disallowance of the claim. 9 1 Sec. 19. LEGISLATIVE INTENT. It is the intent of the 9 2 general assembly that the provisions of this division of this 9 3 Act are conforming amendments consistent with current state 9 4 law, and that the amendments do not change the application of 9 5 current law but instead reflect current law both before and 9 6 after the enactment of this division of this Act. 9 7 Sec. 20. EFFECTIVE DATE. This division of this Act, being 9 8 deemed of immediate importance, takes effect upon enactment. 9 9 DIVISION III 9 10 MISCELLANEOUS TAX PROVISIONS 9 11 Sec. 21. Section 34A.7B, subsection 13, Code 2018, is 9 12 amended to read as follows: 9 13 13. The department shall transfer allremittedreported 9 14 prepaid wireless 911 surcharges to the treasurer of state 9 15 for deposit in the 911 emergency communications fund created 9 16 under section 34A.7A, subsection 2, within thirty days of 9 17 receipt after deducting an amount, not to exceed two percent of 9 18 collected surcharges, that shall be retained by the department 9 19 to reimburse its direct costs of administering the collection 9 20 and remittance of prepaid wireless 911 surcharges. 9 21 Sec. 22. Section 421.17, subsection 2, paragraph d, Code 9 22 2018, is amended to read as follows: 9 23 d. To facilitate uniformity and equalization of 9 24 assessments throughout the state of Iowa and to facilitate 9 25 transfers of funds to local governments, the director may 9 26 use geographic information system technology and may require 9 27 assessing authorities and local governments that have adopted 9 28 compatible technology to provide information to the department 9 29 electronically using electronic geographic information 9 30 system file formats. The department of revenue shall act on 9 31 behalf of political subdivisions and the state to deliver a 9 32 consolidated response to the boundary and annexation survey 9 33 and provide legal boundary geography data to the United States 9 34 census bureau. The department shall coordinate with political 9 35 subdivisions and the state to ensure that consistent, accurate, 10 1 and integrated geography is provided to the United States 10 2 census bureau. The office of the chief information officer 10 3 shall provide geographic information system and technical 10 4 support to the department to facilitate the exchange. 10 5 Sec. 23. Section 421.19, Code 2018, is amended to read as 10 6 follows: 10 7 421.19 Counsel. 10 8 1. It shall be the duty of the attorney general and of 10 9 the county attorneys in their respective counties to commence 10 10 and prosecute actions, prosecutions, and complaints, when 10 11 so directed by the director of revenue and to represent the 10 12 director in any litigation arising from the discharge of the 10 13 director's duties. 10 14 2. If the department has information that indicates a 10 15 taxpayer intentionally filed a false claim, affidavit, return, 10 16 or other information with intent to evade tax or to obtain 10 17 a refund, credit, or other benefit from the department, the 10 18 department may notify federal, state, or local law enforcement 10 19 and may disclose state returns, state return information, 10 20 state investigative or audit information, or any other state 10 21 information to such law enforcement, notwithstanding sections 10 22 422.20 and 422.72. 10 23 3. Notwithstanding sections 422.20 and 422.72, the 10 24 department may disclose state returns, state return 10 25 information, state investigative or audit information, or any 10 26 other state information under this section. 10 27 Sec. 24. NEW SECTION. 421.71 Class actions ==== implied right 10 28 of action ==== private cause of action immunity. 10 29 1. Class actions prohibited. No class action may be brought 10 30 against the department, a taxpayer, or a person required to 10 31 collect any tax imposed under this title, in any court, agency, 10 32 or other adjudicative body, or in any other forum, based on 10 33 any act or omission arising from or related to any provision 10 34 of this title. 10 35 2. No implied right of action. Nothing in this title shall 11 1 be construed as creating or providing an implied private right 11 2 of action or any private common law claim against any taxpayer, 11 3 or against any person required to collect any tax imposed under 11 4 this title, in any court, agency, or other adjudicative body, 11 5 or in any other forum. This subsection shall not apply to or 11 6 otherwise limit any claim, action, mandate, power, remedy, or 11 7 discretion of the department, or an agent or designee of the 11 8 department. 11 9 3. Private cause of action immunity for overpayment of 11 10 certain taxes. 11 11 a. A taxpayer, or any person required to collect taxes 11 12 imposed under chapters 423, 423A, 423B, 423C, and 423D, and 11 13 chapter 423G, as enacted in 2018 Iowa Acts, Senate File 512, 11 14 shall be immune from any private cause of action arising from 11 15 or related to the overpayment of taxes imposed under chapters 11 16 423, 423A, 423B, 423C, and 423D, and chapter 423G, as enacted 11 17 in 2018 Iowa Acts, Senate File 512, that are collected and 11 18 remitted to the department. 11 19 b. Nothing in this subsection shall apply to or otherwise 11 20 limit any of the following: 11 21 (1) Any claim, action, mandate, power, remedy, or 11 22 discretion of the department, or an agent or designee of the 11 23 department. 11 24 (2) A taxpayer's right to seek a refund from the department 11 25 related to taxes imposed under chapters 423, 423A, 423B, 11 26 423C, and 423D, and chapter 423G, as enacted in 2018 Iowa 11 27 Acts, Senate File 512, that are collected from or paid by the 11 28 taxpayer. 11 29 Sec. 25. Section 423G.5, subsection 1, as enacted by 2018 11 30 Iowa Acts, Senate File 512, section 15, is amended to read as 11 31 follows: 11 32 1. The director of revenue shall administer the water 11 33 service tax as nearly as possible in conjunction with the 11 34 administration of the state sales and use tax law, except that 11 35 portion of the law that implements the streamlined sales and 12 1 use tax agreement. The director shall provide appropriate 12 2 forms, or provide on the regular state tax forms, for reporting 12 3 water service tax liability, and for ease of administration may 12 4 require water service tax liability to be identified, reported, 12 5 and remitted to the department as sales and use tax liability, 12 6 provided the department has the ability to properly identify 12 7 such amounts as water service tax revenues upon receipt. 12 8 Sec. 26. Section 423G.6, subsection 2, paragraphs a, b, and 12 9 c, as enacted by 2018 Iowa Acts, Senate File 512, section 16, 12 10 are amended to read as follows: 12 11 a. For revenuescollectedreported on or after July 1, 2018, 12 12 but before August 1, 2019, one=twelfth of the revenues to the 12 13 water quality infrastructure fund created in section 8.57B, 12 14 and one=twelfth of the revenues to the water quality financial 12 15 assistance fund created in section 16.134A. 12 16 b. For revenuescollectedreported on or after August 1, 12 17 2019, but before August 1, 2020, one=sixth of the revenues to 12 18 the water quality infrastructure fund created in section 8.57B, 12 19 and one=sixth of the revenues to the water quality financial 12 20 assistance fund created in section 16.134A. 12 21 c. For revenuescollectedreported on or after August 1, 12 22 2020, one=half of the revenues to the water quality financial 12 23 assistance fund created in section 16.134A. 12 24 Sec. 27. IOWA ELECTION CAMPAIGN FUND TAX CHECKOFF AND 12 25 CONTRIBUTIONS ==== CREDIT TO GENERAL FUND. Notwithstanding 12 26 section 68A.601 or 422.12J, or any other provision of law to 12 27 the contrary, any amount of contribution to the Iowa election 12 28 campaign fund in section 68A.602 designated on an individual 12 29 income tax return for any tax year and filed on or after 12 30 January 1, 2018, is void and shall be disregarded, and such 12 31 contribution amount shall be credited to the general fund and 12 32 not to the Iowa election campaign fund. 12 33 Sec. 28. EFFECTIVE DATE. The following, being deemed of 12 34 immediate importance, take effect upon enactment: 12 35 1. The section of this division of this Act relating to the 13 1 Iowa election campaign fund tax checkoff and contributions. 13 2 2. The section of this division of this Act enacting section 13 3 421.71. 13 4 Sec. 29. RETROACTIVE APPLICABILITY. The following applies 13 5 retroactively to January 1, 2018, for individual income tax 13 6 returns filed on or after that date: 13 7 The section of this division of this Act relating to the Iowa 13 8 election campaign fund tax checkoff and contributions. 13 9 DIVISION IV 13 10 TAX CREDITS 13 11 Sec. 30. Section 15E.52, subsection 8, Code 2018, is amended 13 12 to read as follows: 13 13 8. The board shall not certify an innovation fund after June 13 14 30,20182023. 13 15 Sec. 31. Section 403.19A, subsection 3, paragraph c, 13 16 subparagraph (2), Code 2018, is amended to read as follows: 13 17 (2) The pilot project city and the economic development 13 18 authority shall not enter into a withholding agreement after 13 19 June 30,20182019. 13 20 Sec. 32. Section 422.10, subsection 1, Code 2018, is amended 13 21 by adding the following new paragraph: 13 22 NEW PARAGRAPH. 0a. An individual shall only be eligible for 13 23 the credit provided in this section if the business conducting 13 24 the research meets all of the following requirements: 13 25 (1) (a) The business is engaged in the manufacturing, 13 26 life sciences, software engineering, or aviation and aerospace 13 27 industry. 13 28 (b) Persons that shall not be considered to be engaged in 13 29 the manufacturing, life sciences, software engineering, or 13 30 aviation and aerospace industry, and thus are not eligible 13 31 for the credit, include but are not limited to all of the 13 32 following: 13 33 (i) A person engaged in agricultural production as defined 13 34 in section 423.1. 13 35 (ii) A person who is a contractor, subcontractor, builder, 14 1 or a contractor=retailer that engages in commercial and 14 2 residential repair and installation, including but not limited 14 3 to heating or cooling installation and repair, plumbing and 14 4 pipe fitting, security system installation, and electrical 14 5 installation and repair. For purposes of this subparagraph 14 6 subdivision, "contractor=retailer" means a business that makes 14 7 frequent retail sales to the public or to other contractors and 14 8 that also engages in the performance of construction contracts. 14 9 (iii) A finance or investment company. 14 10 (iv) A retailer. 14 11 (v) A wholesaler. 14 12 (vi) A transportation company. 14 13 (vii) A publisher. 14 14 (viii) An agricultural cooperative association as defined 14 15 in section 502.102. 14 16 (ix) A real estate company. 14 17 (x) A collection agency. 14 18 (xi) An accountant. 14 19 (xii) An architect. 14 20 (2) The business claims and is allowed a research credit 14 21 for such qualified research expenses under section 41 of the 14 22 Internal Revenue Code for the same taxable year as it is 14 23 claiming the credit provided in this section. 14 24 Sec. 33. Section 422.10, subsection 3, Code 2018, is amended 14 25 by adding the following new paragraph: 14 26 NEW PARAGRAPH. 0a. For purposes of this section, "base 14 27 amount" means the product of the fixed=based percentage times 14 28 the average annual gross receipts of the taxpayer for the four 14 29 taxable years preceding the taxable year for which the credit 14 30 is being determined, but in no event shall the base amount be 14 31 less than fifty percent of the qualified research expenses for 14 32 the credit year. 14 33 Sec. 34. Section 422.10, subsection 3, paragraph a, Code 14 34 2018, is amended to read as follows: 14 35 a. For purposes of this section,"base amount","basic 15 1 research payment",and "qualified research expense" mean the 15 2 same as defined for the federal credit for increasing research 15 3 activities under section 41 of the Internal Revenue Code, 15 4 except that for the alternative simplified credit such amounts 15 5 are for research conducted within this state. 15 6 Sec. 35. Section 422.11S, subsection 6, paragraph a, Code 15 7 2018, is amended to read as follows: 15 8 a. "Eligible student" means a student who is a member of a 15 9 household whose total annual income during the calendar year 15 10 before the student receives a tuition grant for purposes of 15 11 this section does not exceed an amount equal tothreefour 15 12 times the most recently published federal poverty guidelines in 15 13 the federal register by the United States department of health 15 14 and human services. 15 15 Sec. 36. Section 422.11S, subsection 8, paragraph a, 15 16 subparagraph (2), Code 2018, is amended to read as follows: 15 17 (2) "Total approved tax credits" means for the tax year 15 18 beginning in the 2006 calendar year, two million five hundred 15 19 thousand dollars, for the tax year beginning in the 2007 15 20 calendar year, five million dollars, for tax years beginning 15 21 on or after January 1, 2008, but before January 1, 2012, seven 15 22 million five hundred thousand dollars, for tax years beginning 15 23 on or after January 1, 2012, but before January 1, 2014, eight 15 24 million seven hundred fifty thousand dollars, and for tax years 15 25 beginning on or after January 1, 2014, but before January 1, 15 26 2019, twelve million dollars, and for tax years beginning on or 15 27 after January 1, 2019, thirteen million dollars. 15 28 Sec. 37. Section 422.33, subsection 5, Code 2018, is amended 15 29 by adding the following new paragraph: 15 30 NEW PARAGRAPH. 0e. A corporation shall only be 15 31 eligible for the credit provided in this subsection if the 15 32 business conducting the research meets all of the following 15 33 requirements: 15 34 (1) (a) The business is engaged in the manufacturing, 15 35 life sciences, software engineering, or aviation and aerospace 16 1 industry. 16 2 (b) Persons that shall not be considered to be engaged in 16 3 the manufacturing, life sciences, software engineering, or 16 4 aviation and aerospace industry, and thus are not eligible 16 5 for the credit, include but are not limited to all of the 16 6 following: 16 7 (i) A person engaged in agricultural production as defined 16 8 in section 423.1. 16 9 (ii) A person who is a contractor, subcontractor, builder, 16 10 or a contractor=retailer that engages in commercial and 16 11 residential repair and installation, including but not limited 16 12 to heating or cooling installation and repair, plumbing and 16 13 pipe fitting, security system installation, and electrical 16 14 installation and repair. For purposes of this subparagraph 16 15 subdivision, "contractor=retailer" means a business that makes 16 16 frequent retail sales to the public or to other contractors and 16 17 that also engages in the performance of construction contracts. 16 18 (iii) A finance or investment company. 16 19 (iv) A retailer. 16 20 (v) A wholesaler. 16 21 (vi) A transportation company. 16 22 (vii) A publisher. 16 23 (viii) An agricultural cooperative association as defined 16 24 in section 502.102. 16 25 (ix) A real estate company. 16 26 (x) A collection agency. 16 27 (xi) An accountant. 16 28 (xii) An architect. 16 29 (2) The business claims and is allowed a research credit 16 30 for such qualified research expenses under section 41 of the 16 31 Internal Revenue Code for the same taxable year as it is 16 32 claiming the credit provided in this subsection. 16 33 Sec. 38. Section 422.33, subsection 5, paragraph e, Code 16 34 2018, is amended by adding the following new subparagraph: 16 35 NEW SUBPARAGRAPH. (01) For purposes of this section, "base 17 1 amount" means the product of the fixed=based percentage times 17 2 the average annual gross receipts of the taxpayer for the four 17 3 taxable years preceding the taxable year for which the credit 17 4 is being determined, but in no event shall the base amount be 17 5 less than fifty percent of the qualified research expenses for 17 6 the credit year. 17 7 Sec. 39. Section 422.33, subsection 5, paragraph e, 17 8 subparagraph (1), Code 2018, is amended to read as follows: 17 9 (1) For purposes of this subsection,"base amount","basic 17 10 research payment",and "qualified research expense" mean the 17 11 same as defined for the federal credit for increasing research 17 12 activities under section 41 of the Internal Revenue Code, 17 13 except that for the alternative simplified credit such amounts 17 14 are for research conducted within this state. 17 15 Sec. 40. 2019 INTERIM TAX CREDIT STUDY. 17 16 1. The legislative council is requested to authorize a 17 17 study committee to evaluate tax credits available under Iowa 17 18 law, including Iowa's utilization of tax credits as a tool 17 19 for promoting and supporting economic growth and development. 17 20 The study committee shall also consider new or different 17 21 tax credits or incentive programs, or tax rate or structure 17 22 changes, that will foster economic growth and improve Iowa's 17 23 overall tax and economic development climate. The study 17 24 committee shall make recommendations that the committee 17 25 believes will improve predictability for the state's budget, 17 26 improve accountability to the taxpayers of Iowa, maximize 17 27 flexibility in utilization, and place Iowa in the best position 17 28 for attracting and retaining workers and businesses in the 17 29 future. In developing recommendations, the study committee 17 30 shall place significant emphasis on directing tax credits, 17 31 incentive programs, or tax rate or structure changes toward 17 32 Iowa workers and programs to strengthen Iowa's workforce by 17 33 incentivizing efforts to expand Iowans' skills and capabilities 17 34 in high=demand career fields. 17 35 2. The study committee shall consist of five members of 18 1 the senate, three of whom shall be appointed by the majority 18 2 leader of the senate and two of whom shall be appointed by 18 3 the minority leader of the senate, and five members of the 18 4 house of representatives, three of whom shall be appointed by 18 5 the speaker of the house of representatives and two of whom 18 6 shall be appointed by the minority leader of the house of 18 7 representatives. 18 8 3. The study committee shall meet during the 2019 18 9 legislative interim to make recommendations for consideration 18 10 during the 2020 legislative session in a report submitted to 18 11 the general assembly. 18 12 Sec. 41. LEGISLATIVE INTENT. It is the intent of the 18 13 general assembly that the provisions of this division of this 18 14 Act enacting section 422.10, subsection 3, paragraph "0a", 18 15 amending section 422.10, subsection 3, paragraph "a", enacting 18 16 section 422.33, subsection 5, paragraph e, subparagraph (01), 18 17 and amending section 422.33, subsection 5, paragraph "e", 18 18 subparagraph (1), are conforming amendments consistent with 18 19 current state law, and that the amendments do not change the 18 20 application of current law but instead reflect current law both 18 21 before and after the enactment of this division of this Act. 18 22 Sec. 42. REPEAL. Sections 422.10A and 422.11I, Code 2018, 18 23 are repealed. 18 24 Sec. 43. EFFECTIVE DATE. The following, being deemed of 18 25 immediate importance, take effect upon enactment: 18 26 1. The section of this division of this Act amending section 18 27 15E.52, subsection 8. 18 28 2. The section of this division of this Act enacting section 18 29 422.10, subsection 1, paragraph "0a". 18 30 3. The section of this division of this Act enacting section 18 31 422.10, subsection 3, paragraph "0a". 18 32 4. The section of this division of this Act amending section 18 33 422.10, subsection 3, paragraph "a". 18 34 5. The section of this division of this Act enacting section 18 35 422.33, subsection 5, paragraph "0e". 19 1 6. The section of this division of this Act enacting section 19 2 422.33, subsection 5, paragraph "e", subparagraph (01). 19 3 7. The section of this division of this Act amending section 19 4 422.33, subsection 5, paragraph "e", subparagraph (1). 19 5 8. The section of this division of this Act entitled 19 6 "legislative intent" which describes the intent of the general 19 7 assembly with respect to certain amendments in this division of 19 8 this Act to sections 422.10 and 422.33. 19 9 Sec. 44. EFFECTIVE DATE. The following take effect January 19 10 1, 2019: 19 11 1. The sections of this division of this Act amending 19 12 section 422.11S. 19 13 2. The section of this division of this Act repealing 19 14 sections 422.10A and 422.11I. 19 15 Sec. 45. RETROACTIVE APPLICABILITY. The following apply 19 16 retroactively to January 1, 2017, for tax years beginning on 19 17 or after that date: 19 18 1. The section of this division of this Act enacting section 19 19 422.10, subsection 1, paragraph "0a". 19 20 2. The section of this division of this Act enacting section 19 21 422.33, subsection 5, paragraph "0e". 19 22 Sec. 46. APPLICABILITY. The following applies to tax 19 23 years beginning on or after January 1, 2019, and to qualified 19 24 geothermal heat pump property installations occurring on or 19 25 after January 1, 2019: 19 26 The section of this division of this Act repealing sections 19 27 422.10A and 422.11I. 19 28 DIVISION V 19 29 TAXPAYERS TRUST FUND AND TAXPAYERS TRUST FUND TAX CREDIT 19 30 Sec. 47. Section 8.55, subsection 2, paragraph a, Code 2018, 19 31 is amended to read as follows: 19 32 a. The first sixty million dollars of the difference 19 33 between the actual net revenue for the general fund of the 19 34 state for the fiscal year and the adjusted revenue estimate for 19 35 the fiscal year shall be transferred to thetaxpayers trust 20 1taxpayer relief fund created in section 8.57E. 20 2 Sec. 48. Section 8.57E, Code 2018, is amended to read as 20 3 follows: 20 4 8.57ETaxpayers trustTaxpayer relief fund. 20 5 1. Ataxpayers trusttaxpayer relief fund is created. The 20 6 fund shall be separate from the general fund of the state and 20 7 the balance in the fund shall not be considered part of the 20 8 balance of the general fund of the state. The moneys credited 20 9 to the fund are not subject to section 8.33 and shall not 20 10 be transferred, used, obligated, appropriated, or otherwise 20 11 encumbered except as provided in this section. 20 12 2. Moneys in thetaxpayers trusttaxpayer relief fund shall 20 13 only be used pursuant to appropriations or transfers made by 20 14 the general assembly for tax relief, including but not limited 20 15 to increases in the general retirement income exclusion under 20 16 section 422.7, subsection 31, or reductions in income tax 20 17 rates.During each fiscal year beginning on or after July 1, 20 18 2014, in which the balance of the taxpayers trust fund equals 20 19 or exceeds thirty million dollars, there is transferred from 20 20 the taxpayers trust fund to the Iowa taxpayers trust fund tax 20 21 credit fund created in section 422.11E, the entire balance of 20 22 the taxpayers trust fund to be used for the Iowa taxpayers 20 23 trust fund tax credit in accordance with section 422.11E, 20 24 subsection 5.20 25 3. a. Moneys in thetaxpayers trusttaxpayer relief 20 26 fund may be used for cash flow purposes during a fiscal year 20 27 provided that any moneys so allocated are returned to the fund 20 28 by the end of that fiscal year. 20 29 b. Except as provided in section 8.58, thetaxpayers trust 20 30taxpayer relief fund shall be considered a special account for 20 31 the purposes of section 8.53 in determining the cash position 20 32 of the general fund of the state for the payment of state 20 33 obligations. 20 34 4. Notwithstanding section 12C.7, subsection 2, interest or 20 35 earnings on moneys deposited in thetaxpayers trusttaxpayer 21 1 relief fund shall be credited to the fund. 21 2 Sec. 49. Section 8.58, Code 2018, is amended to read as 21 3 follows: 21 4 8.58 Exemption from automatic application. 21 5 1. To the extent that moneys appropriated under section 21 6 8.57 do not result in moneys being credited to the general 21 7 fund under section 8.55, subsection 2, moneys appropriated 21 8 under section 8.57 and moneys contained in the cash reserve 21 9 fund, rebuild Iowa infrastructure fund, environment first fund, 21 10 Iowa economic emergency fund,taxpayers trusttaxpayer relief 21 11 fund, and state bond repayment fund shall not be considered 21 12 in the application of any formula, index, or other statutory 21 13 triggering mechanism which would affect appropriations, 21 14 payments, or taxation rates, contrary provisions of the Code 21 15 notwithstanding. 21 16 2. To the extent that moneys appropriated under section 21 17 8.57 do not result in moneys being credited to the general fund 21 18 under section 8.55, subsection 2, moneys appropriated under 21 19 section 8.57 and moneys contained in the cash reserve fund, 21 20 rebuild Iowa infrastructure fund, environment first fund, Iowa 21 21 economic emergency fund,taxpayers trusttaxpayer relief fund, 21 22 and state bond repayment fund shall not be considered by an 21 23 arbitrator or in negotiations under chapter 20. 21 24 Sec. 50. Section 257.21, subsection 2, Code 2018, is amended 21 25 to read as follows: 21 26 2. The instructional support income surtax shall be imposed 21 27 on the state individual income tax for the calendar year during 21 28 which the school's budget year begins, or for a taxpayer's 21 29 fiscal year ending during the second half of that calendar year 21 30 and after the date the board adopts a resolution to participate 21 31 in the program or the first half of the succeeding calendar 21 32 year, and shall be imposed on all individuals residing in the 21 33 school district on the last day of the applicable tax year. 21 34 As used in this section, "state individual income tax" means 21 35 the taxes computed under section 422.5, less the amounts of 22 1 nonrefundable credits allowed under chapter 422, division II, 22 2 except for the Iowa taxpayers trust fund tax credit allowed 22 3 under section 422.11E. 22 4 Sec. 51. Section 422D.2, Code 2018, is amended to read as 22 5 follows: 22 6 422D.2 Local income surtax. 22 7 A county may impose by ordinance a local income surtax as 22 8 provided in section 422D.1 at the rate set by the board of 22 9 supervisors, of up to one percent, on the state individual 22 10 income tax of each individual residing in the county at the 22 11 end of the individual's applicable tax year. However, the 22 12 cumulative total of the percents of income surtax imposed on 22 13 any taxpayer in the county shall not exceed twenty percent. 22 14 The reason for imposing the surtax and the amount needed 22 15 shall be set out in the ordinance. The surtax rate shall be 22 16 set to raise only the amount needed. For purposes of this 22 17 section, "state individual income tax" means the tax computed 22 18 under section 422.5, less the amounts of nonrefundable credits 22 19 allowed under chapter 422, division II, except for the Iowa 22 20 taxpayers trust fund tax credit allowed under section 422.11E. 22 21 Sec. 52. REPEAL. Section 422.11E, Code 2018, is repealed. 22 22 Sec. 53. EFFECTIVE DATE. This division of this Act, being 22 23 deemed of immediate importance, takes effect upon enactment. 22 24 Sec. 54. RETROACTIVE APPLICABILITY. The following apply 22 25 retroactively to January 1, 2018, for tax years beginning on 22 26 or after that date: 22 27 1. The section of this division of this Act amending section 22 28 257.21. 22 29 2. The section of this division of this Act repealing 22 30 section 422.11E. 22 31 3. The section of this division of this Act amending section 22 32 422D.2. 22 33 DIVISION VI 22 34 TAXPAYERS TRUST FUND TRANSFER CAP 22 35 Sec. 55. Section 8.55, subsection 2, paragraph a, Code 2018, 23 1 is amended to read as follows: 23 2 a. Thefirst sixty million dollars of thedifference between 23 3 the actual net revenue for the general fund of the state for 23 4 the fiscal year and the adjusted revenue estimate for the 23 5 fiscal year shall be transferred to the taxpayers trust fund 23 6 created in section 8.57E. 23 7 Sec. 56. EFFECTIVE DATE. This division of this Act takes 23 8 effect July 1, 2019. 23 9 Sec. 57. APPLICABILITY. This division of this Act is first 23 10 applicable to calculate the state general fund expenditure 23 11 limitation for the fiscal year beginning July 1, 2020. 23 12 DIVISION VII 23 13 INDIVIDUAL INCOME TAX CHANGES BEGINNING IN TAX YEAR 2018 23 14 Sec. 58. Section 422.7, Code 2018, is amended by adding the 23 15 following new subsections: 23 16 NEW SUBSECTION. 51. a. Notwithstanding any other provision 23 17 of law to the contrary, the increased expensing allowance under 23 18 section 179 of the Internal Revenue Code, as amended by Pub. 23 19 L. No. 115=97, {13101, applies in computing net income for 23 20 state tax purposes for tax years beginning on or after January 23 21 1, 2018, subject to the limitations in this subsection for tax 23 22 years beginning prior to January 1, 2020. 23 23 b. If the taxpayer has taken the increased expensing 23 24 allowance under section 179 of the Internal Revenue Code, 23 25 as amended by Pub. L. No. 115=97, {13101, for purposes of 23 26 computing federal adjusted gross income for tax years beginning 23 27 on or after January 1, 2018, but before January 1, 2020, then 23 28 the taxpayer shall make the following adjustments to federal 23 29 adjusted gross income when computing net income for state tax 23 30 purposes for the same tax year: 23 31 (1) Add the total amount of expense deduction taken on 23 32 section 179 property allowable for federal tax purposes under 23 33 section 179 of the Internal Revenue Code, as amended by Pub. 23 34 L. No. 115=97, {13101. 23 35 (2) (a) For tax years beginning on or after January 24 1 1, 2018, but before January 1, 2019, subtract the amount 24 2 of expense deduction on section 179 property allowable for 24 3 federal tax purposes under section 179 of the Internal Revenue 24 4 Code, as amended by Pub. L. No. 115=97, {13101, not to exceed 24 5 seventy thousand dollars. The subtraction in this subparagraph 24 6 division shall be reduced, but not below zero, by the amount by 24 7 which the total cost of section 179 property placed in service 24 8 by the taxpayer during the tax year exceeds two hundred eighty 24 9 thousand dollars. 24 10 (b) For tax years beginning on or after January 1, 2019, 24 11 but before January 1, 2020, subtract the amount of expense 24 12 deduction on section 179 property allowable for federal tax 24 13 purposes under section 179 of the Internal Revenue Code, as 24 14 amended by Pub. L. No. 115=97, {13101, not to exceed one 24 15 hundred thousand dollars. The subtraction in this subparagraph 24 16 division shall be reduced, but not below zero, by the amount by 24 17 which the total cost of section 179 property placed in service 24 18 by the taxpayer during the tax year exceeds four hundred 24 19 thousand dollars. 24 20 (3) Any other adjustments to gains or losses necessary to 24 21 reflect adjustments made in subparagraphs (1) and (2). 24 22 c. The director shall adopt rules pursuant to chapter 17A 24 23 to administer this subsection. 24 24 NEW SUBSECTION. 52. a. For tax years beginning on or 24 25 after January 1, 2018, but before January 1, 2020, a taxpayer 24 26 may elect to take advantage of this subsection in lieu of 24 27 subsection 51, but only if the taxpayer's total expensing 24 28 allowance deduction for federal tax purposes under section 179 24 29 of the Internal Revenue Code, as amended by Pub. L. No. 115=97, 24 30 {13101, that is allocated to the taxpayer from one or more 24 31 partnerships, S corporations, or limited liability companies 24 32 electing to have the income taxed directly to the individual 24 33 exceeds seventy thousand dollars for a tax year beginning 24 34 during the 2018 calendar year, or exceeds one hundred thousand 24 35 dollars for a tax year beginning during the 2019 calendar year, 25 1 and would, except as provided in this subsection, be limited 25 2 for purposes of computing net income for state tax purposes 25 3 pursuant to subsection 51. 25 4 b. A taxpayer who elects to take advantage of this 25 5 subsection shall make the following adjustments to federal 25 6 adjusted gross income when computing net income for state tax 25 7 purposes: 25 8 (1) Add the total amount of section 179 expense 25 9 deduction allocated to the taxpayer from all partnerships, S 25 10 corporations, or limited liability companies electing to have 25 11 the income taxed directly to the individual, to the extent the 25 12 allocated amount was allowed as a deduction to the taxpayer 25 13 for federal tax purposes for the tax year under section 179 of 25 14 the Internal Revenue Code, as amended by Pub. L. No. 115=97, 25 15 {13101. 25 16 (2) From the amount added in subparagraph (1), do the 25 17 following: 25 18 (a) For tax years beginning on or after January 1, 2018, 25 19 but before January 1, 2019, subtract the first seventy thousand 25 20 dollars of expensing allowance deduction on section 179 25 21 property. 25 22 (b) For tax years beginning on or after January 1, 2019, 25 23 but before January 1, 2020, subtract the first one hundred 25 24 thousand dollars of expensing allowance deduction on section 25 25 179 property. 25 26 (3) The remaining amount, equal to the difference between 25 27 the amount added in subparagraph (1), and the amount subtracted 25 28 in subparagraph (2), may be deducted by the taxpayer but such 25 29 deduction shall be amortized equally over five tax years 25 30 beginning in the following tax year. 25 31 (4) Any other adjustments to gains or losses necessary to 25 32 reflect adjustments made in subparagraphs (1) through (3). 25 33 c. A taxpayer who elects to take advantage of this 25 34 subsection shall not take the increased expensing allowance 25 35 under section 179 of the Internal Revenue Code, as amended by 26 1 Pub. L. No. 115=97, {13101, for any section 179 property placed 26 2 in service by the taxpayer in computing adjusted gross income 26 3 for state tax purposes. If the taxpayer has taken any such 26 4 deduction for purposes of computing federal adjusted gross 26 5 income, the taxpayer shall make the following adjustments to 26 6 federal adjusted gross income when computing net income for 26 7 state tax purposes: 26 8 (1) Add the total amount of expense deduction for federal 26 9 tax purposes taken on section 179 property placed in service by 26 10 the taxpayer under section 179 of the Internal Revenue Code, as 26 11 amended by Pub. L. No. 115=97, {13101. 26 12 (2) Subtract the amount of depreciation allowable on such 26 13 property under the modified accelerated cost recovery system 26 14 described in section 168 of the Internal Revenue Code, without 26 15 regard to section 168(k) of the Internal Revenue Code. The 26 16 taxpayer shall continue to take depreciation on the applicable 26 17 property in future tax years to the extent allowed under the 26 18 modified accelerated cost recovery system described in section 26 19 168 of the Internal Revenue Code, without regard to section 26 20 168(k) of the Internal Revenue Code. 26 21 (3) Any other adjustments to gains or losses necessary to 26 22 reflect the adjustments made in subparagraphs (1) and (2). 26 23 d. The election made under this subsection is for one tax 26 24 year and the taxpayer may elect or not elect to take advantage 26 25 of this subsection in any subsequent tax year. However, not 26 26 electing to take advantage of this subsection in a subsequent 26 27 tax year shall not affect the taxpayer's ability to claim the 26 28 tax deduction under paragraph "b", subparagraph (3), that 26 29 originated from a previous tax year. 26 30 e. The director shall adopt rules pursuant to chapter 17A 26 31 to administer this subsection. 26 32 Sec. 59. Section 422.9, subsection 2, paragraph h, Code 26 33 2018, is amended to read as follows: 26 34 h. For purposes of calculating the deductions in this 26 35 subsection that are authorized under the Internal Revenue Code, 27 1 and to the extent that any of such deductions is determined by 27 2 an individual's federal adjusted gross income, the individual's 27 3 federal adjusted gross income is computed in accordance with 27 4 section 422.7, subsections 39, 39A, 39B, 51, 52, and 53. 27 5 Sec. 60. TAX=FREE IRA DISTRIBUTIONS TO CERTAIN PUBLIC 27 6 CHARITIES FOR INDIVIDUALS SEVENTY AND ONE=HALF YEARS OF AGE 27 7 OR OLDER. Notwithstanding any other provision of law to the 27 8 contrary, for tax years beginning during the 2018 calendar 27 9 year, the exclusion from federal adjusted gross income for 27 10 certain qualified charitable distributions from an individual 27 11 retirement plan provided in section 408(d)(8) of the Internal 27 12 Revenue Code, as amended by Pub. L. No. 114=113, division Q, 27 13 {112, applies in computing net income for state tax purposes. 27 14 Sec. 61. STATE SALES AND USE TAX DEDUCTION. 27 15 Notwithstanding any other provision of law to the contrary, for 27 16 tax years beginning during the 2018 calendar year, a taxpayer 27 17 who elects to itemize deductions for state tax purposes under 27 18 section 422.9, subsection 2, is allowed to take the deduction 27 19 for state sales and use tax in lieu of the deduction for state 27 20 and local income taxes under section 164(b)(5) of the Internal 27 21 Revenue Code, as amended by Pub. L. No. 114=113, division Q, 27 22 {106, in computing taxable income for state tax purposes, but 27 23 only if the taxpayer elected to deduct state sales and use 27 24 taxes in lieu of state and local income taxes for federal tax 27 25 purposes for the same tax year. 27 26 Sec. 62. EARNED INCOME TAX CREDIT FOR 2018. 27 27 Notwithstanding the definition of "Internal Revenue Code" 27 28 in section 422.3, for tax years beginning during the 2018 27 29 calendar year, any reference to the term "Internal Revenue 27 30 Code" in section 422.12B shall mean the Internal Revenue Code 27 31 of 1954, prior to the date of its redesignation as the Internal 27 32 Revenue Code of 1986 by the Tax Reform Act of 1986, or means 27 33 the Internal Revenue Code of 1986 as amended and in effect on 27 34 January 1, 2016, but shall not be construed to include any 27 35 amendment to the Internal Revenue Code enacted after January 1, 28 1 2016, including any amendment with retroactive applicability 28 2 or effectiveness. 28 3 Sec. 63. ACCOUNTING METHOD AND OTHER MISCELLANEOUS 28 4 COUPLING PROVISIONS FOR TAX YEAR 2018. Notwithstanding any 28 5 other provision of law to the contrary, amendments to the 28 6 Internal Revenue Code enacted in Pub. L. No. 115=97, {13102, 28 7 {13221, {13504, {13541, {13543, {13611, and {13613, apply in 28 8 calculating federal adjusted gross income or federal taxable 28 9 income, as applicable, for state tax purposes for purposes of 28 10 chapter 422 for tax years beginning during the 2018 calendar 28 11 year to the extent those amendments affect the calculation of 28 12 federal adjusted gross income or federal taxable income, as 28 13 applicable, for federal tax purposes for tax years beginning 28 14 during the 2018 calendar year. 28 15 Sec. 64. TEACHER EXPENSE DEDUCTION. Notwithstanding 28 16 any other provision of law to the contrary, for tax years 28 17 beginning during the 2018 calendar year, a taxpayer is allowed 28 18 to take the deduction for certain expenses of elementary and 28 19 secondary school teachers allowed under section 62(a)(2)(D) of 28 20 the Internal Revenue Code, as amended by Pub. L. No. 114=113, 28 21 division Q, {104, in computing net income for state tax 28 22 purposes. 28 23 Sec. 65. EFFECTIVE DATE. This division of this Act, being 28 24 deemed of immediate importance, takes effect upon enactment. 28 25 Sec. 66. RETROACTIVE APPLICABILITY. Except as otherwise 28 26 provided in this division of this Act, this division of this 28 27 Act applies retroactively to January 1, 2018, for tax years 28 28 beginning on or after that date, but before January 1, 2019. 28 29 Sec. 67. RETROACTIVE APPLICABILITY. The following apply 28 30 retroactively to January 1, 2018, for tax years beginning on 28 31 or after that date: 28 32 1. The section of this division of this Act enacting section 28 33 422.7, subsections 51 and 52. 28 34 2. The section of this division of this Act amending section 28 35 422.9, subsection 2, paragraph "h". 29 1 DIVISION VIII 29 2 INDIVIDUAL AND CORPORATE INCOME TAX AND FRANCHISE TAX CHANGES 29 3 BEGINNING IN TAX YEAR 2019 29 4 Sec. 68. Section 15.335, subsection 7, paragraph b, Code 29 5 2018, is amended by striking the paragraph and inserting in 29 6 lieu thereof the following: 29 7 b. For purposes of this section, "Internal Revenue Code" 29 8 means the same as defined in section 422.3. 29 9 Sec. 69. Section 422.3, subsection 5, Code 2018, is amended 29 10 to read as follows: 29 11 5. "Internal Revenue Code" means one of the following: 29 12 a. For tax years beginning during the 2019 calendar year, 29 13 "Internal Revenue Code" means the Internal Revenue Code of 29 14 1954, prior to the date of its redesignation as the Internal 29 15 Revenue Code of 1986 by the Tax Reform Act of 1986, or means 29 16 the Internal Revenue Code of 1986 as amended and in effect on 29 17January 1, 2015March 24, 2018. This definition shall not be 29 18 construed to include any amendment to the Internal Revenue Code 29 19 enacted after the date specified in the preceding sentence, 29 20 including any amendment with retroactive applicability or 29 21 effectiveness. 29 22 b. For tax years beginning on or after January 1, 2020, 29 23 "Internal Revenue Code" means the Internal Revenue Code of 29 24 1954, prior to the date of its redesignation as the Internal 29 25 Revenue Code of 1986 by the Tax Reform Act of 1986, or means the 29 26 Internal Revenue Code of 1986, as amended. 29 27 Sec. 70. Section 422.4, subsection 16, Code 2018, is amended 29 28 to read as follows: 29 29 16. The words "taxable income" mean the net income as 29 30 defined in section 422.7 minus the deductions allowed by 29 31 section 422.9, in the case of individuals; in the case of 29 32 estates or trusts, the words "taxable income" mean the taxable 29 33 income(without a deduction for personal exemption)as 29 34 computed for federal income tax purposes under the Internal 29 35 Revenue Code, but with the following adjustmentsspecified in 30 1 section 422.7 plus the Iowa income tax deducted in computing 30 2 the federal taxable income and minus federal income taxes as 30 3 provided in section 422.9.: 30 4 a. Add back the personal exemption deduction taken in 30 5 computing federal taxable income. 30 6 b. Make the adjustments specified in section 422.7. 30 7 c. Add back Iowa income tax deducted in computing federal 30 8 taxable income. 30 9 d. Subtract federal income taxes as provided in section 30 10 422.9. 30 11 e. Add back the following percentage of the qualified 30 12 business income deduction under section 199A of the Internal 30 13 Revenue Code taken in calculating federal taxable income for 30 14 the applicable tax year: 30 15 (1) For tax years beginning on or after January 1, 2019, but 30 16 before January 1, 2021, seventy=five percent. 30 17 (2) For tax years beginning during the 2021 calendar year, 30 18 fifty percent. 30 19 (3) For tax years beginning on or after January 1, 2022, 30 20 twenty=five percent. 30 21 Sec. 71. Section 422.5, subsection 1, Code 2018, is amended 30 22 to read as follows: 30 23 1. a. A tax is imposed upon every resident and nonresident 30 24 of the state which tax shall be levied, collected, and paid 30 25 annually upon and with respect to the entire taxable income 30 26 as defined in this division at rates asfollows:provided in 30 27 section 422.5A. 30 28a. On all taxable income from zero through one thousand 30 29 dollars, thirty=six hundredths of one percent.30 30b. On all taxable income exceeding one thousand dollars but 30 31 not exceeding two thousand dollars, seventy=two hundredths of 30 32 one percent.30 33c. On all taxable income exceeding two thousand dollars 30 34 but not exceeding four thousand dollars, two and forty=three 30 35 hundredths percent.31 1d. On all taxable income exceeding four thousand dollars but 31 2 not exceeding nine thousand dollars, four and one=half percent.31 3e. On all taxable income exceeding nine thousand dollars 31 4 but not exceeding fifteen thousand dollars, six and twelve 31 5 hundredths percent.31 6f. On all taxable income exceeding fifteen thousand dollars 31 7 but not exceeding twenty thousand dollars, six and forty=eight 31 8 hundredths percent.31 9g. On all taxable income exceeding twenty thousand dollars 31 10 but not exceeding thirty thousand dollars, six and eight=tenths 31 11 percent.31 12h. On all taxable income exceeding thirty thousand dollars 31 13 but not exceeding forty=five thousand dollars, seven and 31 14 ninety=two hundredths percent.31 15i. On all taxable income exceeding forty=five thousand 31 16 dollars, eight and ninety=eight hundredths percent.31 17j.b. (1) The tax imposed upon the taxable income of a 31 18 nonresident shall be computed by reducing the amount determined 31 19 pursuant toparagraphs "a" through "i"paragraph "a" by the 31 20 amounts of nonrefundable credits under this division and by 31 21 multiplying this resulting amount by a fraction of which the 31 22 nonresident's net income allocated to Iowa, as determined in 31 23 section 422.8, subsection 2, paragraph "a", is the numerator and 31 24 the nonresident's total net income computed under section 422.7 31 25 is the denominator. This provision also applies to individuals 31 26 who are residents of Iowa for less than the entire tax year. 31 27 (2) (a) The tax imposed upon the taxable income of a 31 28 resident shareholder in an S corporation or of an estate 31 29 or trust with a situs in Iowa that is a shareholder in an S 31 30 corporation, which S corporation has in effect for the tax 31 31 year an election under subchapter S of the Internal Revenue 31 32 Code and carries on business within and without the state, 31 33 may be computed by reducing the amount determined pursuant 31 34 toparagraphs "a" through "i"paragraph "a" by the amounts of 31 35 nonrefundable credits under this division and by multiplying 32 1 this resulting amount by a fraction of which the resident's 32 2 or estate's or trust's net income allocated to Iowa, as 32 3 determined in section 422.8, subsection 2, paragraph "b", is 32 4 the numerator and the resident's or estate's or trust's total 32 5 net income computed under section 422.7 is the denominator. If 32 6 a resident shareholder, or an estate or trust with a situs in 32 7 Iowa that is a shareholder, has elected to take advantage of 32 8 this subparagraph (2), and for the next tax year elects not to 32 9 take advantage of this subparagraph, the resident or estate or 32 10 trust shareholder shall not reelect to take advantage of this 32 11 subparagraph for the three tax years immediately following the 32 12 first tax year for which the shareholder elected not to take 32 13 advantage of this subparagraph, unless the director consents to 32 14 the reelection. This subparagraph also applies to individuals 32 15 who are residents of Iowa for less than the entire tax year. 32 16 (b) This subparagraph (2) shall not affect the amount of 32 17 the taxpayer's checkoffs under this division, the credits from 32 18 tax provided under this division, and the allocation of these 32 19 credits between spouses if the taxpayers filed separate returns 32 20 or separately on combined returns. 32 21 Sec. 72. Section 422.5, subsection 2, paragraph a, Code 32 22 2018, is amended to read as follows: 32 23 a. There is imposed upon every resident and nonresident of 32 24 this state, including estates and trusts, the greater of the 32 25 tax determined in subsection 1, paragraphs "a" through "j",or 32 26 the state alternative minimum tax equal to seventy=five percent 32 27 of the maximum state individual income tax rate for the tax 32 28 year, rounded to the nearest one=tenth of one percent, times 32 29 the state alternative minimum taxable income of the taxpayer as 32 30 computed under this subsection. 32 31 Sec. 73. NEW SECTION. 422.5A Tax rates. 32 32 The tax imposed in section 422.5 shall be calculated at the 32 33 following rates: 32 34 1. On all taxable income from 0 through $1,000, the rate of 32 35 0.33 percent. 33 1 2. On all taxable income exceeding $1,000 but not exceeding 33 2 $2,000, the rate of 0.67 percent. 33 3 3. On all taxable income exceeding $2,000 but not exceeding 33 4 $4,000, the rate of 2.25 percent. 33 5 4. On all taxable income exceeding $4,000 but not exceeding 33 6 $9,000, the rate of 4.14 percent. 33 7 5. On all taxable income exceeding $9,000 but not exceeding 33 8 $15,000, the rate of 5.63 percent. 33 9 6. On all taxable income exceeding $15,000 but not exceeding 33 10 $20,000, the rate of 5.96 percent. 33 11 7. On all taxable income exceeding $20,000 but not exceeding 33 12 $30,000, the rate of 6.25 percent. 33 13 8. On all taxable income exceeding $30,000 but not exceeding 33 14 $45,000, the rate of 7.44 percent. 33 15 9. On all taxable income exceeding $45,000, the rate of 8.53 33 16 percent. 33 17 Sec. 74. Section 422.5, subsection 6, Code 2018, is amended 33 18 to read as follows: 33 19 6. Upon determination of the latest cumulative inflation 33 20 factor, the director shall multiply each dollar amount set 33 21 forth insubsection 1, paragraphs "a" through "i"section 33 22 422.5A by this cumulative inflation factor, shall round 33 23 off the resulting product to the nearest one dollar, and 33 24 shall incorporate the result into the income tax forms and 33 25 instructions for each tax year. 33 26 Sec. 75. Section 422.7, subsection 39A, unnumbered 33 27 paragraph 1, Code 2018, is amended by striking the unnumbered 33 28 paragraph and inserting in lieu thereof the following: 33 29 The additional first=year depreciation allowance authorized 33 30 in section 168(k) of the Internal Revenue Code does not 33 31 apply in computing net income for state tax purposes. If the 33 32 taxpayer has taken the additional first=year depreciation 33 33 allowance for purposes of computing federal adjusted gross 33 34 income, then the taxpayer shall make the following adjustments 33 35 to federal adjusted gross income when computing net income for 34 1 state tax purposes: 34 2 Sec. 76. Section 422.7, Code 2018, is amended by adding the 34 3 following new subsection: 34 4 NEW SUBSECTION. 59. a. The rules for nonrecognition 34 5 of gain or loss from exchanges of real property held for 34 6 productive use or investment and not held primarily for sale, 34 7 as provided in section 1031 of the Internal Revenue Code, apply 34 8 for state income tax purposes with regard to exchanges of real 34 9 property. 34 10 b. (1) The rules for nonrecognition of gain or loss 34 11 from exchanges of property other than real property held for 34 12 productive use or investment as provided in section 1031 of the 34 13 Internal Revenue Code, as amended up to and including December 34 14 21, 2017, apply for state income tax purposes for tax years 34 15 beginning during the 2019 calendar year, notwithstanding any 34 16 other provision of law to the contrary. If the taxpayer's 34 17 federal adjusted gross income includes gain or loss from 34 18 property, other than real property described in paragraph "a", 34 19 and the taxpayer elects to have this paragraph apply, the 34 20 following adjustments shall be made: 34 21 (a) (i) Subtract the total amount of gain related to the 34 22 sale or exchange of the property as properly reported for 34 23 federal tax purposes under the Internal Revenue Code. 34 24 (ii) Add back any gain related to the sale or exchange 34 25 of the property to the extent such gain does not qualify for 34 26 deferral under section 1031 of the Internal Revenue Code, as 34 27 amended up to and including December 21, 2017, which gain 34 28 shall be calculated using the taxpayer's adjusted basis in the 34 29 property for state tax purposes. 34 30 (b) (i) Add the total amount of loss related to the sale or 34 31 exchange of the property as properly reported for federal tax 34 32 purposes under the Internal Revenue Code. 34 33 (ii) Subtract any loss related to the sale or exchange 34 34 of the property to the extent such loss does not qualify for 34 35 deferral under section 1031 of the Internal Revenue Code, as 35 1 amended up to and including December 21, 2017, which loss 35 2 shall be calculated using the taxpayer's adjusted basis in the 35 3 property for state tax purposes. 35 4 (c) Any other adjustments to gains, losses, deductions, or 35 5 tax basis for the property given up or received in the sale or 35 6 exchange pursuant to rules adopted by the director. 35 7 (2) The director shall adopt rules pursuant to chapter 17A 35 8 to administer this paragraph. 35 9 c. This subsection is repealed January 1, 2020, for tax 35 10 years beginning on or after that date. 35 11 Sec. 77. Section 422.8, subsection 2, paragraph a, Code 35 12 2018, is amended to read as follows: 35 13 a. Nonresident's net income allocated to Iowa is the net 35 14 income, or portion of net income, which is derived from a 35 15 business, trade, profession, or occupation carried on within 35 16 this state or income from any property, trust, estate, or 35 17 other source within Iowa. However, income derived from a 35 18 business, trade, profession, or occupation carried on within 35 19 this state and income from any property, trust, estate, or 35 20 other source within Iowa shall not include distributions from 35 21 pensions, including defined benefit or defined contribution 35 22 plans, annuities, individual retirement accounts, and deferred 35 23 compensation plans or any earnings attributable thereto so long 35 24 as the distribution is directly related to an individual's 35 25 documented retirement and received while the individual is a 35 26 nonresident of this state. If a business, trade, profession, 35 27 or occupation is carried on partly within and partly without 35 28 the state, only the portion of the net income which is fairly 35 29 and equitably attributable to that part of the business, 35 30 trade, profession, or occupation carried on within the state 35 31 is allocated to Iowa for purposes of section 422.5, subsection 35 32 1, paragraph"j""b", and section 422.13 and income from any 35 33 property, trust, estate, or other source partly within and 35 34 partly without the state is allocated to Iowa in the same 35 35 manner, except that annuities, interest on bank deposits and 36 1 interest=bearing obligations, and dividends are allocated 36 2 to Iowa only to the extent to which they are derived from a 36 3 business, trade, profession, or occupation carried on within 36 4 the state. Net income described in section 29C.24, subsection 36 5 3, paragraph "a", subparagraph (3), and paragraph "b", 36 6 subparagraph (2), shall not be allocated and apportioned to the 36 7 state, as provided in section 29C.24. 36 8 Sec. 78. Section 422.9, unnumbered paragraph 1, Code 2018, 36 9 is amended to read as follows: 36 10 In computing taxable income of individuals, there shall be 36 11 deducted from net income the larger of thefollowingamounts: 36 12computed under subsection 1 or 2, plus the amount computed 36 13 under subsection 2A. 36 14 Sec. 79. Section 422.9, Code 2018, is amended by adding the 36 15 following new subsection: 36 16 NEW SUBSECTION. 2A. a. The following percentage of the 36 17 qualified business income deduction under section 199A of the 36 18 Internal Revenue Code taken in calculating federal taxable 36 19 income for the applicable tax year: 36 20 (1) For tax years beginning on or after January 1, 2019, but 36 21 before January 1, 2021, twenty=five percent. 36 22 (2) For tax years beginning during the 2021 calendar year, 36 23 fifty percent. 36 24 (3) For tax years beginning on or after January 1, 2022, 36 25 seventy=five percent. 36 26 b. Notwithstanding paragraph "a", and section 422.4, 36 27 subsection 16, paragraph "e", for an entity electing or required 36 28 to file a composite return under section 422.13, subsection 5, 36 29 the deduction allowed under this subsection for purposes of the 36 30 composite return shall be an amount equal to the applicable 36 31 percentage described in paragraph "a" of the deduction that 36 32 would be allowable for federal income tax purposes under 36 33 section 199A of the Internal Revenue Code by an individual 36 34 taxpayer reporting the same items of income and loss that are 36 35 included in the composite return. 37 1 Sec. 80. Section 422.9, subsection 2, paragraph i, Code 37 2 2018, is amended to read as follows: 37 3 i. The deduction for state sales and use taxes is allowable 37 4 only if the taxpayer elected to deduct the state sales and use 37 5 taxes in lieu of state income taxes under section 164 of the 37 6 Internal Revenue Code. A deduction for state sales and use 37 7 taxes is not allowed if the taxpayer has taken the deduction 37 8 for state income taxes or claimed the standard deduction under 37 9 section 63 of the Internal Revenue Code. This paragraph 37 10 applies to taxable years beginning afterDecember 31, 2003, and 37 11 before January 1, 2008, and to taxable years beginning after 37 12 December 31, 2009, and before January 1, 2015December 31, 37 13 2018. 37 14 Sec. 81. Section 422.9, subsection 2, Code 2018, is amended 37 15 by adding the following new paragraph: 37 16 NEW PARAGRAPH. l. The limitation on the deduction of 37 17 certain taxes in section 164(b)(6) of the Internal Revenue 37 18 Code does not apply in computing taxable income for state tax 37 19 purposes. A taxpayer is allowed to deduct taxes in computing 37 20 taxable income as otherwise provided in this subsection without 37 21 regard to section 164(b)(6), as enacted by Pub. L. No. 115=97, 37 22 {11042. 37 23 Sec. 82. Section 422.9, subsection 3, paragraph d, Code 37 24 2018, is amended to read as follows: 37 25 d. Notwithstanding paragraph "a", for a taxpayer who is 37 26 engaged in the trade or business of farming as defined in 37 27 section 263A(e)(4) of the Internal Revenue Code and has a loss 37 28 from farming as defined in section172(b)(1)(F)172(b)(1)(B) of 37 29 the Internal Revenue Code including modifications prescribed by 37 30 rule by the director, the Iowa loss from the trade or business 37 31 of farming is a net operating loss which may be carried back 37 32 five taxable years prior to the taxable year of the loss. 37 33 Sec. 83. Section 422.9, subsection 5, Code 2018, is amended 37 34 to read as follows: 37 35 5. A taxpayer affected by section 422.8 shall, if the 38 1 optional standard deduction is not used,be permitted to deduct 38 2 only such portion of the total referred to insubsection 38 3subsections 2aboveand 2A as is fairly and equitably allocable 38 4 to Iowa under the rules prescribed by the director. 38 5 Sec. 84. Section 422.9, subsections 6 and 7, Code 2018, are 38 6 amended by striking the subsections. 38 7 Sec. 85. Section 422.10, subsection 3, paragraph b, Code 38 8 2018, is amended by striking the paragraph. 38 9 Sec. 86. Section 422.11B, Code 2018, is amended to read as 38 10 follows: 38 11 422.11B Minimum tax credit. 38 12 1. a. There is allowed as a credit against the tax 38 13 determined in section 422.5, subsection 1,paragraphs "a" 38 14 through "j"for a tax year an amount equal to the minimum tax 38 15 credit for that tax year. 38 16 b. The minimum tax credit for a tax year is the excess, 38 17 if any, of the net minimum tax imposed for all prior tax 38 18 years beginning on or after January 1, 1987, over the amount 38 19 allowable as a credit under this section for those prior tax 38 20 years. 38 21 2. a. The allowable credit under subsection 1 for a tax 38 22 year shall not exceed the excess, if any, of the tax determined 38 23 in section 422.5, subsection 1,paragraphs "a" through "j"over 38 24 the state alternative minimum tax as determined in section 38 25 422.5, subsection 2. 38 26 b. The net minimum tax for a tax year is the excess, if any, 38 27 of the tax determined in section 422.5, subsection 2, for the 38 28 tax year over the tax determined in section 422.5, subsection 38 29 1,paragraphs "a" through "j"for the tax year. 38 30 Sec. 87. Section 422.32, subsection 1, paragraph h, Code 38 31 2018, is amended to read as follows: 38 32 h. "Internal Revenue Code" means one of the following: 38 33 (1) For tax years beginning during the 2019 calendar year, 38 34 "Internal Revenue Code" means the Internal Revenue Code of 38 35 1954, prior to the date of its redesignation as the Internal 39 1 Revenue Code of 1986 by the Tax Reform Act of 1986, or means 39 2 the Internal Revenue Code of 1986 as amended and in effect on 39 3January 1, 2015March 24, 2018. This definition shall not be 39 4 construed to include any amendment to the Internal Revenue Code 39 5 enacted after the date specified in the preceding sentence, 39 6 including any amendment with retroactive applicability or 39 7 effectiveness. 39 8 (2) For tax years beginning on or after January 1, 2020, 39 9 "Internal Revenue Code" means the Internal Revenue Code of 39 10 1954, prior to the date of its redesignation as the Internal 39 11 Revenue Code of 1986 by the Tax Reform Act of 1986, or means the 39 12 Internal Revenue Code of 1986, as amended. 39 13 Sec. 88. Section 422.33, subsection 1, paragraphs a, b, c, 39 14 and d, Code 2018, are amended to read as follows: 39 15 a. On the first twenty=five thousand dollars of taxable 39 16 income, or any part thereof, the rate of six percent for tax 39 17 years beginning prior to January 1, 2021, and the rate of 39 18 five and one=half percent for tax years beginning on or after 39 19 January 1, 2021. 39 20 b. On taxable income between twenty=five thousand dollars 39 21 and one hundred thousand dollars or any part thereof, the rate 39 22 of eight percent for tax years beginning prior to January 1, 39 23 2021, and the rate of five and one=half percent for tax years 39 24 beginning on or after January 1, 2021. 39 25 c. On taxable income between one hundred thousand dollars 39 26 and two hundred fifty thousand dollars or any part thereof, the 39 27 rate of ten percent for tax years beginning prior to January 1, 39 28 2021, and the rate of nine percent for tax years beginning on 39 29 or after January 1, 2021. 39 30 d. On taxable income of two hundred fifty thousand dollars 39 31 or more, the rate of twelve percent for tax years beginning 39 32 prior to January 1, 2021, and the rate of nine and eight=tenths 39 33 percent for tax years beginning on or after January 1, 2021. 39 34 Sec. 89. Section 422.33, subsection 4, paragraph a, Code 39 35 2018, is amended to read as follows: 40 1 a. In addition to all taxes imposed under this division, 40 2 there is imposed upon each corporation doing business within 40 3 the state the greater of the tax determined in subsection 1, 40 4 paragraphs "a" through "d" or the state alternative minimum tax 40 5 equal to sixty percent of the maximum state corporate income 40 6 tax rate for the tax year, rounded to the nearest one=tenth of 40 7 one percent, of the state alternative minimum taxable income of 40 8 the taxpayer computed under this subsection. 40 9 Sec. 90. Section 422.33, subsection 4, paragraph b, 40 10 subparagraph (1), Code 2018, is amended to read as follows: 40 11 (1) Add items of tax preference included in federal 40 12 alternative minimum taxable income under section 57, except 40 13 subsections (a)(1) and (a)(5), of the Internal Revenue Code, 40 14 make the adjustments included in federal alternative minimum 40 15 taxable income under section 56, except subsections (a)(4) and 40 16 (d), of the Internal Revenue Code, and add losses as required 40 17 by section 58 of the Internal Revenue Code. In making the 40 18 adjustment under section 56(c)(1) of the Internal Revenue Code, 40 19 interest and dividends from federal securities and interest 40 20 and dividends from state and other political subdivisions and 40 21 from regulated investment companies exempt from federal income 40 22 tax under the Internal Revenue Code, net of amortization of 40 23 any discount or premium, shall be subtracted. For purposes of 40 24 this subparagraph, "Internal Revenue Code" means the Internal 40 25 Revenue Code of 1954, prior to the date of its redesignation 40 26 as the Internal Revenue Code of 1986 by the Tax Reform Act of 40 27 1986, or means the Internal Revenue Code of 1986 as amended and 40 28 in effect on December 21, 2017. This definition shall not be 40 29 construed to include any amendment to the Internal Revenue Code 40 30 enacted after the date specified in the preceding sentence, 40 31 including any amendment with retroactive applicability or 40 32 effectiveness. 40 33 Sec. 91. Section 422.33, subsection 4, Code 2018, is amended 40 34 by adding the following new paragraph: 40 35 NEW PARAGRAPH. c. This subsection is repealed January 1, 41 1 2021, for tax years beginning on or after that date. 41 2 Sec. 92. Section 422.33, subsection 5, paragraph e, 41 3 subparagraph (2), Code 2018, is amended by striking the 41 4 subparagraph. 41 5 Sec. 93. Section 422.33, subsection 7, Code 2018, is amended 41 6 to read as follows: 41 7 7. a. (1)ThereFor tax years beginning before January 1, 41 8 2022, there is allowed as a credit against the tax determined 41 9 in subsection 1 for a tax year an amount equal to the minimum 41 10 tax credit for that tax year. 41 11 (2) The minimum tax credit for a tax year is the excess, 41 12 if any, of the net minimum tax imposed for all prior tax years 41 13 beginning on or after January 1, 1987, but before January 41 14 1, 2021, over the amount allowable as a credit under this 41 15 subsection for those prior tax years. 41 16 b. (1) The allowable credit under paragraph "a" for a tax 41 17 year beginning before January 1, 2021, shall not exceed the 41 18 excess, if any, of the tax determined in subsection 1 over 41 19 the state alternative minimum tax as determined in subsection 41 20 4. The allowable credit under paragraph "a" for a tax year 41 21 beginning in the 2021 calendar year shall not exceed the tax 41 22 determined in subsection 1. 41 23 (2) The net minimum tax for a tax year is the excess, if 41 24 any, of the tax determined in subsection 4 for the tax year 41 25 over the tax determined in subsection 1 for the tax year. 41 26 c. This subsection is repealed January 1, 2022, for tax 41 27 years beginning on or after that date. 41 28 Sec. 94. Section 422.35, subsection 4, Code 2018, is amended 41 29 to read as follows: 41 30 4. a.SubtractFor tax years beginning before January 1, 41 31 2022, subtract fifty percent of the federal income taxes paid 41 32or accrued, as the case may be,during the tax year to the 41 33 extent payment is for a tax year beginning prior to January 1, 41 34 2021, adjusted by any federal income tax refunds; and add the 41 35 Iowa income tax deducted in computing said taxable incometo 42 1 the extent the tax was deducted for a tax year beginning prior 42 2 to January 1, 2021. 42 3 b. Add the Iowa income tax deducted in computing federal 42 4 taxable income. 42 5 Sec. 95. Section 422.35, Code 2018, is amended by adding the 42 6 following new subsections: 42 7 NEW SUBSECTION. 14. a. The increased expensing allowance 42 8 under section 179 of the Internal Revenue Code applies in 42 9 computing net income for state tax purposes for tax years 42 10 beginning on or after January 1, 2019, subject to the 42 11 limitations in this subsection for tax years beginning on or 42 12 after January 1, 2019, but before January 1, 2020. 42 13 b. If the taxpayer has taken the increased expensing 42 14 allowance under section 179 of the Internal Revenue Code for 42 15 purposes of computing federal taxable income for tax years 42 16 beginning on or after January 1, 2019, but before January 1, 42 17 2020, then the taxpayer shall make the following adjustments to 42 18 federal taxable income when computing net income for state tax 42 19 purposes for the same tax year: 42 20 (1) Add the total amount of expense deduction taken on 42 21 section 179 property allowable for federal tax purposes under 42 22 section 179 of the Internal Revenue Code. 42 23 (2) Subtract the amount of expense deduction on section 42 24 179 property allowable for federal tax purposes under section 42 25 179 of the Internal Revenue Code, not to exceed one hundred 42 26 thousand dollars. The subtraction in this subparagraph shall 42 27 be reduced, but not below zero, by the amount by which the 42 28 total cost of section 179 property placed in service by the 42 29 taxpayer during the tax year exceeds four hundred thousand 42 30 dollars. 42 31 (3) Any other adjustments to gains or losses necessary to 42 32 reflect adjustments made in subparagraphs (1) and (2). 42 33 c. The director shall adopt rules pursuant to chapter 17A 42 34 to administer this subsection. 42 35 NEW SUBSECTION. 15. a. For tax years beginning on or 43 1 after January 1, 2019, but before January 1, 2020, a taxpayer 43 2 may elect to take advantage of this subsection in lieu of 43 3 subsection 14, but only if the taxpayer's total expensing 43 4 allowance deduction for federal tax purposes under section 43 5 179 of the Internal Revenue Code that is allocated to the 43 6 taxpayer from one or more partnerships or limited liability 43 7 companies electing to have the income taxed directly to the 43 8 owners exceeds one hundred thousand dollars and would, except 43 9 as provided in this subsection, be limited for purposes 43 10 of computing net income for state tax purposes pursuant to 43 11 subsection 14. 43 12 b. A taxpayer who elects to take advantage of this 43 13 subsection shall make the following adjustments to federal 43 14 taxable income when computing net income for state tax 43 15 purposes: 43 16 (1) Add the total amount of section 179 expense deduction 43 17 allocated to the taxpayer from all partnerships or limited 43 18 liability companies electing to have the income taxed directly 43 19 to the owners, to the extent the allocated amount was allowed 43 20 as a deduction to the taxpayer for federal tax purposes for the 43 21 tax year under section 179 of the Internal Revenue Code. 43 22 (2) From the amount added in subparagraph (1), subtract 43 23 the first one hundred thousand dollars of expensing allowance 43 24 deduction on section 179 property. 43 25 (3) The remaining amount, equal to the difference between 43 26 the amount added in subparagraph (1), and the amount subtracted 43 27 in subparagraph (2), may be deducted by the taxpayer but such 43 28 deduction shall be amortized equally over five tax years 43 29 beginning in the following tax year. 43 30 (4) Any other adjustments to gains or losses necessary to 43 31 reflect adjustments made in subparagraphs (1) through (3). 43 32 c. A taxpayer who elects to take advantage of this 43 33 subsection shall not take the increased expensing allowance 43 34 under section 179 of the Internal Revenue Code for any section 43 35 179 property placed in service by the taxpayer in computing 44 1 taxable income for state tax purposes. If the taxpayer has 44 2 taken any such deduction for purposes of computing federal 44 3 taxable income, the taxpayer shall make the following 44 4 adjustments to federal taxable income when computing net income 44 5 for state tax purposes: 44 6 (1) Add the total amount of expense deduction for federal 44 7 tax purposes taken on section 179 property placed in service by 44 8 the taxpayer under section 179 of the Internal Revenue Code. 44 9 (2) Subtract the amount of depreciation allowable on such 44 10 property under the modified accelerated cost recovery system 44 11 described in section 168 of the Internal Revenue Code, without 44 12 regard to section 168(k) of the Internal Revenue Code. The 44 13 taxpayer shall continue to take depreciation on the applicable 44 14 property in future tax years to the extent allowed under the 44 15 modified accelerated cost recovery system described in section 44 16 168 of the Internal Revenue Code, without regard to section 44 17 168(k) of the Internal Revenue Code. 44 18 (3) Any other adjustments to gains or losses necessary to 44 19 reflect the adjustments made in subparagraphs (1) and (2). 44 20 d. The director shall adopt rules pursuant to chapter 17A 44 21 to administer this subsection. 44 22 Sec. 96. Section 422.35, subsection 19A, unnumbered 44 23 paragraph 1, Code 2018, is amended by striking the unnumbered 44 24 paragraph and inserting in lieu thereof the following: 44 25 The additional first=year depreciation allowance authorized 44 26 in section 168(k) of the Internal Revenue Code does not 44 27 apply in computing net income for state tax purposes. If the 44 28 taxpayer has taken the additional first=year depreciation 44 29 allowance for purposes of computing federal taxable income, 44 30 then the taxpayer shall make the following adjustments to 44 31 federal taxable income when computing net income for state tax 44 32 purposes: 44 33 Sec. 97. EFFECTIVE DATE. This division of this Act takes 44 34 effect January 1, 2019. 44 35 Sec. 98. APPLICABILITY. This division of this Act applies 45 1 to tax years beginning on or after January 1, 2019. 45 2 DIVISION IX 45 3 FUTURE CONTINGENT INCOME AND CORPORATE TAX AND FRANCHISE TAX 45 4 CHANGES 45 5 Sec. 99. Section 12D.9, subsection 2, Code 2018, is amended 45 6 to read as follows: 45 7 2. State income tax treatment of the Iowa educational 45 8 savings plan trust shall be as provided in section 422.7, 45 9 subsections 18, 32, and 33. 45 10 Sec. 100. Section 217.39, Code 2018, is amended to read as 45 11 follows: 45 12 217.39 Persecuted victims of World War II ==== reparations ==== 45 13 heirs. 45 14 Notwithstanding any other law of this state, payments paid 45 15 to and income from lost property of a victim of persecution 45 16 for racial, ethnic, or religious reasons by Nazi Germany or 45 17 any other Axis regime or as an heir of such victim which is 45 18exempt from state income tax as provideddescribed in section 45 19 422.7, subsection 35, Code 2018, shall not be considered as 45 20 income or an asset for determining the eligibility for state or 45 21 local government benefit or entitlement programs. The proceeds 45 22 are not subject to recoupment for the receipt of governmental 45 23 benefits or entitlements, and liens, except liens for child 45 24 support, are not enforceable against these sums for any reason. 45 25 Sec. 101. Section 422.4, subsection 1, paragraphs b and c, 45 26 Code 2018, are amended to read as follows: 45 27 b. "Cumulative inflation factor" means the product of the 45 28 annual inflation factor for the1988calendar year beginning on 45 29 January 1 of the calendar year that this division of this Act 45 30 takes effect and all annual inflation factors for subsequent 45 31 calendar years as determined pursuant to this subsection. The 45 32 cumulative inflation factor applies to all tax years beginning 45 33 on or after January 1 of the calendar year for which the latest 45 34 annual inflation factor has been determined. 45 35 c. The annual inflation factor for the1988calendar year 46 1 beginning on January 1 of the calendar year that this division 46 2 of this Act takes effect is one hundred percent. 46 3 Sec. 102. Section 422.4, subsection 2, Code 2018, is amended 46 4 by striking the subsection. 46 5 Sec. 103. Section 422.4, subsection 16, Code 2018, is 46 6 amended by striking the subsection and inserting in lieu 46 7 thereof the following: 46 8 16. "Taxable income" means, in the case of individuals, 46 9 the net income as defined in section 422.7 minus the deduction 46 10 allowed by section 422.9, if available. "Taxable income" means, 46 11 in the case of estates or trusts, the taxable income without 46 12 a deduction for personal exemption as computed for federal 46 13 income tax purposes under the Internal Revenue Code, but with 46 14 the adjustments specified in section 422.7, and the deduction 46 15 allowed by section 422.9, if available. 46 16 Sec. 104. Section 422.5, subsection 1, paragraph j, 46 17 subparagraph (2), subparagraph division (b), Code 2018, is 46 18 amended to read as follows: 46 19 (b) This subparagraph (2) shall not affect the amount of 46 20 the taxpayer's checkoffs under this division, the credits from 46 21 tax provided under this division, and the allocation of these 46 22 credits between spouses if the taxpayers filed separate returns 46 23or separately on combined returns. 46 24 Sec. 105. Section 422.5, subsection 2, Code 2018, is amended 46 25 by striking the subsection. 46 26 Sec. 106. Section 422.5, subsections 3 and 3B, Code 2018, 46 27 are amended to read as follows: 46 28 3. a. The tax shall not be imposed on a resident or 46 29 nonresident whose net income, as defined in section 422.7, is 46 30 thirteen thousand five hundred dollars or less in the case 46 31 of married persons filing jointlyor filing separately on a 46 32 combined return, heads of household, and surviving spouses or 46 33 nine thousand dollars or less in the case of all other persons; 46 34 but in the event that the payment of tax under this division 46 35 would reduce the net income to less than thirteen thousand five 47 1 hundred dollars or nine thousand dollars as applicable, then 47 2 the tax shall be reduced to that amount which would result 47 3 in allowing the taxpayer to retain a net income of thirteen 47 4 thousand five hundred dollars or nine thousand dollars as 47 5 applicable. The preceding sentence does not apply to estates 47 6 or trusts. For the purpose of this subsection, the entire net 47 7 income, including any part of the net income not allocated 47 8 to Iowa, shall be taken into account. For purposes of this 47 9 subsection, net income includes all amounts of pensions or 47 10 other retirement income, except for military retirement pay 47 11 excluded under section 422.7, subsection 31A, paragraph "a", 47 12 or section 422.7, subsection 31B, paragraph "a", received from 47 13 any source which is not taxable under this division as a result 47 14 of the government pension exclusions in section 422.7, or any 47 15 other state law. In calculating net income for purposes of 47 16 this subsection, any amount of itemized or standard deduction, 47 17 personal exemption deduction, or qualified business income 47 18 deduction that was allowed as a deduction in computing federal 47 19 taxable income under the Internal Revenue Code shall be added 47 20 back. If the combined net income of a husband and wife exceeds 47 21 thirteen thousand five hundred dollars, neither of them shall 47 22 receive the benefit of this subsection, and it is immaterial 47 23 whether they file a joint return or separate returns. However, 47 24 if a husband and wife file separate returns and have a combined 47 25 net income of thirteen thousand five hundred dollars or less, 47 26 neither spouse shall receive the benefit of this paragraph, 47 27 if one spouse has a net operating loss and elects to carry 47 28 back or carry forward the loss as provided under the Internal 47 29 Revenue Code or in section 422.9, subsection 3. A person who 47 30 is claimed as a dependent by another person as defined in 47 31 section 422.12 shall not receive the benefit of this subsection 47 32 if the person claiming the dependent has net income exceeding 47 33 thirteen thousand five hundred dollars or nine thousand dollars 47 34 as applicable or the person claiming the dependent and the 47 35 person's spouse have combined net income exceeding thirteen 48 1 thousand five hundred dollars or nine thousand dollars as 48 2 applicable. 48 3 b. In lieu of the computation in subsection 1or 2, or in 48 4 paragraph "a" of this subsection, if the married persons',48 5 filing jointlyor filing separately on a combined return, 48 6 head of household's, or surviving spouse's net income exceeds 48 7 thirteen thousand five hundred dollars, the regular tax imposed 48 8 under this division shall be the lesser of the maximum state 48 9 individual income tax rate times the portion of the net income 48 10 in excess of thirteen thousand five hundred dollars or the 48 11 regular tax liability computed without regard to this sentence. 48 12 Taxpayers electing to file separately shall compute the 48 13 alternate tax described in this paragraph using the total net 48 14 income of the husband and wife. The alternate tax described 48 15 in this paragraph does not apply if one spouse elects to carry 48 16 back or carry forwardthea net operating loss as provided 48 17 under the Internal Revenue Code or in section 422.9, subsection 48 18 3. 48 19 3B. a. The tax shall not be imposed on a resident or 48 20 nonresident who is at least sixty=five years old on December 48 21 31 of the tax year and whose net income, as defined in section 48 22 422.7, is thirty=two thousand dollars or less in the case 48 23 of married persons filing jointlyor filing separately on a 48 24 combined return, heads of household, and surviving spouses or 48 25 twenty=four thousand dollars or less in the case of all other 48 26 persons; but in the event that the payment of tax under this 48 27 division would reduce the net income to less than thirty=two 48 28 thousand dollars or twenty=four thousand dollars as applicable, 48 29 then the tax shall be reduced to that amount which would result 48 30 in allowing the taxpayer to retain a net income of thirty=two 48 31 thousand dollars or twenty=four thousand dollars as applicable. 48 32 The preceding sentence does not apply to estates or trusts. 48 33 For the purpose of this subsection, the entire net income, 48 34 including any part of the net income not allocated to Iowa, 48 35 shall be taken into account. For purposes of this subsection, 49 1 net income includes all amounts of pensions or other retirement 49 2 income, except for military retirement pay excluded under 49 3 section 422.7, subsection 31A, paragraph "a", or section 422.7, 49 4 subsection 31B, paragraph "a", received from any source which is 49 5 not taxable under this division as a result of the government 49 6 pension exclusions in section 422.7, or any other state law. 49 7 In calculating net income for purposes of this subsection, any 49 8 amount of itemized or standard deduction, personal exemption 49 9 deduction, or qualified business income deduction that was 49 10 allowed as a deduction in computing federal taxable income 49 11 under the Internal Revenue Code shall be added back. If the 49 12 combined net income of a husband and wife exceeds thirty=two 49 13 thousand dollars, neither of them shall receive the benefit 49 14 of this subsection, and it is immaterial whether they file a 49 15 joint return or separate returns. However, if a husband and 49 16 wife file separate returns and have a combined net income of 49 17 thirty=two thousand dollars or less, neither spouse shall 49 18 receive the benefit of this paragraph, if one spouse has a net 49 19 operating loss and elects to carry back or carry forward the 49 20 loss as provided under the Internal Revenue Code or in section 49 21 422.9, subsection 3. A person who is claimed as a dependent by 49 22 another person as defined in section 422.12 shall not receive 49 23 the benefit of this subsection if the person claiming the 49 24 dependent has net income exceeding thirty=two thousand dollars 49 25 or twenty=four thousand dollars as applicable or the person 49 26 claiming the dependent and the person's spouse have combined 49 27 net income exceeding thirty=two thousand dollars or twenty=four 49 28 thousand dollars as applicable. 49 29 b. In lieu of the computation in subsection 1, 2,or 3, if 49 30 the married persons',filing jointlyor filing separately on 49 31 a combined return, head of household's, or surviving spouse's 49 32 net income exceeds thirty=two thousand dollars, the regular 49 33 tax imposed under this division shall be the lesser of the 49 34 maximum state individual income tax rate times the portion of 49 35 the net income in excess of thirty=two thousand dollars or the 50 1 regular tax liability computed without regard to this sentence. 50 2 Taxpayers electing to file separately shall compute the 50 3 alternate tax described in this paragraph using the total net 50 4 income of the husband and wife. The alternate tax described 50 5 in this paragraph does not apply if one spouse elects to carry 50 6 back or carry forwardthea net operating loss as provided 50 7 under the Internal Revenue Code or in section 422.9, subsection 50 8 3. 50 9 c. This subsection applies even though one spouse has not 50 10 attained the age of sixty=five, if the other spouse is at least 50 11 sixty=five at the end of the tax year. 50 12 Sec. 107. Section 422.5A, as enacted in this Act, Code 50 13 2018, is amended by striking the section and inserting in lieu 50 14 thereof the following: 50 15 422.5A Tax rates. 50 16 1. The tax imposed in section 422.5 shall be calculated 50 17 at the following rates in the case of a married couple filing 50 18 jointly: 50 19 a. On all taxable income from 0 through $12,000, the rate of 50 20 4.40 percent. 50 21 b. On all taxable income exceeding $12,000 but not exceeding 50 22 $60,000, the rate of 4.82 percent. 50 23 c. On all taxable income exceeding $60,000 but not exceeding 50 24 $150,000, the rate of 5.70 percent. 50 25 d. On all taxable income exceeding $150,000, the rate of 50 26 6.50 percent. 50 27 2. The tax imposed in section 422.5 shall be calculated at 50 28 the following rates in the case of any taxpayer other than a 50 29 married couple filing jointly: 50 30 a. On all taxable income from 0 through $6,000, the rate of 50 31 4.40 percent. 50 32 b. On all taxable income exceeding $6,000 but not exceeding 50 33 $30,000, the rate of 4.82 percent. 50 34 c. On all taxable income exceeding $30,000 but not exceeding 50 35 $75,000, the rate of 5.70 percent. 51 1 d. On all taxable income exceeding $75,000, the rate of 6.50 51 2 percent. 51 3 Sec. 108. Section 422.7, unnumbered paragraph 1, Code 2018, 51 4 is amended to read as follows: 51 5 The term "net income" means theadjusted gross income before 51 6 the net operating loss deductiontaxable income as properly 51 7 computed for federal income tax purposes under section 63 of 51 8 the Internal Revenue Code, with the following adjustments: 51 9 Sec. 109. Section 422.7, Code 2018, is amended by adding the 51 10 following new subsections: 51 11 NEW SUBSECTION. 4. Add any federal net operating loss 51 12 deduction carried over from a taxable year beginning prior to 51 13 January 1 of the calendar year that this division of this Act 51 14 takes effect. 51 15 NEW SUBSECTION. 6. a. For tax years beginning in the 51 16 calendar year that this division of this Act takes effect, 51 17 subtract the amount of federal income taxes paid during the 51 18 tax year to the extent payment is for a tax year beginning 51 19 prior to January 1 of the calendar year that this division of 51 20 this Act takes effect, and add any federal income tax refunds 51 21 received during the tax year to the extent the federal income 51 22 tax was deducted for a tax year beginning prior to January 1 of 51 23 the calendar year that this division of this Act takes effect. 51 24 Where married persons who have filed a joint federal income 51 25 tax return file separately for state tax purposes, such total 51 26 shall be divided between them according to the portion of the 51 27 total paid by each. Federal income taxes paid for a tax year 51 28 in which an Iowa return was not required to be filed shall not 51 29 be subtracted. 51 30 b. Notwithstanding any other provision of law to the 51 31 contrary, amounts subtracted or added pursuant to this 51 32 subsection shall not be included in the calculation of net 51 33 income for purposes of section 422.5, subsection 3 or 3B, or 51 34 section 422.13. 51 35 Sec. 110. Section 422.7, subsection 5, Code 2018, is amended 52 1 to read as follows: 52 2 5. Individual taxpayers and married taxpayers who file a 52 3 joint federal income tax return and who elect to file a joint 52 4 return,or separate returns, or separate filing on a combined 52 5 returnfor Iowa income tax purposes,may avail themselves of 52 6 the disability income exclusion and shall compute the amount 52 7 of the disability income exclusion subject to the limitations 52 8 for joint federal income tax return filers provided by section 52 9 105(d) of the Internal Revenue Code. The disability income 52 10 exclusion provided in section 105(d) of the Internal Revenue 52 11 Code, as amended up to and including December 31, 1982, 52 12 continues to apply for state income tax purposes for tax years 52 13 beginning on or after January 1, 1984. 52 14 Sec. 111. Section 422.7, subsection 13, Code 2018, is 52 15 amended by striking the subsection and inserting in lieu 52 16 thereof the following: 52 17 13. Subtract, to the extent included, the amount of social 52 18 security benefits taxable under section 86 of the Internal 52 19 Revenue Code. 52 20 Sec. 112. Section 422.7, Code 2018, is amended by adding the 52 21 following new subsections: 52 22 NEW SUBSECTION. 18. Add, to the extent deducted for federal 52 23 tax purposes, charitable contributions under section 170 of 52 24 the Internal Revenue Code to the extent such contribution was 52 25 made to an organization for the purpose of deposit in the Iowa 52 26 education savings plan trust established in chapter 12D, and 52 27 the taxpayer designated that any part of the contribution be 52 28 used for the direct benefit of any dependent of the taxpayer or 52 29 any other single beneficiary designated by the taxpayer. 52 30 NEW SUBSECTION. 19. a. Subtract, to the extent included, 52 31 income resulting from the payment by an employer of the 52 32 taxpayer, whether paid to the taxpayer or to a lender, of 52 33 principal or interest on any qualified education loan incurred 52 34 by the taxpayer. 52 35 b. If the taxpayer has a deduction in computing federal 53 1 taxable income under section 221 of the Internal Revenue Code 53 2 for interest on a qualified education loan, the taxpayer shall 53 3 recompute for purposes of this subsection the amount of the 53 4 deduction under paragraph "a" by not subtracting any amount of 53 5 income resulting from the employer's payment of interest on a 53 6 qualified education loan that was also deducted by the taxpayer 53 7 under section 221 of the Internal Revenue Code. 53 8 c. For purposes of this subsection, "qualified education 53 9 loan" means the same as defined in section 221 of the Internal 53 10 Revenue Code. 53 11 Sec. 113. Section 422.7, subsection 21, Code 2018, is 53 12 amended by striking the subsection and inserting in lieu 53 13 thereof the following: 53 14 21. a. For purposes of this subsection: 53 15 (1) "Farming business" means the raising and harvesting 53 16 of crops or forest or fruit trees, the rearing, feeding, and 53 17 management of livestock, or horticulture, all for intended 53 18 profit. 53 19 (2) "Held" shall be determined with reference to the holding 53 20 period provisions of section 1223 of the Internal Revenue Code 53 21 and the federal regulations pursuant thereto. 53 22 (3) "Materially participated" means the same as "material 53 23 participation" in section 469(h) of the Internal Revenue Code. 53 24 (4) (a) "Real property used in a farming business" means all 53 25 tracts of land and the improvements and structures located on 53 26 them which are in good faith used primarily for agricultural 53 27 purposes except buildings which are primarily used or intended 53 28 for human habitation. Land and the nonresidential improvements 53 29 and structures located on it shall be considered to be used 53 30 primarily for agricultural purposes if its principal use is 53 31 devoted to the raising and harvesting of crops or forest or 53 32 fruit trees, the rearing, feeding, and management of livestock, 53 33 or horticulture, all for intended profit. Woodland, wasteland, 53 34 and pastureland shall qualify but only if such land is held or 53 35 operated in conjunction with real property that otherwise meets 54 1 the requirements of this paragraph. 54 2 (b) Real property classified as agricultural property for 54 3 Iowa property tax purposes, except real property described 54 4 in section 441.21, subsection 12, paragraphs "a" or "b", 54 5 shall be presumed to be real property used in a farming 54 6 business. This presumption is rebuttable by the department by 54 7 a preponderance of evidence that the real property did not meet 54 8 the requirements of subparagraph division (a). 54 9 (5) "Relative" means an individual that satisfies one or 54 10 more of the following conditions: 54 11 (a) The individual is related to the taxpayer by 54 12 consanguinity within the second degree as determined by common 54 13 law. 54 14 (b) The individual is a lineal descendent of the taxpayer. 54 15 For purposes of this subparagraph division, "lineal descendent" 54 16 means children of the taxpayer, including legally adopted 54 17 children and biological children, stepchildren, grandchildren, 54 18 great=grandchildren, and any other lineal descendent of the 54 19 taxpayer. 54 20 b. Subtract the net capital gain from the sale of real 54 21 property used in a farming business if all of the following 54 22 conditions are satisfied: 54 23 (1) The taxpayer has materially participated in the farming 54 24 business for a minimum of ten years immediately preceding the 54 25 sale. 54 26 (2) The taxpayer has held the real property used in a 54 27 farming business for a minimum of ten years immediately 54 28 preceding the sale. 54 29 (3) The real property used in a farming business is sold to 54 30 a relative of the taxpayer. 54 31 c. (1) If the relative to whom the taxpayer sold the 54 32 real property used in a farming business that qualified 54 33 for the deduction in this subsection subsequently sells or 54 34 otherwise transfers all or part of said real property to a 54 35 person who is not a relative of the taxpayer within five years 55 1 of the original sale, the subsequent sale or transfer shall 55 2 be considered prima facie evidence that the original sale 55 3 was entered into by the taxpayer primarily to obtain the tax 55 4 benefits provided in this subsection, and the deduction under 55 5 this subsection for the original sale shall be disallowed for 55 6 the taxpayer with respect to that real property subsequently 55 7 sold or transferred by the relative. 55 8 (2) The prima facie determination in subparagraph (1) may be 55 9 rebutted by the taxpayer by a preponderance of evidence showing 55 10 that at the time of the original sale by the taxpayer of the 55 11 real property used in a farming business, all of the following 55 12 conditions were satisfied: 55 13 (a) The taxpayer had a substantial purpose for entering into 55 14 the sale transaction apart from the state tax benefits. 55 15 (b) The taxpayer did not intend that the real property would 55 16 subsequently be sold or transferred to a person who is not a 55 17 relative of the taxpayer. 55 18 (c) The taxpayer had no actual or constructive knowledge of 55 19 the buyer's intent to subsequently sell or transfer the real 55 20 property to a person who is not a relative of the taxpayer. 55 21 (3) Notwithstanding section 422.25, subsection 1, paragraph 55 22 "a", the period of limitation for examination and determination 55 23 of tax with regard to the deduction provided in this subsection 55 24 shall be one of the following dates, whichever occurs later: 55 25 (a) The date which is three years after the date that the 55 26 return upon which the deduction in this subsection is claimed 55 27 is filed. 55 28 (b) The date which is three years after the date that the 55 29 return upon which the deduction in this subsection is claimed 55 30 is due, including any extensions. 55 31 (c) The date which is six years after the date of the sale 55 32 of the real property used in a farming business for which the 55 33 deduction in this subsection is claimed. 55 34 d. To the extent otherwise allowed, the deduction provided 55 35 in this subsection is not allowed for purposes of computing the 56 1 income for the taxable year or years for which a net operating 56 2 loss is deducted under the Internal Revenue Code or under 56 3 subsection 422.9. 56 4 Sec. 114. Section 422.7, subsection 29, Code 2018, is 56 5 amended to read as follows: 56 6 29. a.SubtractFor a taxpayer who is sixty=five years 56 7 of age or older and whose net income is less than one hundred 56 8 thousand dollars, subtract, to the extent not otherwise 56 9 deducted in computingadjusted grossfederal taxable income, 56 10 the amounts paid by the taxpayer for the purchase of health 56 11 benefits coverage or insurance for the taxpayer or taxpayer's 56 12 spouse or dependent. 56 13 b. For purposes of this subsection, "net income" means net 56 14 income as properly computed under this section without regard 56 15 to the deduction in this subsection and with the following 56 16 additional adjustments: 56 17 (1) Add back any amount of pensions or other retirement 56 18 income received from any source which is not taxable under this 56 19 division, including but not limited to amounts deductible under 56 20 subsections 13, 31, 31A, and 31B. 56 21 (2) Add back any amount of itemized or standard deduction, 56 22 personal exemption deduction, or qualified business income 56 23 deduction that was allowed as a deduction from federal adjusted 56 24 gross income in computing federal taxable income under the 56 25 Internal Revenue Code. 56 26 Sec. 115. Section 422.7, subsection 31, Code 2018, is 56 27 amended to read as follows: 56 28 31. For a person who is disabled, or is fifty=five years of 56 29 age or older, or is the surviving spouse of an individual or 56 30 a survivor having an insurable interest in an individual who 56 31 would have qualified for the exemption under this subsection 56 32 for the tax year, subtract, to the extent included, the 56 33 total amount of a governmental or other pension or retirement 56 34 pay, including, but not limited to, defined benefit or 56 35 defined contribution plans, annuities, individual retirement 57 1 accounts, plans maintained or contributed to by an employer, 57 2 or maintained or contributed to by a self=employed person as 57 3 an employer, and deferred compensation plans or any earnings 57 4 attributable to the deferred compensation plans, up to a 57 5 maximum of six thousand dollars for a person, other than a 57 6 husband or wife, who files a separate state income tax return 57 7 and up to a maximum of twelve thousand dollars for a husband 57 8 and wife who file a joint state income tax return. However, a 57 9 surviving spouse who is not disabled or fifty=five years of age 57 10 or older can only exclude the amount of pension or retirement 57 11 pay received as a result of the death of the other spouse. A 57 12 husband and wife filing separate state income tax returnsor 57 13 separately on a combined state returnare allowed a combined 57 14 maximum exclusion under this subsection of up to twelve 57 15 thousand dollars. The twelve thousand dollar exclusion shall 57 16 be allocated to the husband or wife in the proportion that each 57 17 spouse's respective pension and retirement pay received bears 57 18 to total combined pension and retirement pay received. 57 19 Sec. 116. Section 422.7, subsection 41, Code 2018, is 57 20 amended by adding the following new paragraph: 57 21 NEW PARAGRAPH. 0e. Add, to the extent deducted for 57 22 federal tax purposes, interest, taxes, and other miscellaneous 57 23 expenses to the extent such amounts are eligible home costs 57 24 in connection with a qualified home purchase that were paid 57 25 or reimbursed from funds in a first=time homebuyer savings 57 26 account. 57 27 Sec. 117. Section 422.7, subsection 47, Code 2018, is 57 28 amended to read as follows: 57 29 47. Subtract, to the extent not otherwise deducted in 57 30 computingadjusted grossfederal taxable income, the amounts 57 31 paid by the taxpayer to the department of veterans affairs for 57 32 the purpose of providing grants under the injured veterans 57 33 grant program established in section 35A.14. Amounts 57 34 subtracted under this subsection shall not be used by the 57 35 taxpayer in computing the amount of charitable contributions as 58 1 defined by section 170 of the Internal Revenue Code. 58 2 Sec. 118. Section 422.7, subsections 3, 7, 8, 9, 10, 11, 14, 58 3 15, 16, 20, 22, 24, 25, 26, 30, 35, 36, 37, 39, 39B, 40, 43, 45, 58 4 49, 53, 55, 56, 57, and 58, Code 2018, are amended by striking 58 5 the subsections. 58 6 Sec. 119. Section 422.8, subsection 4, Code 2018, is amended 58 7 by striking the subsection. 58 8 Sec. 120. Section 422.9, Code 2018, is amended by striking 58 9 the section and inserting in lieu thereof the following: 58 10 422.9 Carry over of Iowa net operating loss. 58 11 Any Iowa net operating loss carried over from a taxable year 58 12 beginning prior to January 1 of the calendar year that this 58 13 division of this Act takes effect may be deducted as provided 58 14 in section 422.9, subsection 3, Code 2018. 58 15 Sec. 121. Section 422.11B, Code 2018, is amended to read as 58 16 follows: 58 17 422.11B Minimum tax credit. 58 18 1. a.ThereFor tax years beginning before January 1 of the 58 19 calendar year following the calendar year that this division 58 20 of this Act takes effect, there is allowed as a credit against 58 21 the tax determined in section 422.5, subsection 1,paragraphs 58 22 "a" through "j"for a tax year an amount equal to the minimum 58 23 tax credit for that tax year. 58 24 b. The minimum tax credit for a tax year is the excess, if 58 25 any, of the net minimum tax imposed for all prior tax years 58 26 beginning on or after January 1, 1987, but before January 1 of 58 27 the calendar year that this division of this Act takes effect, 58 28 over the amount allowable as a credit under this section for 58 29 those prior tax years. 58 30 2. a. The allowable credit under subsection 1 for a tax 58 31 year beginning before January 1 of the calendar year that this 58 32 division of this Act takes effect shall not exceed the excess, 58 33 if any, of the tax determined in section 422.5, subsection 58 34 1,paragraphs "a" through "j"over the state alternative 58 35 minimum tax as determined in section 422.5, subsection 2, Code 59 1 2018. The allowable credit under subsection 1 for a tax year 59 2 beginning in the calendar year that this division of this Act 59 3 takes effect shall not exceed the tax determined under section 59 4 422.5, subsection 1. 59 5 b. The net minimum tax for a tax year is the excess, if 59 6 any, of the tax determined in section 422.5, subsection 2, 59 7 Code 2018, for the tax year over the tax determined in section 59 8 422.5, subsection 1,paragraphs "a" through "j"for the tax 59 9 year. 59 10 3. This section is repealed January 1 of the calendar year 59 11 following the calendar year that this division of this Act 59 12 takes effect, for tax years beginning on or after January 1 59 13 of the calendar year following the calendar year that this 59 14 division of this Act takes effect. 59 15 Sec. 122. Section 422.11S, subsection 4, Code 2018, is 59 16 amended to read as follows: 59 17 4. Married taxpayers who file separate returnsor file 59 18 separately on a combined return formmust determine the tax 59 19 credit under subsection 1 based upon their combined net income 59 20 and allocate the total credit amount to each spouse in the 59 21 proportion that each spouse's respective net income bears to 59 22 the total combined net income. Nonresidents or part=year 59 23 residents of Iowa must determine their tax credit in the ratio 59 24 of their Iowa source net income to their all source net income. 59 25 Nonresidents or part=year residents who are married and elect 59 26 to file separate returnsor to file separately on a combined 59 27 return formmust allocate the tax credit between the spouses 59 28 in the ratio of each spouse's Iowa source net income to the 59 29 combined Iowa source net income of the taxpayers. 59 30 Sec. 123. Section 422.12B, subsection 2, Code 2018, is 59 31 amended to read as follows: 59 32 2. Married taxpayers electing to file separate returnsor 59 33 filing separately on a combined returnmay avail themselves 59 34 of the earned income credit by allocating the earned income 59 35 credit to each spouse in the proportion that each spouse's 60 1 respective earned income bears to the total combined earned 60 2 income. Taxpayers affected by the allocation provisions of 60 3 section 422.8 shall be permitted a deduction for the credit 60 4 only in the amount fairly and equitably allocable to Iowa under 60 5 rules prescribed by the director. 60 6 Sec. 124. Section 422.12C, subsection 4, Code 2018, is 60 7 amended to read as follows: 60 8 4. Married taxpayers who have filed joint federal returns 60 9 electing to file separate returnsor to file separately on a 60 10 combined return formmust determine the child and dependent 60 11 care credit under subsection 1 or the early childhood 60 12 development tax credit under subsection 2 based upon their 60 13 combined net income and allocate the total credit amount to 60 14 each spouse in the proportion that each spouse's respective net 60 15 income bears to the total combined net income. Nonresidents 60 16 or part=year residents of Iowa must determine their Iowa child 60 17 and dependent care credit in the ratio of their Iowa source 60 18 net income to their all source net income. Nonresidents or 60 19 part=year residents who are married and elect to file separate 60 20 returnsor to file separately on a combined return formmust 60 21 allocate the Iowa child and dependent care credit between the 60 22 spouses in the ratio of each spouse's Iowa source net income to 60 23 the combined Iowa source net income of the taxpayers. 60 24 Sec. 125. Section 422.13, subsection 1, paragraph c, Code 60 25 2018, is amended by striking the paragraph. 60 26 Sec. 126. Section 422.16, subsection 1, paragraph f, Code 60 27 2018, is amended by striking the paragraph. 60 28 Sec. 127. Section 422.21, subsections 2, 5, and 7, Code 60 29 2018, are amended to read as follows: 60 30 2. An individual in the armed forces of the United States 60 31 serving in an area designated by the president of the United 60 32 States or the United States Congress as a combat zone or as a 60 33 qualified hazardous duty area, or deployed outside the United 60 34 States away from the individual's permanent duty station while 60 35 participating in an operation designated by the United States 61 1 secretary of defense as a contingency operation as defined 61 2 in 10 U.S.C. {101(a)(13), or which became such a contingency 61 3 operation by the operation of law, or an individual serving in 61 4 support of those forces, is allowed the same additional time 61 5 period after leaving the combat zone or the qualified hazardous 61 6 duty area, or ceasing to participate in such contingency 61 7 operation, or after a period of continuous hospitalization, to 61 8 file a state income tax return or perform other acts related 61 9 to the department, as would constitute timely filing of the 61 10 return or timely performance of other acts described in section 61 11 7508(a) of the Internal Revenue Code. An individual on active 61 12 duty federal military service in the armed forces, armed forces 61 13 military reserve, or national guard who is deployed outside 61 14 the United States in other than a combat zone, qualified 61 15 hazardous duty area, or contingency operation is allowed the 61 16 same additional period of time described in section 7508(a) 61 17 of the Internal Revenue Code to file a state income tax 61 18 return or perform other acts related to the department. For 61 19 the purposes of this subsection, "other acts related to the 61 20 department" includes filing claims for refund for any tax 61 21 administered by the department, making tax payments other than 61 22 withholding payments, filing appeals on the tax matters, filing 61 23 other tax returns, and performing other acts described in the 61 24 department's rules. The additional time period allowed applies 61 25 to the spouse of the individual described in this subsection 61 26 to the extent the spouse files jointlyor separately on the 61 27 combined return formwith the individual or when the spouse 61 28 is a party with the individual to any matter for which the 61 29 additional time period is allowed. 61 30 5. The director shall determine for the1989calendar year 61 31 that this division of this Act takes effect and each subsequent 61 32 calendar year the annual and cumulative inflation factors for 61 33 each calendar year to be applied to tax years beginning on or 61 34 after January 1 of that calendar year. The director shall 61 35 compute the new dollar amounts as specified to be adjusted in 62 1 section 422.5 by the latest cumulative inflation factor and 62 2 round off the result to the nearest one dollar. The annual and 62 3 cumulative inflation factors determined by the director are not 62 4 rules as defined in section 17A.2, subsection 11.The director 62 5 shall determine for the 1990 calendar year and each subsequent 62 6 calendar year the annual and cumulative standard deduction 62 7 factors to be applied to tax years beginning on or after 62 8 January 1 of that calendar year. The director shall compute 62 9 the new dollar amounts of the standard deductions specified in 62 10 section 422.9, subsection 1, by the latest cumulative standard 62 11 deduction factor and round off the result to the nearest ten 62 12 dollars. The annual and cumulative standard deduction factors 62 13 determined by the director are not rules as defined in section 62 14 17A.2, subsection 11.62 15 7. If married taxpayers file a joint returnor file 62 16 separately on a combined returnin accordance with rules 62 17 prescribed by the director, both spouses are jointly and 62 18 severally liable for the total tax due on the return, except 62 19 when one spouse is considered to be an innocent spouse under 62 20 criteria established pursuant to section 6015 of the Internal 62 21 Revenue Code. 62 22 Sec. 128. Section 422.35, unnumbered paragraph 1, Code 62 23 2018, is amended to read as follows: 62 24 The term "net income" means the taxable incomebefore the 62 25 net operating loss deduction,as properly computed for federal 62 26 income tax purposes under the Internal Revenue Code, with the 62 27 following adjustments: 62 28 Sec. 129. Section 422.35, subsection 11, Code 2018, is 62 29 amended by striking the subsection and inserting in lieu 62 30 thereof the following: 62 31 11. a. Add any federal net operating loss deduction carried 62 32 over from a taxable year beginning prior to January 1 of the 62 33 calendar year that this division of this Act takes effect. 62 34 b. Any Iowa net operating loss carried over from a taxable 62 35 year beginning prior to January 1 of the calendar year that 63 1 this division of this Act takes effect may be deducted as 63 2 provided in section 422.35, subsection 11, Code 2018. 63 3 Sec. 130. Section 422.35, subsections 3, 4, 5, 7, 8, 10, 63 4 16, 17, 18, 19, 19B, 20, 22, and 24, Code 2018, are amended by 63 5 striking the subsections. 63 6 Sec. 131. Section 541B.3, subsection 1, paragraph b, Code 63 7 2018, is amended to read as follows: 63 8 b. A married couple electing to file a joint Iowa individual 63 9 income tax return may establish a joint first=time homebuyer 63 10 savings account. Married taxpayers electing to file separate 63 11 tax returnsor separately on a combined tax returnfor Iowa tax 63 12 purposes shall not establish or maintain a joint first=time 63 13 homebuyer savings account. 63 14 Sec. 132. Section 541B.6, Code 2018, is amended to read as 63 15 follows: 63 16 541B.6 Tax considerations. 63 17 The state income tax treatment of a first=time homebuyer 63 18 savings account shall be as provided in section 422.7, 63 19 subsection 41, and section 422.9, subsection 2, paragraph "k". 63 20 Sec. 133. CONTINGENT EFFECTIVE DATE ==== NET GENERAL FUND 63 21 REVENUES CALCULATION ==== ANNUAL REPORTS. 63 22 1. This division of this Act takes effect on January 1, 63 23 2023, if both of the following conditions are satisfied: 63 24 a. The net general fund revenues for the fiscal year ending 63 25 June 30, 2022, equal or exceed eight billion three hundred 63 26 fourteen million six hundred thousand dollars. 63 27 b. The net general fund revenues for the fiscal year ending 63 28 June 30, 2022, equal or exceed one hundred and four percent of 63 29 the net general fund revenues for the fiscal year ending June 63 30 30, 2021. 63 31 2. If the provisions of subsection 1 are not satisfied 63 32 and this division of this Act does not take effect on January 63 33 1, 2023, then this division of this Act shall take effect on 63 34 January 1 following the first fiscal year for which both of the 63 35 following conditions are satisfied: 64 1 a. The net general fund revenues for that fiscal year ending 64 2 June 30 equal or exceed eight billion three hundred fourteen 64 3 million six hundred thousand dollars. 64 4 b. The net general fund revenues for that fiscal year ending 64 5 June 30 equal or exceed one hundred and four percent of the 64 6 net general fund revenues for the fiscal year ending June 30 64 7 immediately preceding that fiscal year. 64 8 3. a. For purposes of this section, "net general fund 64 9 revenues" means total appropriated general fund revenues 64 10 excluding transfers from reserve funds, less the sum of tax and 64 11 other refunds and school infrastructure transfers, all made on 64 12 an accrual basis as computed for purposes of the comprehensive 64 13 annual financial reports of the state. 64 14 b. Net general fund revenues shall be calculated by 64 15 the department of management, in consultation with the 64 16 department of revenue, for each fiscal year beginning on 64 17 or after July 1, 2020, until such time as this division of 64 18 this Act takes effect, in accordance with rules adopted by 64 19 the department of management. The department of management 64 20 shall adopt rules pursuant to chapter 17A for calculating net 64 21 general fund revenues as defined in paragraph "a", including 64 22 rules defining "total appropriated general fund revenues", 64 23 "transfers from reserve funds", "tax and other refunds", and 64 24 "school infrastructure transfers", and including the types 64 25 and categories of receipts that will be included within each 64 26 definition and in the calculation of net general fund revenues. 64 27 c. The department of management shall submit an annual 64 28 report to the governor and general assembly by November 1 64 29 following the close of each fiscal year beginning on or after 64 30 July 1, 2020, until such time as this division of this Act 64 31 takes effect, which report shall identify the net general fund 64 32 revenues for the fiscal year and shall include a detailed 64 33 description of the net general fund revenues calculation made 64 34 by the department of management. 64 35 Sec. 134. APPLICABILITY. This division of this Act applies 65 1 to tax years beginning on or after the effective date of this 65 2 division of this Act. 65 3 DIVISION X 65 4 CHANGES TO IOWA EDUCATIONAL SAVINGS PLAN TRUST AND IOWA ABLE 65 5 SAVINGS PLAN TRUST 65 6 Sec. 135. Section 12D.1, Code 2018, is amended to read as 65 7 follows: 65 8 12D.1 Purpose and definitions. 65 9 1. The general assembly finds that the general welfare and 65 10 well=being of the state are directly related to educational 65 11 levels and skills of the citizens of the state, and that a 65 12 vital and valid public purpose is served by the creation and 65 13 implementation of programs which encourage and make possible 65 14 the attainment ofhigherformal education by the greatest 65 15 number of citizens of the state. Thestate has limited 65 16 resources to provide additional programs for higher education 65 17 funding and the continued operation and maintenance of the 65 18 state's public institutions of higher education and thegeneral 65 19 welfare of the citizens of the state will be enhanced by 65 20 establishing a program which allows citizens of the state to 65 21 invest money in a public trust for future application to the 65 22 payment ofhigher education costsqualified education expenses. 65 23 The creation of the means of encouragement for citizens to 65 24 invest in such a program represents the carrying out of a 65 25 vital and valid public purpose. In order to make available 65 26 to the citizens of the state an opportunity to fund future 65 27higherformal education needs, it is necessary that a public 65 28 trust be established in which moneys may be invested for future 65 29 educational use. 65 30 2. As used in this chapter, unless the context otherwise 65 31 requires: 65 32 a. "Account balance limit" means the maximum allowable 65 33 aggregate balance of accounts established for the same 65 34 beneficiary. Account earnings, if any, are included in the 65 35 account balance limit. 66 1 b. "Administrative fund" means the administrative fund 66 2 established under section 12D.4. 66 3 c. "Beneficiary" means the individual designated by a 66 4 participation agreement to benefit from advance payments of 66 5higher education costsqualified education expenses on behalf 66 6 of the beneficiary. 66 7 d. "Benefits" means the payment ofhigher education costs 66 8qualified education expenses on behalf of a beneficiary by the 66 9 trust during the beneficiary's attendance atan institution of 66 10 higher educationa qualified educational institution. 66 11e. "Higher education costs" means the same as "qualified 66 12 higher education expenses" as defined insection 529(e)(3) of 66 13 the Internal Revenue Code.66 14f.e. "Institution of higher education" means an institution 66 15 described in section 481 of the federal Higher Education Act of 66 16 1965, 20 U.S.C. {1088, which is eligible to participate in the 66 17 United States department of education's student aid programs. 66 18g.f. "Internal Revenue Code" means the same as defined 66 19 insection 12I.1. 66 20h.g. "Iowa educational savings plan trust" or "trust" means 66 21 the trust created under section 12D.2. 66 22i.h. "Participant" means an individual, individual's legal 66 23 representative, trust, estate, or an organization described 66 24 in section 501(c)(3) of the Internal Revenue Code and exempt 66 25 from taxation under section 501(a) of the Internal Revenue 66 26 Code, that has entered into a participation agreement under 66 27 this chapter for the advance payment ofhigher education costs 66 28qualified education expenses on behalf of a beneficiary. 66 29j.i. "Participation agreement" means an agreement between 66 30 a participant and the trust entered into under this chapter. 66 31k.j. "Program fund" means the program fund established 66 32 under section 12D.4. 66 33 k. "Qualified education expenses" means the same as 66 34 "qualified higher education expenses" as defined in section 66 35 529(e)(3) of the Internal Revenue Code, as amended by Pub. L. 67 1 No. 115=97, and shall include elementary and secondary school 67 2 expenses for tuition described in section 529(c)(7) of the 67 3 Internal Revenue Code, subject to the limitations imposed by 67 4 section 529(e)(3)(A) of the Internal Revenue Code. 67 5 l. "Qualified educational institution" means an institution 67 6 of higher education, or any elementary or secondary public, 67 7 private, or religious school described in section 529(c)(7) of 67 8 the Internal Revenue Code. 67 9l.m."Tuition and fees""Tuition" means the quarter,or67 10 semester, or annual charges imposed to attendan institution 67 11 of higher educationa qualified educational institution and 67 12 required as a condition of enrollment or attendance. 67 13 Sec. 136. Section 12D.2, subsections 2, 5, 9, and 14, Code 67 14 2018, are amended to read as follows: 67 15 2. Enter into agreements with anyinstitution of higher 67 16 educationqualified educational institution, the state, or any 67 17 federal or other state agency, or other entity as required to 67 18 implement this chapter. 67 19 5. Carry out studies and projections so the treasurer of 67 20 state may advise participants regarding present and estimated 67 21 futurehigher education costsqualified education expenses 67 22 and levels of financial participation in the trust required 67 23 in order to enable participants to achieve their educational 67 24 funding objectives. 67 25 9. Make payments toinstitutions of higher education 67 26qualified educational institutions, participants, or 67 27 beneficiaries, pursuant to participation agreements on behalf 67 28 of beneficiaries. 67 29 14. Establish, impose, and collect administrative fees 67 30 and charges in connection with transactions of the trust, and 67 31 provide for reasonable service charges, including penalties for 67 32 cancellations and late payments with respect to participation 67 33 agreements. 67 34 Sec. 137. Section 12D.3, subsections 1 and 2, Code 2018, are 67 35 amended to read as follows: 68 1 1.a.Each participation agreement may require a 68 2 participant to agree to invest a specific amount of money in 68 3 the trust for a specific period of time for the benefit of a 68 4 specific beneficiary. A participant shall not be required to 68 5 make an annual contribution on behalf of a beneficiary. The 68 6 maximum contribution that may be deducted for Iowa income tax 68 7 purposes shall not exceed two thousand dollars per beneficiary 68 8 per year adjusted annually to reflect increases in the consumer 68 9 price index. The treasurer of state shall set an account 68 10 balance limit to maintain compliance with section 529 of the 68 11 Internal Revenue Code. A contribution shall not be permitted 68 12 to the extent it causes the aggregate balance of all accounts 68 13 established for the same beneficiary under the trust to exceed 68 14 the applicable account balance limit. 68 15b. Participation agreements may be amended to provide for 68 16 adjusted levels of payments based upon changed circumstances or 68 17 changes in educational plans.68 18 2. The execution of a participation agreement by the trust 68 19 shall not guarantee in any way thathigher education costs 68 20qualified education expenses will be equal to projections 68 21 and estimates provided by the trust or that the beneficiary 68 22 named in any participation agreement will attain any of the 68 23 following: 68 24 a. Be admitted toan institution of higher educationa 68 25 qualified educational institution. 68 26 b. If admitted, be determined a resident for tuition 68 27 purposes by theinstitution of higher educationqualified 68 28 educational institution. 68 29 c. Be allowed to continue attendance at theinstitution of 68 30 higher educationqualified educational institution following 68 31 admission. 68 32 d. Graduate from theinstitution of higher education 68 33qualified educational institution. 68 34 Sec. 138. Section 12D.3, Code 2018, is amended by adding the 68 35 following new subsection: 69 1 NEW SUBSECTION. 5. A participant may designate a successor 69 2 in accordance with rules adopted by the treasurer of state. 69 3 The designated successor shall succeed to the ownership of the 69 4 account in the event of the death of the participant. In the 69 5 event a participant dies and has not designated a successor to 69 6 the account, the following criteria shall apply: 69 7 a. The beneficiary of the account, if eighteen years of 69 8 age or older, shall become the owner of the account as well as 69 9 remain the beneficiary upon filing the appropriate forms in 69 10 accordance with rules adopted by the treasurer of state. 69 11 b. If the beneficiary of the account is under the age of 69 12 eighteen, account ownership shall be transferred to the first 69 13 surviving parent or other legal guardian of the beneficiary to 69 14 file the appropriate forms in accordance with rules adopted by 69 15 the treasurer of state. 69 16 Sec. 139. Section 12D.4, Code 2018, is amended to read as 69 17 follows: 69 18 12D.4 Program and administrative funds ==== investment and 69 19 payments. 69 20 1. a. The treasurer of state shall segregate moneys 69 21 received by the trust into two funds: the program fund and the 69 22 administrative fund. 69 23 b. All moneys paid by participants in connection with 69 24 participation agreements shall be deposited as received into 69 25 separate accounts within the program fund. 69 26 c. Contributions to the trust made by participants may only 69 27 be made in the form of cash. 69 28 d. A participant or beneficiaryshall not provide investment 69 29 direction regarding program contributions or earnings held by 69 30 the trustmay, directly or indirectly, direct the investment of 69 31 any contributions to the trust or any earnings thereon no more 69 32 than two times in a calendar year. 69 33 e. The amount of cash distributions from the trust and all 69 34 other qualified state tuition programs under section 529 of 69 35 the Internal Revenue Code to a beneficiary during any taxable 70 1 year shall, in the aggregate, include no more than ten thousand 70 2 dollars in expenses for tuition in connection with enrollment 70 3 at an elementary or secondary public, private, or religious 70 4 school incurred during the taxable year. 70 5 2. Moneys accrued by participants in the program fund of 70 6 the trust may be used for payments to anyinstitution of higher 70 7 educationqualified educational institution. Payments can be 70 8 made to the qualified educational institution, the participant, 70 9 or the beneficiary. 70 10 Sec. 140. Section 12D.6, subsection 1, paragraph a, Code 70 11 2018, is amended to read as follows: 70 12 a. A participant retains ownership of all payments made 70 13 under a participation agreement up to the date of utilization 70 14 for payment ofhigher education costsqualified education 70 15 expenses for the beneficiary. 70 16 Sec. 141. Section 12D.6, subsections 2, 3, and 5, Code 2018, 70 17 are amended to read as follows: 70 18 2. In the event the program is terminated prior to payment 70 19 ofhigher education costsqualified education expenses for the 70 20 beneficiary, the participant is entitled to a refund of the 70 21 participant's account balance. 70 22 3. Theinstitution of higher educationqualified 70 23 educational institution shall obtain ownership of the payments 70 24 made for thehigher education costsqualified education 70 25 expenses paid to the institution at the time each payment is 70 26 made to the institution. 70 27 5. A participant may transfer ownership rights to another 70 28eligible individual, including a gift of the ownership rights 70 29 to a minor beneficiaryparticipant, or may transfer funds to 70 30 another plan under the trust or to an ABLE account as permitted 70 31 under section 529(c)(3)(C) of the Internal Revenue Code. 70 32 The transfer shall be made and the property distributed in 70 33 accordance with rules adopted by the treasurer of state or with 70 34 the terms of the participation agreement. 70 35 Sec. 142. Section 12D.7, Code 2018, is amended to read as 71 1 follows: 71 2 12D.7 Effect of payments on determination of need and 71 3 eligibility for student financial aid. 71 4 A student loan program, student grant program, or other 71 5 program administered by any agency of the state, except as 71 6 may be otherwise provided by federal law or the provisions 71 7 of any specific grant applicable to that law, shall not take 71 8 into account and shall not consider amounts available for 71 9 the payment ofhigher education costsqualified education 71 10 expenses pursuant to the Iowa educational savings plan trust in 71 11 determining need and eligibility for student aid. 71 12 Sec. 143. Section 12D.9, subsection 1, paragraph a, Code 71 13 2018, is amended to read as follows: 71 14 a. Pursuant to section 12D.3, subsection 1, paragraph "a", 71 15 a participant may make contributions to an account which is 71 16 established for the purpose of meeting the qualifiedhigher71 17 education expenses of the designated beneficiary of the 71 18 account. 71 19 Sec. 144. Section 422.7, subsection 32, paragraph c, Code 71 20 2018, is amended by striking the paragraph and inserting in 71 21 lieu thereof the following: 71 22 c. (1) Add, to the extent previously deducted as a 71 23 contribution to the trust, the amount resulting from a 71 24 withdrawal or transfer made by the taxpayer from the Iowa 71 25 educational savings plan trust for purposes other than any of 71 26 the following: 71 27 (a) The payment of qualified higher education expenses. 71 28 (b) The payment of tuition to an elementary or secondary 71 29 school if the tuition amounts are qualified education expenses. 71 30 (c) A change in beneficiaries under, or transfer to another 71 31 account within, the Iowa educational savings plan trust, or a 71 32 transfer to the Iowa ABLE savings plan trust, provided such 71 33 change or transfer is permitted under section 12D.6, subsection 71 34 5. 71 35 (2) For purposes of this paragraph: 72 1 (a) "Elementary or secondary school" means an elementary 72 2 or secondary school in this state which is accredited under 72 3 section 256.11, and adheres to the provisions of the federal 72 4 Civil Rights Act of 1964 and chapter 216. 72 5 (b) "Qualified education expenses" and "tuition" all mean the 72 6 same as defined in section 12D.1, subsection 2. 72 7 (c) (i) "Qualified higher education expenses" means the same 72 8 as defined in section 529(e)(3) of the Internal Revenue Code. 72 9 (ii) For purposes of this subparagraph division (c), 72 10 "Internal Revenue Code" means the Internal Revenue Code of 72 11 1954, prior to the date of its redesignation as the Internal 72 12 Revenue Code of 1986 by the Tax Reform Act of 1986, or means 72 13 the Internal Revenue Code of 1986 as amended and in effect on 72 14 January 1, 2018. This definition shall not be construed to 72 15 include any amendment to the Internal Revenue Code enacted 72 16 after the date specified in the preceding sentence, including 72 17 any amendment with retroactive applicability or effectiveness. 72 18 Sec. 145. Section 422.7, subsection 34, Code 2018, is 72 19 amended to read as follows: 72 20 34. a. (1) Subtract the amount contributed during the tax 72 21 year on behalf of a designated beneficiary that is a resident 72 22 of this state to the Iowa ABLE savings plan trust or to the 72 23 qualified ABLE program with which the state has contracted 72 24 pursuant to section 12I.10, not to exceed the maximum 72 25 contribution level established in section 12I.3, subsection 1, 72 26 paragraph "d", or section 12I.10, subsection 2, paragraph "a", 72 27 as applicable. 72 28 (2) This paragraph "a" shall not apply to any amount 72 29 of contribution that represents a transfer from the Iowa 72 30 educational savings plan trust created in chapter 12D that 72 31 meets the requirements of subsection 32, paragraph "c", 72 32 subparagraph (1), subparagraph division (c), and that was 72 33 previously deducted as a contribution to the Iowa educational 72 34 savings plan trust. 72 35 b. Add the amount resulting from the cancellation of a 73 1 participation agreement refunded to the taxpayer as an account 73 2 owner in the Iowa ABLE savings plan trust or the qualified 73 3 ABLE program with which the state has contracted pursuant to 73 4 section 12I.10 to the extent previously deducted pursuant 73 5 to this subsection by the taxpayer or any other person as a 73 6 contribution to the trust or qualified ABLE program, or to the 73 7 extent the amount was previously deducted by the taxpayer or 73 8 any other person pursuant to subsection 32, paragraph "a", and 73 9 qualified as a transfer under paragraph "a", subparagraph (2), 73 10 of this subsection. 73 11 c. Add the amount resulting from a withdrawal made by a 73 12 taxpayer from the Iowa ABLE savings plan trust or the qualified 73 13 ABLE program with which the state has contracted pursuant to 73 14 section 12I.10 for purposes other than the payment of qualified 73 15 disability expenses to the extent previously deducted pursuant 73 16 to this subsection by the taxpayer or any other person as a 73 17 contribution to the trust or qualified ABLE program, or to the 73 18 extent the amount was previously deducted by the taxpayer or 73 19 any other person pursuant to subsection 32, paragraph "a", and 73 20 qualified as a transfer under paragraph "a", subparagraph (2), 73 21 of this subsection. 73 22 Sec. 146. Section 627.6, Code 2018, is amended by adding the 73 23 following new subsection: 73 24 NEW SUBSECTION. 17. The debtor's interest, whether as 73 25 participant or beneficiary, in contributions and assets, 73 26 including the accumulated earnings and market increases in 73 27 value, held in an account in the Iowa educational savings plan 73 28 trust organized under chapter 12D. 73 29 Sec. 147. EFFECTIVE DATE. This division of this Act, being 73 30 deemed of immediate importance, takes effect upon enactment. 73 31 Sec. 148. RETROACTIVE APPLICABILITY. 73 32 1. Except as provided in subsection 2, this division of this 73 33 Act applies retroactively to January 1, 2018, for withdrawals 73 34 from the Iowa educational savings plan trust made on or after 73 35 that date. 74 1 2. The sections of this division of this Act amending 74 2 section 422.7 apply retroactively to January 1, 2018, for tax 74 3 years beginning on or after that date, and for withdrawals from 74 4 the Iowa educational savings plan trust made on or after that 74 5 date. 74 6 DIVISION XI 74 7 SALES AND USE TAXES 74 8 Sec. 149. Section 15J.4, subsection 3, paragraph f, Code 74 9 2018, is amended to read as follows: 74 10 f. The total aggregate amount of state sales tax revenues 74 11 and state hotel and motel tax revenues that may be approved by 74 12 the board for remittance to all municipalities and that may 74 13 be transferred to the state reinvestment district fund under 74 14 section423.2, subsection 11,423.2A orsection423A.6, and 74 15 remitted to all municipalities having a reinvestment district 74 16 under this chapter shall not exceed one hundred million 74 17 dollars. 74 18 Sec. 150. Section 15J.5, subsection 1, paragraph a, Code 74 19 2018, is amended to read as follows: 74 20 a. The department shall calculate quarterly the amount of 74 21 new state sales tax revenues for each district established in 74 22 the state to be deposited in the state reinvestment district 74 23 fund created in section 15J.6, pursuant to section423.2, 74 24 subsection 11, paragraph "b"423.2A, subsection 2, subject to 74 25 remittance limitations established by the board pursuant to 74 26 section 15J.4, subsection 3. 74 27 Sec. 151. Section 15J.6, subsection 1, Code 2018, is amended 74 28 to read as follows: 74 29 1. A state reinvestment district fund is established in the 74 30 state treasury under the control of the department consisting 74 31 of the new state sales tax revenues collected within each 74 32 district and deposited in the fund pursuant to section423.2, 74 33 subsection 11, paragraph "b"423.2A, subsection 2, and the 74 34 new state hotel and motel tax revenues collected within each 74 35 district and deposited in the fund pursuant to section 423A.6. 75 1 Moneys deposited in the fund are appropriated to the department 75 2 for the purposes of this section. Moneys in the fund shall 75 3 only be used for the purposes of this section. 75 4 Sec. 152. Section 418.11, subsection 1, Code 2018, is 75 5 amended to read as follows: 75 6 1. The department of revenue shall calculate quarterly the 75 7 amount of increased sales tax revenues for each governmental 75 8 entity approved to use sales tax increment revenues and the 75 9 amount of such revenues to be transferred to the sales tax 75 10 increment fund pursuant to section423.2, subsection 11, 75 11 paragraph "b"423.2A, subsection 2. 75 12 Sec. 153. Section 418.12, subsection 1, Code 2018, is 75 13 amended to read as follows: 75 14 1. A sales tax increment fund is established as a separate 75 15 and distinct fund in the state treasury under the control of 75 16 the department of revenue consisting of the amount of the 75 17 increased state sales and services tax revenues collected by 75 18 the department of revenue within each applicable area specified 75 19 in section 418.11, subsection 3, and deposited in the fund 75 20 pursuant to section423.2, subsection 11, paragraph "b"423.2A, 75 21 subsection 2. Moneys deposited in the fund are appropriated 75 22 to the department of revenue for the purposes of this section. 75 23 Moneys in the fund shall only be used for the purposes of this 75 24 section. 75 25 Sec. 154. Section 421.26, Code 2018, is amended to read as 75 26 follows: 75 27 421.26 Personal liability for tax due. 75 28 If a licensee or other person under section 452A.65, a 75 29 retailer or purchaser under chapter 423A, 423B, 423C, 423D, or 75 30 423E, or section 423.14, 423.14A, 423.29, 423.31, 423.32, or 75 31 423.33,or a retailer or purchaser under section 423.32,or 75 32 a user under section 423.34, or a permit holder or licensee 75 33 under section 453A.13, 453A.16, or 453A.44 fails to pay a tax 75 34 under those sections when due, an officer of a corporation 75 35 or association, notwithstanding section 489.304, a member or 76 1 manager of a limited liability company, or a partner of a 76 2 partnership, having control or supervision of or the authority 76 3 for remitting the tax payments and having a substantial legal 76 4 or equitable interest in the ownership of the corporation, 76 5 association, limited liability company, or partnership, who has 76 6 intentionally failed to pay the tax is personally liable for 76 7 the payment of the tax, interest, and penalty due and unpaid. 76 8 However, this section shall not apply to taxes on accounts 76 9 receivable. The dissolution of a corporation, association, 76 10 limited liability company, or partnership shall not discharge a 76 11 person's liability for failure to remit the tax due. 76 12 Sec. 155. Section 423.1, Code 2018, is amended by adding the 76 13 following new subsection: 76 14 NEW SUBSECTION. 22A. "Information services" means 76 15 delivering or providing access to databases or subscriptions 76 16 to information through any tangible or electronic medium. 76 17 "Information services" includes but is not limited to database 76 18 files, research databases, genealogical information, and other 76 19 similar information. 76 20 Sec. 156. Section 423.1, subsection 24, paragraph a, Code 76 21 2018, is amended to read as follows: 76 22 a. "Lease or rental" means any transfer of possession 76 23 or control of, or access to, tangible personal property or 76 24 specified digital products for a fixed or indeterminate term 76 25 for consideration. A "lease or rental" may include future 76 26 options to purchase or extend. 76 27 Sec. 157. Section 423.1, subsection 37, Code 2018, is 76 28 amended to read as follows: 76 29 37. "Place of business" means any warehouse, store, 76 30 place, office, building, or structure wheregoods, wares, or 76 31 merchandisetangible personal property, specified digital 76 32 products, or services are offered for sale at retail or where 76 33 any taxable amusement is conducted, or each office where gas, 76 34 water, heat, communication, or electric services are offered 76 35 for sale at retail. When a retailer or amusement operator 77 1 sells merchandise by means of vending machines or operates 77 2 music or amusement devices by coin=operated machines at more 77 3 than one location within the state, the office, building, or 77 4 place where the books, papers, and records of the taxpayer are 77 5 kept shall be deemed to be the taxpayer's place of business. 77 6 Sec. 158. Section 423.1, Code 2018, is amended by adding the 77 7 following new subsection: 77 8 NEW SUBSECTION. 36A. "Personal property" includes but is 77 9 not limited to tangible personal property and specified digital 77 10 products. 77 11 Sec. 159. Section 423.1, subsection 43, paragraph a, 77 12 subparagraph (3), Code 2018, is amended to read as follows: 77 13 (3) Taking possession or making first use ofdigital goods 77 14specified digital products, whichever comes first. 77 15 Sec. 160. Section 423.1, subsection 47, Code 2018, is 77 16 amended to read as follows: 77 17 47. "Retailer" means and includes every person engaged 77 18 in the business of selling tangible personal property, 77 19 specified digital products, or taxable services at retail, or 77 20 the furnishing of gas, electricity, water, or communication 77 21 service, and tickets or admissions to places of amusement 77 22 and athletic events or operating amusement devices or other 77 23 forms of commercial amusement from which revenues are derived. 77 24 However, when in the opinion of the director it is necessary 77 25 for the efficient administration of this chapter to regard any 77 26 agent or affiliate of a retailer as a retailer for purposes 77 27 of this chapter, the director may so regard them, or when 77 28 it is necessary for the efficient administration of this 77 29 chapter to regard any salespersons, representatives, truckers, 77 30 peddlers,orcanvassers, or other persons as agents of the 77 31 dealers, distributors, supervisors, employers, or persons under 77 32 whom they operate or from whom they obtain tangible personal 77 33 property, services, or specified digital products sold by 77 34 them irrespective of whether or not they are making sales on 77 35 their own behalf or on behalf of such dealers, distributors, 78 1 supervisors, employers, or persons, the director may so regard 78 2 them, and may regard such dealers, distributors, supervisors, 78 3 employers, or persons as retailers for the purposes of this 78 4 chapter. "Retailer" includes a seller obligated to collect 78 5 sales or use tax, including any person obligated to collect 78 6 sales and use tax pursuant to section 423.14A. 78 7 Sec. 161. Section 423.1, subsection 48, paragraph a, Code 78 8 2018, is amended to read as follows: 78 9 a. "Retailer maintaining a place of business in this state" 78 10 or any like term includes any of the following: 78 11 (1) A retailer having or maintaining within this state, 78 12 directly or by a subsidiary, an office, distribution house, 78 13 sales house, warehouse, or other place of business, or any 78 14 representative operating within this state under the authority 78 15 of the retailer or its subsidiary, irrespective of whether that 78 16 place of business or representative is located here permanently 78 17 or temporarily, or whether the retailer or subsidiary is 78 18 admitted to do business within this state pursuant to chapter 78 19 490. 78 20 (2) A person obligated to collect sales and use tax pursuant 78 21 to section 423.14A. 78 22 Sec. 162. Section 423.1, subsection 48, paragraph b, 78 23 subparagraph (1), unnumbered paragraph 1, Code 2018, is amended 78 24 to read as follows: 78 25 A retailer shall be presumed to be maintaining a place of 78 26 business in this state, as defined infor purposes of paragraph 78 27 "a", subparagraph (1), if any person that has substantial nexus 78 28 in this state, other than a person acting in its capacity as a 78 29 common carrier, does any of the following: 78 30 Sec. 163. Section 423.1, subsection 48, paragraph b, 78 31 subparagraph (1), subparagraph division (b), Code 2018, is 78 32 amended to read as follows: 78 33 (b) Maintains an office, distribution facility, warehouse, 78 34 storage place, or similar place of business in this state to 78 35 facilitate the delivery of personal property or services sold 79 1 by the retailer to the retailer's customers. 79 2 Sec. 164. Section 423.1, subsection 50, Code 2018, is 79 3 amended to read as follows: 79 4 50. "Sales" or "sale" means any transfer, exchange, or 79 5 barter, conditional or otherwise, in any manner or by any means 79 6 whatsoever, for consideration, including but not limited to any 79 7 such transfer, exchange, or barter on a subscription basis. 79 8 Sec. 165. Section 423.1, Code 2018, is amended by adding the 79 9 following new subsection: 79 10 NEW SUBSECTION. 55A. "Sold at retail in the state" and 79 11 other references to sales "in the state" or "in this state" 79 12 includes but is not limited to sales sourced to this state 79 13 under this chapter. 79 14 Sec. 166. Section 423.1, Code 2018, is amended by adding the 79 15 following new subsection: 79 16 NEW SUBSECTION. 55B. a. "Specified digital products" means 79 17 electronically transferred digital audio=visual works, digital 79 18 audio works, digital books, or other digital products. 79 19 b. For purposes of this subsection: 79 20 (1) "Digital audio=visual works" means a series of related 79 21 images which, when shown in succession, impart an impression of 79 22 motion, together with accompanying sounds, if any. 79 23 (2) "Digital audio works" means works that result from 79 24 the fixation of a series of musical, spoken, or other sounds, 79 25 including but not limited to ringtones. For purposes of this 79 26 subparagraph, "ringtones" means digitized sound files that are 79 27 downloaded onto a device and that may be used to alert the 79 28 customer with respect to a communication. 79 29 (3) "Digital books" means works that are generally 79 30 recognized in the ordinary and usual sense as books. 79 31 (4) "Electronically transferred" means obtained or accessed 79 32 by the purchaser by means other than tangible storage media, 79 33 including but not limited to a specified digital product 79 34 purchased through a computer software application, commonly 79 35 referred to as an in=app purchase, or through another specified 80 1 digital product, or through any other means. 80 2 (5) "Other digital products" means greeting cards, images, 80 3 video or electronic games or entertainment, news or information 80 4 products, and computer software applications. 80 5 Sec. 167. Section 423.1, Code 2018, is amended by adding the 80 6 following new subsection: 80 7 NEW SUBSECTION. 57A. "Subscription" means any arrangement 80 8 in which a person has the right or ability to access, 80 9 receive, use, obtain, purchase, or otherwise acquire tangible 80 10 personal property, specified digital products, or services 80 11 on a permanent or less than permanent basis, regardless of 80 12 whether the person actually accesses, receives, uses, obtains, 80 13 purchases, or otherwise acquires such tangible personal 80 14 property, specified digital product, or service. 80 15 Sec. 168. Section 423.1, subsections 62, 63, and 64, Code 80 16 2018, are amended to read as follows: 80 17 62. "Use" means and includes the exercise by any person of 80 18 any right or power over or access to tangible personal property 80 19 or a specified digital product incident to the ownership of 80 20 that property, or any right or power over or access to the 80 21 product or result of a service. A retailer's or building 80 22 contractor's sale of manufactured housing for use in this 80 23 state, whether in the form of tangible personal property or 80 24 of realty, is a use of that property for the purposes of this 80 25 chapter. 80 26 63. "Use tax" means the tax levied under subchapter III of 80 27 this chapterfor which the retailer collects and remits tax to 80 28 the department. 80 29 64. "User" means the immediate recipient of the personal 80 30 property or services who is entitled to exercise a rightofor 80 31 power over or access to the personal property, or the product 80 32 or result of such services. 80 33 Sec. 169. Section 423.2, subsection 1, paragraph a, 80 34 subparagraph (1), Code 2018, is amended to read as follows: 80 35 (1) Sales of engraving,photography, retouching,printing, 81 1 and binding services. 81 2 Sec. 170. Section 423.2, subsection 6, Code 2018, is amended 81 3 to read as follows: 81 4 6.a.The sales price of any of the following enumerated 81 5 services is subject to the tax imposed by subsection 5: 81 6 a.alterationAlteration and garment repair; armored. 81 7 b. Armored car; vehicle. 81 8 c. Vehicle repair; battery. 81 9 d. Battery, tire, and allied; investment. 81 10 e. Investment counseling; service. 81 11 f. Service charges of all financial institutions; barber. 81 12 For the purposes of this paragraph, "financial institutions" 81 13 means all national banks, federally chartered savings and loan 81 14 associations, federally chartered savings banks, federally 81 15 chartered credit unions, banks organized under chapter 524, 81 16 credit unions organized under chapter 533, and all banks, 81 17 savings banks, credit unions, and savings and loan associations 81 18 chartered or otherwise created under the laws of any state and 81 19 doing business in Iowa. 81 20 g. Barber and beauty; boat. 81 21 h. Boat repair; vehicle. 81 22 i. Vehicle wash and wax; campgrounds; carpentry; roof. 81 23 j. Campgrounds. 81 24 k. Carpentry. 81 25 l. Roof, shingle, and glass repair; dance. 81 26 m. Dance schools and dance studios; dating. 81 27 n. Dating services; dry. 81 28 o. Dry cleaning, pressing, dyeing, and laundering excluding 81 29 the use of self=pay washers and dryers; electrical. 81 30 p. Electrical and electronic repair and installation; 81 31 excavating. 81 32 q. Excavating and grading; farm. 81 33 r. Farm implement repair of all kinds; flying. 81 34 s. Flying service; furniture. 81 35 t. Furniture, rug, carpet, and upholstery repair and 82 1 cleaning; fur. 82 2 u. Fur storage and repair; golf. 82 3 v. Golf and country clubs and all commercial recreation; 82 4 gun. 82 5 w. Gun and camera repair; house. 82 6 x. House and building moving; household. 82 7 y. Household appliance, television, and radio repair; 82 8 janitorial. 82 9 z. Janitorial and building maintenance or cleaning; jewelry. 82 10 aa. Jewelry and watch repair; lawn. 82 11 ab. Lawn care, landscaping, and tree trimming and removal;. 82 12 ac. Personal transportation service, including but not 82 13 limited to taxis, driver service, ride sharing service, rides 82 14 for hire, and limousine service, including driver; machine. 82 15 ad. Machine operator; machine. 82 16 ae. Machine repair of all kinds; motor. 82 17 af. Motor repair; motorcycle. 82 18 ag. Motorcycle, scooter, and bicycle repair; oilers. 82 19 ah. Oilers and lubricators; office. 82 20 ai. Office and business machine repair; painting. 82 21 aj. Painting, papering, and interior decorating; parking. 82 22 ak. Parking facilities; pay. 82 23 al. Pay television; pet, including but not limited to 82 24 streaming video, video on=demand, and pay=per=view. 82 25 am. Pet grooming; pipe. 82 26 an. Pipe fitting and plumbing; wood. 82 27 ao. Wood preparation; executive. 82 28 ap. Executive search agencies; private. 82 29 aq. Private employment agencies, excluding services for 82 30 placing a person in employment where the principal place of 82 31 employment of that person is to be located outside of the 82 32 state; reflexology; security. 82 33 ar. Reflexology. 82 34 as. Security and detective services, excluding private 82 35 security and detective services furnished by a peace officer 83 1 with the knowledge and consent of the chief executive officer 83 2 of the peace officer's law enforcement agency; sewage. 83 3 at. Sewage services for nonresidential commercial 83 4 operations; sewing. 83 5 au. Sewing and stitching; shoe. 83 6 av. Shoe repair and shoeshine; sign. 83 7 aw. Sign construction and installation; storage. 83 8 ax. Storage of household goods, mini=storage, and 83 9 warehousing of raw agricultural products; swimming. 83 10 ay. Swimming pool cleaning and maintenance; tanning. 83 11 az. Tanning beds or salons; taxidermy. 83 12 ba. Taxidermy services; telephone. 83 13 bb. Telephone answering service; test. 83 14 bc. Test laboratories, including mobile testing laboratories 83 15 and field testing by testing laboratories, and excluding tests 83 16 on humans or animals and excluding environmental testing 83 17 services; termite. 83 18 bd. Termite, bug, roach, and pest eradicators; tin. 83 19 be. Tin and sheet metal repair; transportation. 83 20 bf. Transportation service consisting of the rental of 83 21 recreational vehicles or recreational boats, or the rental of 83 22 vehicles subject to registration which are registered for a 83 23 gross weight of thirteen tons or less for a period of sixty 83 24 days or less, or the rental of aircraft for a period of sixty 83 25 days or less;. 83 26 bg. Turkish baths, massage, and reducing salons, excluding 83 27 services provided by massage therapists licensed under chapter 83 28 152C; water. 83 29 bh. Water conditioning and softening; weighing; welding; 83 30 well. 83 31 bi. Weighing. 83 32 bj. Welding. 83 33 bk. Well drilling; wrapping. 83 34 bl. Wrapping, packing, and packaging of merchandise other 83 35 than processed meat, fish, fowl, and vegetables; wrecking. 84 1 bm. Wrecking service; wrecker. 84 2 bn. Wrecker and towing. 84 3b. For the purposes of this subsection, "financial 84 4 institutions" means all national banks, federally chartered 84 5 savings and loan associations, federally chartered savings 84 6 banks, federally chartered credit unions, banks organized under 84 7 chapter 524, credit unions organized under chapter 533, and 84 8 all banks, savings banks, credit unions, and savings and loan 84 9 associations chartered or otherwise created under the laws of 84 10 any state and doing business in Iowa.84 11 bo. Photography. 84 12 bp. Retouching. 84 13 bq. Storage of tangible or electronic files, documents, or 84 14 other records. 84 15 br. Information services. 84 16 bs. Services arising from or related to installing, 84 17 maintaining, servicing, repairing, operating, upgrading, or 84 18 enhancing specified digital products. 84 19 bt. Video game services and tournaments. 84 20 bu. Software as a service. 84 21 Sec. 171. Section 423.2, subsection 8, Code 2018, is amended 84 22 by adding the following new paragraph: 84 23 NEW PARAGRAPH. d. A transaction that otherwise meets 84 24 the definition of "bundled transaction" as defined in this 84 25 subsection is not a bundled transaction if it is any of the 84 26 following: 84 27 (1) The retail sale of tangible personal property and a 84 28 service where the tangible personal property is essential 84 29 to the use of the service, and is provided exclusively in 84 30 connection with the service, and the true object of the 84 31 transaction is the service. 84 32 (2) The retail sale of services where one service is 84 33 provided that is essential to the use or receipt of a second 84 34 service and the first service is provided exclusively in 84 35 connection with the second service and the true object of the 85 1 transaction is the second service. 85 2 (3) (a) A transaction that includes taxable products and 85 3 nontaxable products and the purchase price or sales price of 85 4 the taxable products is de minimis. 85 5 (b) For purposes of this subparagraph, "de minimis" means 85 6 the seller's purchase or sales price of the taxable products 85 7 is ten percent or less of the total purchase price or sales 85 8 price of the bundled products. Sellers shall use either the 85 9 purchase price or the sale price of the products to determine 85 10 if the taxable products are de minimis. Sellers may not use 85 11 a combination of the purchase price and sales price of the 85 12 products to determine if the taxable products are de minimis. 85 13 (4) The retail sale of exempt tangible personal property and 85 14 taxable tangible personal property where all of the following 85 15 apply: 85 16 (a) The transaction includes food and food ingredients, 85 17 drugs, durable medical equipment, mobility enhancing equipment, 85 18 prosthetic devices, or medical supplies. 85 19 (b) The seller's purchase price or sales price of the 85 20 taxable tangible personal property is fifty percent or less 85 21 of the total purchase price or sales price of the bundled 85 22 tangible personal property. Sellers may not use a combination 85 23 of the purchase price and sales price of the tangible personal 85 24 property when making the fifty percent determination for a 85 25 transaction. 85 26 Sec. 172. Section 423.2, Code 2018, is amended by adding the 85 27 following new subsection: 85 28 NEW SUBSECTION. 9A. a. A tax of six percent is imposed on 85 29 the sales price of specified digital products sold at retail 85 30 in the state. The tax applies whether the purchaser obtains 85 31 permanent use or less than permanent use of the specified 85 32 digital product, whether the sale is conditioned or not 85 33 conditioned upon continued payment from the purchaser, and 85 34 whether the sale is on a subscription basis or is not on a 85 35 subscription basis. 86 1 b. The sale of a digital code that may be used to obtain 86 2 or access a specified digital product shall be taxed in the 86 3 same manner as the specified digital product. For purposes 86 4 of this paragraph, "digital code" means a method that permits 86 5 a purchaser to obtain or access at a later date a specified 86 6 digital product. 86 7 Sec. 173. Section 423.2, subsections 10, 11, and 12, Code 86 8 2018, are amended by striking the subsections. 86 9 Sec. 174. NEW SECTION. 423.2A Deposit and transfer of 86 10 revenues. 86 11 1. a. All revenues arising under the operation of the 86 12 provisions of this subchapter II shall be deposited into the 86 13 general fund of the state. 86 14 b. Subsequent to the deposit into the general fund of 86 15 the state, the director shall credit an amount equal to the 86 16 product of the sales tax rate imposed in section 423.2 times 86 17 the sales price of the tangible personal property or services 86 18 furnished to purchasers at a baseball and softball complex that 86 19 has received an award under section 15F.207 and that meets 86 20 the qualifications of section 423.4, subsection 10, into the 86 21 baseball and softball complex sales tax rebate fund created 86 22 under section 423.4, subsection 10, paragraph "e". The director 86 23 shall credit the moneys beginning the first day of the quarter 86 24 following July 1, 2016. This paragraph is repealed thirty 86 25 days following the date on which five million dollars in total 86 26 rebates have been provided under section 423.4, subsection 10. 86 27 2. Subsequent to the deposit into the general fund of the 86 28 state pursuant to subsection 1, the department shall do the 86 29 following in the order prescribed: 86 30 a. Transfer the revenues collected under chapter 423B. 86 31 b. Transfer from the remaining revenues the amounts required 86 32 under Article VII, section 10, of the Constitution of the State 86 33 of Iowa to the natural resources and outdoor recreation trust 86 34 fund created in section 461.31, if applicable. 86 35 c. Transfer one=sixth of the remaining revenues to the 87 1 secure an advanced vision for education fund created in section 87 2 423F.2. This paragraph "c" is repealed December 31, 2029. 87 3 d. Transfer to the baseball and softball complex sales tax 87 4 rebate fund that portion of the sales tax receipts described 87 5 in subsection 1, paragraph "b", remaining after the transfers 87 6 required under paragraphs "a", "b", and "c" of this subsection 87 7 2. This paragraph is repealed thirty days following the date 87 8 on which five million dollars in total rebates have been 87 9 provided under section 423.4, subsection 10. 87 10 e. Beginning the first day of the calendar quarter 87 11 beginning on the reinvestment district's commencement date, 87 12 subject to remittance limitations established by the economic 87 13 development authority board pursuant to section 15J.4, 87 14 subsection 3, transfer to a district account created in the 87 15 state reinvestment district fund for each reinvestment district 87 16 established under chapter 15J, the amount of new state sales 87 17 tax revenue, determined in section 15J.5, subsection 1, 87 18 paragraph "b", in the district, that remains after the prior 87 19 transfers required under this subsection 2. Such transfers 87 20 shall cease pursuant to section 15J.8. 87 21 f. Subject to the limitation on the calculation and 87 22 deposit of sales tax increment revenues in section 418.12, 87 23 beginning the first day of the quarter following adoption 87 24 of the resolution pursuant to section 418.4, subsection 3, 87 25 paragraph "d", transfer to the account created in the sales tax 87 26 increment fund for each governmental entity approved to use 87 27 sales tax increment revenues under chapter 418, that portion 87 28 of the increase in sales tax revenue, determined in section 87 29 418.11, subsection 2, paragraph "d", in the applicable area of 87 30 the governmental entity, that remains after the other transfers 87 31 required under this subsection 2. 87 32 g. Beginning the first day of the quarter following July 1, 87 33 2014, transfer to the raceway facility tax rebate fund created 87 34 in section 423.4, subsection 11, paragraph "e", that portion 87 35 of the sales tax receipts collected and remitted upon sales of 88 1 tangible personal property or services furnished by retailers 88 2 at a raceway facility meeting the qualifications of section 88 3 423.4, subsection 11, that remains after the transfers required 88 4 in paragraphs "a" through "f" of this subsection 2. This 88 5 paragraph is repealed June 30, 2025, or thirty days following 88 6 the date on which an amount of total rebates specified in 88 7 section 423.4, subsection 11, paragraph "c", subparagraph (4), 88 8 subparagraph division (a) or (b), whichever is applicable, 88 9 has been provided or thirty days following the date on which 88 10 rebates cease as provided in section 423.4, subsection 11, 88 11 paragraph "c", subparagraph (5), whichever is earliest. 88 12 3. Of the amount of sales tax revenue actually transferred 88 13 per quarter pursuant to subsection 2, paragraphs "e" and "f", 88 14 the department shall retain an amount equal to the actual cost 88 15 of administering the transfers under subsection 2, paragraphs 88 16 "e" and "f", or twenty=five thousand dollars, whichever is 88 17 less. The amount retained by the department pursuant to this 88 18 subsection shall be divided pro rata each quarter between 88 19 the amounts that would have been transferred pursuant to 88 20 subsection 2, paragraphs "e" and "f", without the deduction 88 21 made by operation of this subsection. Revenues retained by 88 22 the department pursuant to this subsection shall be considered 88 23 repayment receipts as defined in section 8.2. 88 24 Sec. 175. Section 423.3, subsections 1 and 17, Code 2018, 88 25 are amended to read as follows: 88 26 1. The sales price from sales of tangible personal property, 88 27 specified digital products, and services furnished which this 88 28 state is prohibited from taxing under the Constitution or laws 88 29 of the United States or under the Constitution of this state. 88 30 17. The sales price of allgoods, wares, or merchandise, 88 31tangible personal property, specified digital products, or 88 32 services, used for educational purposes sold to any private 88 33 nonprofit educational institution in this state. For the 88 34 purpose of this subsection, "educational institution" means an 88 35 institution which primarily functions as a school, college, 89 1 or university with students, faculty, and an established 89 2 curriculum. The faculty of an educational institution must be 89 3 associated with the institution and the curriculum must include 89 4 basic courses which are offered every year. "Educational 89 5 institution" includes an institution primarily functioning as 89 6 a library. 89 7 Sec. 176. Section 423.3, subsection 18, unnumbered 89 8 paragraph 1, Code 2018, is amended to read as follows: 89 9 The sales price of tangible personal property or specified 89 10 digital products sold, or of services furnished, to the 89 11 following nonprofit corporations: 89 12 Sec. 177. Section 423.3, subsections 20, 21, 22, 23, 26, 27, 89 13 28, and 31, Code 2018, are amended to read as follows: 89 14 20. The sales price of tangible personal property or 89 15 specified digital products sold, or of services furnished, to 89 16 nonprofit legal aid organizations. 89 17 21. The sales price ofgoods, wares, or merchandise, 89 18tangible personal property, of specified digital products, 89 19 or of services, used for educational, scientific, historic 89 20 preservation, or aesthetic purpose sold to a nonprofit private 89 21 museum. 89 22 22. The sales price from sales ofgoods, wares, or 89 23 merchandise,tangible personal property, of specified digital 89 24 products, or from services furnished, to a nonprofit private 89 25 art center to be used in the operation of the art center. 89 26 23. The sales price of tangible personal property or 89 27 specified digital products sold, or of services furnished, by a 89 28 fair organized under chapter 174. 89 29 26. The sales price of tangible personal property or 89 30 specified digital products sold, or of services furnished, to a 89 31 statewide nonprofit organ procurement organization, as defined 89 32 in section 142C.2. 89 33 27. The sales price of tangible personal property or 89 34 specified digital products sold, or of services furnished, to a 89 35 nonprofit hospital licensed pursuant to chapter 135B to be used 90 1 in the operation of the hospital. 90 2 28. The sales price of tangible personal property or 90 3 specified digital products sold, or of services furnished, to 90 4 a freestanding nonprofit hospice facility which operates a 90 5 hospice program as defined in 42 C.F.R. ch. IV, {418.3, which 90 6 property or services are to be used in the hospice program. 90 7 31.a.The sales price ofgoods, wares, or merchandise 90 8tangible personal property or specified digital products sold 90 9 to and of services furnished, and used for public purposes 90 10 sold to a tax=certifying or tax=levying body of the state or 90 11 a governmental subdivision of the state, including regional 90 12 transit systems, as defined in section 324A.1, the state board 90 13 of regents, department of human services, state department of 90 14 transportation, any municipally owned solid waste facility 90 15 which sells all or part of its processed waste as fuel to a 90 16 municipally owned public utility, and all divisions, boards, 90 17 commissions, agencies, or instrumentalities of state, federal, 90 18 county, or municipal government which have no earnings going to 90 19 the benefit of an equity investor or stockholder, except any 90 20 of the following: 90 21(1)a. The sales price ofgoods, wares, or merchandise 90 22tangible personal property or specified digital products sold 90 23 to, or of services furnished, and used by or in connection with 90 24 the operation of any municipally owned public utility engaged 90 25 in selling gas, electricity, heat, pay television service, or 90 26 communication service to the general public. 90 27(2)b. The sales price of furnishing of sewage services to 90 28 a county or municipality on behalf of nonresidential commercial 90 29 operations. 90 30(3)c. The furnishing of solid waste collection and 90 31 disposal service to a county or municipality on behalf of 90 32 nonresidential commercial operations located within the county 90 33 or municipality. 90 34b. The exemption provided by this subsection shall also 90 35 apply to all such sales of goods, wares, or merchandise or of 91 1 services furnished and subject to use tax.91 2 Sec. 178. Section 423.3, subsection 32, unnumbered 91 3 paragraph 1, Code 2018, is amended to read as follows: 91 4 The sales price of tangible personal property or specified 91 5 digital products sold, or of services furnished, by a county or 91 6 city. This exemption does not apply to any of the following: 91 7 Sec. 179. Section 423.3, subsection 36, unnumbered 91 8 paragraph 1, Code 2018, is amended to read as follows: 91 9 The sales price from sales of tangible personal property 91 10 or specified digital products or of the sale or furnishing of 91 11 electrical energy, natural or artificial gas, or communication 91 12 service to another state or political subdivision of another 91 13 state if the other state provides a similar reciprocal 91 14 exemption for this state and political subdivision of this 91 15 state. 91 16 Sec. 180. Section 423.3, subsection 39, paragraph a, 91 17 subparagraphs (1) and (2), Code 2018, are amended to read as 91 18 follows: 91 19 (1) Sales of tangible personal property or specified 91 20 digital products, or the furnishing of services, of a 91 21 nonrecurring nature, by the owner, if the seller, at the time 91 22 of the sale, is not engaged for profit in the business of 91 23 selling tangible personal property, specified digital products, 91 24 or services taxed under section 423.2. 91 25 (2) The sale of all or substantially all of the tangible 91 26 personal property, or specified digital products, or services 91 27 held or used by a seller in the course of the seller's trade or 91 28 business for which the seller is required to hold a sales tax 91 29 permit when the seller sells or otherwise transfers the trade 91 30 or business to another person who shall engage in a similar 91 31 trade or business. 91 32 Sec. 181. Section 423.3, subsection 39, Code 2018, is 91 33 amended by adding the following new paragraph: 91 34 NEW PARAGRAPH. c. The exemption under this subsection does 91 35 not apply to sales for which a person is required pursuant to 92 1 section 423.14A to collect sales and use tax. 92 2 Sec. 182. Section 423.3, subsection 47, paragraph d, 92 3 subparagraph (1), Code 2018, is amended to read as follows: 92 4 (1) "Commercial enterprise"includesmeans businesses 92 5 and manufacturers conducted for profitand centers for data 92 6 processing services to, for=profit and nonprofit insurance 92 7 companies, and for=profit and nonprofit financial institutions, 92 8businesses, and manufacturers,but excludes other nonprofits 92 9 and professions and occupationsand nonprofit organizations. 92 10 Sec. 183. Section 423.3, subsection 47, paragraph d, 92 11 subparagraph (4), Code 2018, is amended by striking the 92 12 subparagraph and inserting in lieu thereof the following: 92 13 (4) (a) "Manufacturer" means a business that primarily 92 14 purchases, receives, or holds personal property of any 92 15 description for the purpose of adding to its value by a process 92 16 of manufacturing with a view to selling the property for gain 92 17 or profit. 92 18 (b) "Manufacturer" includes contract manufacturers. A 92 19 contract manufacturer is a manufacturer that otherwise falls 92 20 within the definition of manufacturer, except that a contract 92 21 manufacturer does not sell the tangible personal property 92 22 the contract manufacturer processes on behalf of other 92 23 manufacturers. 92 24 (c) "Manufacturer" does not include persons who are not 92 25 commonly understood as manufacturers, including but not limited 92 26 to persons engaged in any of the following activities: 92 27 (i) Construction contracting. 92 28 (ii) Repairing tangible personal property or real property. 92 29 (iii) Providing health care. 92 30 (iv) Farming, including cultivating agricultural products 92 31 and raising livestock. 92 32 (v) Transporting for hire. 92 33 (d) For purposes of this subparagraph: 92 34 (i) "Business" means those businesses conducted for 92 35 profit, but excludes professions and occupations and nonprofit 93 1 organizations. 93 2 (ii) "Manufacturing" means those activities commonly 93 3 understood within the ordinary meaning of the term, and shall 93 4 include: 93 5 (A) Refining. 93 6 (B) Purifying. 93 7 (C) Combining of different materials. 93 8 (D) Packing of meats. 93 9 (E) Activities subsequent to the extractive process of 93 10 quarrying or mining, such as crushing, washing, sizing, or 93 11 blending of aggregate materials. 93 12 (iii) "Manufacturing" does not include activities occurring 93 13 on premises primarily used to make retail sales. 93 14 Sec. 184. Section 423.3, subsection 63, Code 2018, is 93 15 amended to read as follows: 93 16 63. The sales price from the sale of tangible personal 93 17 property, specified digital products, or services which will be 93 18 given as prizes to players in games of skill, games of chance, 93 19 raffles, and bingo games as defined in chapter 99B. 93 20 Sec. 185. Section 423.3, subsections 65, 66, and 67, Code 93 21 2018, are amended by striking the subsections. 93 22 Sec. 186. Section 423.3, subsection 78, paragraph a, 93 23 unnumbered paragraph 1, Code 2018, is amended to read as 93 24 follows: 93 25 The sales price fromsales or rentalthe sale of tangible 93 26 personal property, specified digital products, or services 93 27 rendered by any entity where the profits from thesales or 93 28 rentalsale of the tangible personal property, specified 93 29 digital products, or services rendered, are used by or donated 93 30 to a nonprofit entity that is exempt from federal income 93 31 taxation pursuant to section 501(c)(3) of the Internal Revenue 93 32 Code, a government entity, or a nonprofit private educational 93 33 institution, and where the entire proceeds from thesales, 93 34 rental,sale or services are expended for any of the following 93 35 purposes: 94 1 Sec. 187. Section 423.3, subsection 79, Code 2018, is 94 2 amended to read as follows: 94 3 79. The sales price from the saleor rentalof tangible 94 4 personal property or specified digital products, or from 94 5 services furnished, to a recognized community action agency as 94 6 provided in section 216A.93 to be used for the purposes of the 94 7 agency. 94 8 Sec. 188. Section 423.3, Code 2018, is amended by adding the 94 9 following new subsections: 94 10 NEW SUBSECTION. 103. a. The sales price of specified 94 11 digital products and of prewritten computer software sold, and 94 12 of enumerated services described in section 423.2, subsection 94 13 6, paragraphs "bq", "br", "bs", and "bu" furnished, to a 94 14 commercial enterprise for use exclusively by the commercial 94 15 enterprise. The use of prewritten computer software, a 94 16 specified digital product, or service fails to qualify as a 94 17 use exclusively by the commercial enterprise if its use for 94 18 noncommercial purposes is more than de minimis. 94 19 b. For purposes of this subsection: 94 20 (1) "Commercial enterprise" means the same as defined in 94 21 section 423.3, subsection 47, paragraph "d", subparagraph (1), 94 22 but also includes professions and occupations. 94 23 (2) "De minimis" and "noncommercial purposes" shall be 94 24 defined by the director by rule. 94 25 NEW SUBSECTION. 104. The sales price of specified digital 94 26 products sold to a non=end user. For purposes of this 94 27 subsection, "non=end user" means a person who receives by 94 28 contract a specified digital product for further commercial 94 29 broadcast, rebroadcast, transmission, retransmission, 94 30 licensing, relicensing, distribution, redistribution, or 94 31 exhibition of the product, in whole or in part, to another 94 32 person. 94 33 NEW SUBSECTION. 105. The sales price for transportation 94 34 services furnished by emergency or nonemergency medical 94 35 transportation, by a paratransit service, and by a public 95 1 transit system as defined in section 324A.1. 95 2 Sec. 189. Section 423.4, subsection 3, unnumbered paragraph 95 3 1, Code 2018, is amended to read as follows: 95 4 A relief agency may apply to the director for refund of the 95 5 amount of sales or use tax imposed and paid upon sales to it 95 6 of anygoods, wares, merchandise,tangible personal property 95 7 or specified digital products, or services furnished, used for 95 8 free distribution to the poor and needy. 95 9 Sec. 190. Section 423.4, subsection 3, paragraph a, 95 10 subparagraph (1), Code 2018, is amended to read as follows: 95 11 (1) On forms furnished by the department, and filed within 95 12 the time as the director shall provide by rule, the relief 95 13 agency shall report to the department the total amount or 95 14 amounts, valued in money, expended directly or indirectly 95 15 forgoods, wares, merchandise,tangible personal property or 95 16 specified digital products, or services furnished, used for 95 17 free distribution to the poor and needy. 95 18 Sec. 191. Section 423.4, subsection 10, paragraph e, Code 95 19 2018, is amended to read as follows: 95 20 e. There is established within the state treasury under the 95 21 control of the department a baseball and softball complex sales 95 22 tax rebate fund consisting of the amount of state sales tax 95 23 revenues transferred pursuant to section423.2, subsection 11, 95 24 paragraph "b", subparagraph (4)423.2A, subsection 2, paragraph 95 25 "d". An account is created within the fund for each baseball 95 26 and softball complex receiving an award under section 15F.207 95 27 and meeting the qualifications of this subsection. Moneys 95 28 in the fund shall only be used to provide rebates of state 95 29 sales tax pursuant to this subsection, and only the state sales 95 30 tax revenues in the baseball and softball complex rebate fund 95 31 are subject to rebate under this subsection. The amount of 95 32 rebates paid from each baseball and softball complex's account 95 33 within the fund shall not exceed the amount of the award under 95 34 section 15F.207, and not more than five million dollars in 95 35 total rebates shall be paid from the fund. Any moneys in the 96 1 fund which represent state sales tax revenue for which the time 96 2 period in paragraph "c" for receiving a rebate has expired, 96 3 or which otherwise represent state sales tax revenue that has 96 4 become ineligible for rebate pursuant to this subsection, shall 96 5 immediately revert to the general fund of this state. 96 6 Sec. 192. Section 423.4, subsection 11, paragraph b, 96 7 subparagraph (1), Code 2018, is amended to read as follows: 96 8 (1) Sales tax imposed and collected by retailers upon 96 9 sales of tangible personal property or services furnished to 96 10 purchasers at the raceway facility. Notwithstanding the state 96 11 sales tax imposed in section 423.2, a sales tax rebate issued 96 12 pursuant to this subparagraph shall not exceed the amounts 96 13 transferred to the raceway facility tax rebate fund pursuant to 96 14 section423.2, subsection 11, paragraph "b", subparagraph (7) 96 15423.2A, subsection 2, paragraph "g". 96 16 Sec. 193. Section 423.4, subsection 11, paragraph b, 96 17 subparagraph (2), subparagraph division (c), Code 2018, is 96 18 amended to read as follows: 96 19 (c) Notwithstanding the state sales tax imposed in section 96 20 423.2, a sales tax rebate issued pursuant to this subparagraph 96 21 shall not exceed the amounts remaining after the transfers 96 22 required under section423.2, subsection 11, paragraph "b", 96 23 subparagraphs (1) through (6)423.2A, subsection 2, paragraphs 96 24 "a" through "f", have been made from the total amount of sales 96 25 tax for which the rebate is requested. 96 26 Sec. 194. Section 423.4, subsection 11, paragraph e, Code 96 27 2018, is amended to read as follows: 96 28 e. There is established within the state treasury under 96 29 the control of the department a raceway facility tax rebate 96 30 fund consisting of the amount of state sales tax revenues 96 31 transferred pursuant to section423.2, subsection 11, paragraph 96 32 "b", subparagraph (7)423.2A, subsection 2, paragraph "g". An 96 33 account is created within the fund for each raceway facility 96 34 meeting the qualifications of this subsection. Moneys in the 96 35 fund shall only be used to provide rebates of state sales tax 97 1 pursuant to paragraph "b", subparagraph (1). The total amount 97 2 of rebates paid from the fund shall not exceed the amount 97 3 specified in paragraph "c", subparagraph (4), subparagraph 97 4 division (a) or (b), whichever is applicable. Any moneys in 97 5 the fund which represent state sales tax revenue for which the 97 6 time period in paragraph "c" for receiving a rebate has expired, 97 7 or which otherwise represent state sales tax revenue that has 97 8 become ineligible for rebate pursuant to this subsection shall 97 9 immediately revert to the general fund of the state. 97 10 Sec. 195. Section 423.5, subsection 1, paragraph a, Code 97 11 2018, is amended to read as follows: 97 12 a. The use in this state of tangible personal property 97 13 as defined in section 423.1, including aircraft subject to 97 14 registration under section 328.20, purchased for use in this 97 15 state. For the purposes of this subchapter, the furnishing 97 16 or use of the following services is also treated as the use 97 17 of tangible personal property: optional service or warranty 97 18 contracts, except residential service contracts regulated under 97 19 chapter 523C, vulcanizing, recapping, or retreading services, 97 20 engraving,photography, retouching,printing, or binding 97 21 services, and communication service when furnished or delivered 97 22 to consumers or users within this state. 97 23 Sec. 196. Section 423.5, subsection 1, paragraph d, Code 97 24 2018, is amended to read as follows: 97 25 d. Purchases of tangible personal property or specified 97 26 digital products made from the government of the United States 97 27 or any of its agencies by ultimate consumers shall be subject 97 28 to the tax imposed by this section. Services purchased from 97 29 the same source or sources shall be subject to the service 97 30 tax imposed by this subchapter and apply to the user of the 97 31 services. 97 32 Sec. 197. Section 423.5, subsection 1, Code 2018, is amended 97 33 by adding the following new paragraph: 97 34 NEW PARAGRAPH. f. (1) The use in this state of specified 97 35 digital products. The tax applies whether the purchaser 98 1 obtains permanent use or less than permanent use of the 98 2 specified digital product, whether the use is conditioned or 98 3 not conditioned upon continued payment from the purchaser, 98 4 and whether the use is on a subscription basis or is not on a 98 5 subscription basis. 98 6 (2) The use of a digital code that may be used to obtain 98 7 or access a specified digital product shall be taxed in the 98 8 same manner as the specified digital product. For purposes of 98 9 this subparagraph, "digital code" means the same as defined in 98 10 section 423.2, subsection 9A. 98 11 Sec. 198. Section 423.5, subsection 3, Code 2018, is amended 98 12 to read as follows: 98 13 3. For the purpose of the proper administration of the use 98 14 tax and to prevent its evasion, evidence that tangible personal 98 15 propertywasor specified digital products were sold by any 98 16 person for delivery in this state shall be prima facie evidence 98 17 that such tangible personal propertywasor specified digital 98 18 products were sold for use in this state. 98 19 Sec. 199. Section 423.5, subsection 4, Code 2018, is amended 98 20 by striking the subsection. 98 21 Sec. 200. Section 423.6, unnumbered paragraph 1, Code 2018, 98 22 is amended to read as follows: 98 23 The use in this state of the following tangible personal 98 24 property, specified digital products, and services is exempted 98 25 from the tax imposed by this subchapter: 98 26 Sec. 201. Section 423.6, subsections 1, 2, 4, and 6, Code 98 27 2018, are amended to read as follows: 98 28 1. Tangible personal property, specified digital products, 98 29 and enumerated services, the sales price from the sale of which 98 30 are required to be included in the measure of the sales tax, if 98 31 that tax has been paid to the department or the retailer. This 98 32 exemption does not include vehicles subject to registration or 98 33 subject only to the issuance of a certificate of title. 98 34 2. The sale of tangible personal property, specified 98 35 digital products, or the furnishing of services in the regular 99 1 course of business. 99 2 4. All articles of tangible personal property and all 99 3 specified digital products brought into the state of Iowa by a 99 4 nonresident individual for the individual's use or enjoyment 99 5 while within the state. 99 6 6. Tangible personal property, specified digital products, 99 7 or services the sales price of which is exempt from the sales 99 8 tax under section 423.3, except section 423.3, subsections 39 99 9 and 73, as it relates to the sale, but not the lease or rental, 99 10 of vehicles subject only to the issuance of a certificate of 99 11 title and as it relates to aircraft subject to registration 99 12 under section 328.20. 99 13 Sec. 202. Section 423.14, subsection 2, paragraphs b and c, 99 14 Code 2018, are amended to read as follows: 99 15 b. The tax upon the use of all tangible personal property 99 16 and specified digital products other than that enumerated in 99 17 paragraph "a", which is sold by a seller who is a retailer 99 18maintaining a place of business in this state, or by such other 99 19 retailer or agent as the director shall authorize pursuant to 99 20 section 423.30or its agent that is not otherwise required 99 21 to collect sales tax under the provisions of this chapter, 99 22 shall be collected by the retailer or agent and remitted to the 99 23 department, pursuant to the provisions of paragraph "e", and 99 24 sections 423.24, 423.29, 423.30, 423.32, and 423.33. 99 25 c. The tax upon the use of all tangible personal property 99 26 and specified digital products not paid pursuant to paragraphs 99 27 "a" and "b" shall be paid to the department directly by any 99 28 person using the property within this state, pursuant to the 99 29 provisions of section 423.34. 99 30 Sec. 203. NEW SECTION. 423.14A Persons required to collect 99 31 sales and use tax ==== supplemental conditions, requirements, and 99 32 responsibilities. 99 33 1. For purposes of this section: 99 34 a. "Iowa sales" means sales of tangible personal property, 99 35 services, or specified digital products sourced to this state 100 1 pursuant to section 423.15, 423.16, 423.17, 423.19, or 423.20, 100 2 or that are otherwise sold in this state or for delivery into 100 3 this state. 100 4 b. (1) "Marketplace facilitator" means a person, including 100 5 any affiliate of the person, who facilitates a retail sale by 100 6 satisfying subparagraph divisions (a) and (b) as follows: 100 7 (a) The person directly or indirectly does any of the 100 8 following: 100 9 (i) Lists, makes available, or advertises tangible personal 100 10 property, services, or specified digital products for sale 100 11 by a marketplace seller in a marketplace owned, operated, or 100 12 controlled by the person. 100 13 (ii) Facilitates the sale of a marketplace seller's 100 14 product through a marketplace by transmitting or otherwise 100 15 communicating an offer or acceptance of a retail sale of 100 16 tangible personal property, services, or specified digital 100 17 products between a marketplace seller and a purchaser in a 100 18 forum including a shop, store, booth, catalog, internet site, 100 19 or similar forum. 100 20 (iii) Owns, rents, licenses, makes available, or operates 100 21 any electronic or physical infrastructure or any property, 100 22 process, method, copyright, trademark, or patent that connects 100 23 marketplace sellers to purchasers for the purpose of making 100 24 retail sales of tangible personal property, services, or 100 25 specified digital products. 100 26 (iv) Provides a marketplace for making retail sales of 100 27 tangible personal property, services, or specified digital 100 28 products, or otherwise facilitates retail sales of tangible 100 29 personal property, services, or specified digital products, 100 30 regardless of ownership or control of the tangible personal 100 31 property, services, or specified digital products that are the 100 32 subject of the retail sale. 100 33 (v) Provides software development or research and 100 34 development activities related to any activity described in 100 35 this subparagraph division (a), if such software development or 101 1 research and development activities are directly related to the 101 2 physical or electronic marketplace provided by a marketplace 101 3 provider. 101 4 (vi) Provides or offers fulfillment or storage services for 101 5 a marketplace seller. 101 6 (vii) Sets prices for a marketplace seller's sale of 101 7 tangible personal property, services, or specified digital 101 8 products. 101 9 (viii) Provides or offers customer service to a marketplace 101 10 seller or a marketplace seller's customers, or accepts or 101 11 assists with taking orders, returns, or exchanges of tangible 101 12 personal property, services, or specified digital products sold 101 13 by a marketplace seller. 101 14 (ix) Brands or otherwise identifies sales as those of the 101 15 marketplace facilitator. 101 16 (b) The person directly or indirectly does any of the 101 17 following: 101 18 (i) Collects the sales price or purchase price of a retail 101 19 sale of tangible personal property, services, or specified 101 20 digital products. 101 21 (ii) Provides payment processing services for a retail sale 101 22 of tangible personal property, services, or specified digital 101 23 products. 101 24 (iii) Charges, collects, or otherwise receives selling 101 25 fees, listing fees, referral fees, closing fees, fees for 101 26 inserting or making available tangible personal property, 101 27 services, or specified digital products on a marketplace, or 101 28 other consideration from the facilitation of a retail sale of 101 29 tangible personal property, services, or specified digital 101 30 products, regardless of ownership or control of the tangible 101 31 personal property, services, or specified digital products that 101 32 are the subject of the retail sale. 101 33 (iv) Through terms and conditions, agreements, or 101 34 arrangements with a third party, collects payment in connection 101 35 with a retail sale of tangible personal property, services, 102 1 or specified digital products from a purchaser and transmits 102 2 that payment to the marketplace seller, regardless of whether 102 3 the person collecting and transmitting such payment receives 102 4 compensation or other consideration in exchange for the 102 5 service. 102 6 (v) Provides a virtual currency that purchasers are allowed 102 7 or required to use to purchase tangible personal property, 102 8 services, or specified digital products. 102 9 (2) "Marketplace facilitator" includes but is not limited 102 10 to a person who satisfies the requirements of this paragraph 102 11 through the ownership, operation, or control of a digital 102 12 distribution service, digital distribution platform, online 102 13 portal, or application store. 102 14 (3) A "rental platform", as defined in section 423C.2, that 102 15 meets the requirements described in section 423C.3, subsection 102 16 3, paragraph "c", subparagraph (2), shall not be considered 102 17 a "marketplace facilitator" with respect to any sale of a 102 18 transportation service under section 423.2, subsection 6, 102 19 paragraph "bf", or section 423.5, subsection 1, paragraph "e", 102 20 consisting of the rental of vehicles subject to registration 102 21 which are registered for a gross weight of thirteen tons or 102 22 less for a period of sixty days or less. 102 23 c. "Marketplace seller" means any of the following: 102 24 (1) A seller that makes retail sales through any physical 102 25 or electronic marketplace owned, operated, or controlled by a 102 26 marketplace facilitator, even if such seller would not have 102 27 been required to collect and remit sales and use tax had the 102 28 sale not been made through such marketplace. 102 29 (2) A seller that makes retail sales resulting from a 102 30 referral by a referrer, even if such seller would not have been 102 31 required to collect and remit sales and use tax had the sale 102 32 not been made through such referrer. 102 33 2. In addition to and not in lieu of any application of 102 34 this chapter to sellers who are retailers and sellers who are 102 35 retailers maintaining a place of business in this state, any 103 1 person described in subsection 3, or the person's agents, 103 2 shall be considered a retailer in this state and a retailer 103 3 maintaining a place of business in this state for purposes of 103 4 this chapter on or after January 1, 2019, and shall be subject 103 5 to all requirements of this chapter imposed on retailers and 103 6 retailers maintaining a place of business in this state, 103 7 including but not limited to the requirement to collect and 103 8 remit sales and use taxes pursuant to sections 423.14 and 103 9 423.29, and local option taxes under chapter 423B. 103 10 3. a. A retailer that has gross revenue from Iowa sales 103 11 equal to or exceeding one hundred thousand dollars for an 103 12 immediately preceding calendar year or a current calendar year. 103 13 b. A retailer that makes Iowa sales in two hundred or more 103 14 separate transactions for an immediately preceding calendar 103 15 year or a current calendar year. 103 16 c. (1) A retailer that owns, licenses, or uses software 103 17 or data files that are installed or stored on property used 103 18 in this state. For purposes of this subparagraph, "software 103 19 or data files" include but are not limited to software that is 103 20 affirmatively downloaded by a user, software that is downloaded 103 21 as a result of the use of a website, preloaded software, and 103 22 cookies. 103 23 (2) A retailer that uses in=state software to make Iowa 103 24 sales. For purposes of this subparagraph, "in=state software" 103 25 means computer software that is installed or stored on property 103 26 located in this state or that is distributed within this state 103 27 for the purpose of facilitating a sale by the retailer. 103 28 (3) A retailer that provides, or enters into an agreement 103 29 with another person to provide, a content distribution network 103 30 in this state to facilitate, accelerate, or enhance the 103 31 delivery of the retailer's internet site to purchasers. For 103 32 purposes of this subparagraph, "content distribution network" 103 33 means a system of distributed servers that deliver internet 103 34 sites and other internet content to a user based on the 103 35 geographic location of the user, the origin of the internet 104 1 site or internet content, and a content delivery server. 104 2 (4) This paragraph "c" shall not apply to a retailer that 104 3 has gross revenue from Iowa sales of less than one hundred 104 4 thousand dollars for an immediately preceding calendar year or 104 5 a current calendar year. 104 6 d. (1) A marketplace facilitator that makes or facilitates 104 7 Iowa sales on its own behalf or for one or more marketplace 104 8 sellers equal to or exceeding one hundred thousand dollars, 104 9 or in two hundred or more separate transactions, for an 104 10 immediately preceding calendar year or a current calendar year. 104 11 (2) A marketplace facilitator shall collect sales and 104 12 use tax on the entire sales price or purchase price paid by 104 13 a purchaser on each Iowa sale subject to sales and use tax 104 14 that is made or facilitated by the marketplace facilitator, 104 15 regardless of whether the marketplace seller for whom an Iowa 104 16 sale is made or facilitated has or is required to have a 104 17 retail sales tax permit or would have been required to collect 104 18 sales and use tax had the sale not been facilitated by the 104 19 marketplace facilitator, and regardless of the amount of the 104 20 sales price or purchase price that will ultimately accrue 104 21 to or benefit the marketplace facilitator, the marketplace 104 22 seller, or any other person. This sales and use tax collection 104 23 responsibility of a marketplace facilitator applies but shall 104 24 not be limited to sales facilitated through a computer software 104 25 application, commonly referred to as in=app purchases, or 104 26 through another specified digital product. 104 27 (3) A marketplace facilitator shall be relieved of 104 28 liability under this paragraph "d" for failure to collect and 104 29 remit sales and use tax on an Iowa sale made or facilitated for 104 30 a marketplace seller under the following circumstances and up 104 31 to the amounts permitted under the following circumstances: 104 32 (a) If the marketplace facilitator demonstrates to the 104 33 satisfaction of the department that the marketplace facilitator 104 34 has made a reasonable effort to obtain accurate information 104 35 from the marketplace seller about a retail sale and that 105 1 the failure to collect and remit the correct tax was due to 105 2 incorrect information provided to the marketplace facilitator 105 3 by the marketplace seller, then the marketplace facilitator 105 4 shall be relieved of liability for that retail sale. This 105 5 subparagraph division does not apply with regard to a retail 105 6 sale for which the marketplace facilitator is the seller or if 105 7 the marketplace facilitator and the seller are affiliates. For 105 8 Iowa sales for which a marketplace facilitator is relieved of 105 9 liability under this subparagraph division, the marketplace 105 10 seller and purchaser are liable for any amount of uncollected, 105 11 unpaid, or unremitted tax. 105 12 (b) (i) Subject to the limitation in subparagraph 105 13 subdivision (ii), if the marketplace facilitator demonstrates 105 14 to the satisfaction of the department that the Iowa sale was 105 15 made or facilitated for a marketplace seller prior to January 105 16 1, 2026, through a marketplace of the marketplace facilitator, 105 17 that the marketplace facilitator is not the seller and that 105 18 the marketplace facilitator and the seller are not affiliates, 105 19 and that the failure to collect sales and use tax was due to 105 20 an error other than an error in sourcing the sale. To the 105 21 extent that a marketplace facilitator is relieved of liability 105 22 for collection of sales and use tax under this subparagraph 105 23 division, the marketplace seller for whom the marketplace 105 24 facilitator has made or facilitated the Iowa sale is also 105 25 relieved of liability. The department may determine the manner 105 26 in which a marketplace facilitator or marketplace seller shall 105 27 claim the liability relief provided in this subparagraph 105 28 division. 105 29 (ii) The liability relief provided in subparagraph 105 30 subdivision (i) shall not exceed the following percentage 105 31 of the total sales and use tax due on Iowa sales made or 105 32 facilitated by a marketplace facilitator for marketplace 105 33 sellers and sourced to this state during a calendar year, 105 34 which Iowa sales shall not include sales by the marketplace 105 35 facilitator or affiliates of the marketplace facilitator: 106 1 (A) For Iowa sales made or facilitated during the 2019 106 2 calendar year, ten percent. 106 3 (B) For Iowa sales made or facilitated during calendar years 106 4 2020 through 2024, five percent. 106 5 (C) For Iowa sales made or facilitated during the 2025 106 6 calendar year, three percent. 106 7 (c) Nothing in this subparagraph (3) shall be construed to 106 8 relieve any person of liability for collecting but failing to 106 9 remit to the department sales and use tax. 106 10 (d) A marketplace facilitator is deemed to be an agent 106 11 of any marketplace seller making retail sales through a 106 12 marketplace of the marketplace facilitator. 106 13 e. (1) A referrer if, for any immediately preceding 106 14 calendar year or a current calendar year, one hundred thousand 106 15 dollars or more in Iowa sales or two hundred or more separate 106 16 Iowa sales transactions result from referrals from a platform 106 17 of the referrer. A referrer is not required to collect and 106 18 remit sales and use tax pursuant to this paragraph if the 106 19 referrer does all of the following: 106 20 (a) The referrer posts a conspicuous notice on each platform 106 21 of the referrer that includes all of the following: 106 22 (i) A statement that sales or use tax is due on certain 106 23 purchases. 106 24 (ii) A statement that the marketplace seller from whom the 106 25 person is purchasing on the platform may or may not collect and 106 26 remit sales and use tax on a purchase. 106 27 (iii) A statement that Iowa requires the purchaser to pay 106 28 sales or use tax and file sales or use tax returns if sales 106 29 or use tax is not collected at the time of the sale by the 106 30 marketplace seller. 106 31 (iv) Information informing the purchaser that the notice is 106 32 provided under the requirements of this subparagraph. 106 33 (v) Instructions for obtaining additional information from 106 34 the department regarding whether and how to remit sales and use 106 35 tax to the state of Iowa. 107 1 (b) The referrer provides a monthly notice to each 107 2 marketplace seller to whom the referrer made a referral of a 107 3 potential customer located in Iowa during the previous calendar 107 4 year, which monthly notice shall contain all of the following: 107 5 (i) A statement that Iowa imposes a sales or use tax on Iowa 107 6 sales. 107 7 (ii) A statement that a marketplace facilitator or other 107 8 retailer making Iowa sales must collect and remit sales and use 107 9 tax. 107 10 (iii) Instructions for obtaining additional information 107 11 from the department regarding the collection and remittance of 107 12 Iowa sales and use tax. 107 13 (c) The referrer provides the department with monthly 107 14 reports in an electronic format and in the manner prescribed 107 15 by the department, which monthly reports contain all of the 107 16 following: 107 17 (i) A list of marketplace sellers who received the 107 18 referrer's notice under subparagraph division (b). 107 19 (ii) A list of marketplace sellers that collect and 107 20 remit Iowa sales and use tax and that list or advertise the 107 21 marketplace seller's products for sale on a platform of the 107 22 referrer. 107 23 (iii) An affidavit signed under penalty of perjury from 107 24 an officer of the referrer affirming that the referrer made 107 25 reasonable efforts to comply with the applicable sales and use 107 26 tax notice and reporting requirements of this subparagraph. 107 27 (2) A referrer is deemed to be an agent of any marketplace 107 28 seller making retail sales resulting from a referral of the 107 29 referrer. 107 30 (3) For purposes of this paragraph: 107 31 (a) "Platform" means an electronic or physical medium, 107 32 including but not limited to an internet site or catalog, that 107 33 is owned, operated, or controlled by a referrer. 107 34 (b) "Referral" means the transfer through telephone, 107 35 internet link, or other means by a referrer of a potential 108 1 customer to a retailer or seller who advertises or lists 108 2 products for sale on a platform of the referrer. 108 3 (c) (i) "Referrer" means a person who does all of the 108 4 following: 108 5 (A) Contracts or otherwise agrees with a retailer, seller, 108 6 or marketplace facilitator to list or advertise for sale a 108 7 product of the retailer, seller, or marketplace facilitator on 108 8 a platform, provided such listing or advertisement identifies 108 9 whether or not the retailer, seller, or marketplace facilitator 108 10 collects sales and use tax. 108 11 (B) Receives a commission, fee, or other consideration 108 12 from the retailer, seller, or marketplace facilitator for the 108 13 listing or advertisement. 108 14 (C) Provides referrals to a retailer, seller, or 108 15 marketplace facilitator, or an affiliate of a retailer, seller, 108 16 or marketplace facilitator. 108 17 (D) Does not collect money or other consideration from the 108 18 customer for the transaction. 108 19 (ii) "Referrer" does not include any of the following: 108 20 (A) A person primarily engaged in the business of printing 108 21 or publishing a newspaper. 108 22 (B) A person who does not provide the retailer's, seller's, 108 23 or marketplace facilitator's shipping terms and who does 108 24 not advertise whether a retailer, seller, or marketplace 108 25 facilitator collects sales or use tax. 108 26 (4) This paragraph only applies to referrals by a referrer 108 27 and shall not preclude the applicability of other provisions 108 28 of this section to a person who is a referrer and is also a 108 29 retailer, a marketplace facilitator, or a marketplace seller. 108 30 f. (1) A retailer that makes Iowa sales through the use of 108 31 a solicitor. For purposes of this paragraph, "solicitor" means 108 32 a person that directly or indirectly solicits business for a 108 33 retailer. 108 34 (2) (a) A retailer is deemed to have a solicitor in 108 35 this state if the retailer enters into an agreement with a 109 1 resident under which the resident, for a commission, fee, or 109 2 other similar consideration, directly or indirectly refers 109 3 potential customers, whether by link on an internet site, 109 4 or otherwise, to the retailer. This determination may be 109 5 rebutted by a showing of proof that the resident with whom the 109 6 retailer has an agreement did not engage in any solicitation 109 7 in this state on behalf of the retailer that would satisfy the 109 8 nexus requirement of the United States Constitution during the 109 9 calendar year in question. 109 10 (b) This subparagraph (2) shall not apply to a retailer that 109 11 has Iowa gross revenue from Iowa sales of ten thousand dollars 109 12 or less for an immediately preceding calendar year or a current 109 13 calendar year. 109 14 (c) For purposes of this subparagraph (2): 109 15 (i) "Iowa gross revenue" means gross revenue from Iowa 109 16 sales to purchasers who were referred to the retailer by all 109 17 solicitors who are residents. 109 18 (ii) "Resident" includes an individual who is a resident 109 19 of this state, as defined in section 422.4, and any business 109 20 that owns any tangible or intangible property with a situs in 109 21 this state, or that has one or more employees performing or 109 22 providing services for the business in this state. 109 23 (d) This paragraph "f" does not apply to chapter 422 and 109 24 does not expand or contract the state's jurisdiction to tax a 109 25 trade or business under chapter 422. 109 26 g. A retailer that owns, controls, rents, licenses, makes 109 27 available, or uses any tangible or intangible property in this 109 28 state or with a situs in this state, to make or otherwise 109 29 facilitate a retail sale. 109 30 h. (1) Any person that enters into a contract or agreement 109 31 with a governmental entity, including but not limited to 109 32 contracts for the provision of financial assistance or 109 33 incentives such as a tax credit, forgivable loan, grant, tax 109 34 rebate, or any other thing of value. For purposes of this 109 35 subparagraph, "governmental entity" means any unit of government 110 1 in the executive, legislative, or judicial branch, or any 110 2 political subdivision of the state, including but not limited 110 3 to a city, county, township, or school district. 110 4 (2) Every bid submitted and each contract or agreement 110 5 executed by a state agency shall contain a certification by 110 6 the bidder or contractor stating that the bidder or contractor 110 7 is registered with the department pursuant to this chapter 110 8 and will collect and remit Iowa sales and use tax due under 110 9 this chapter. In the certification, the bidder or contractor 110 10 shall also acknowledge that the state agency may declare the 110 11 contractor or bid void if the certification is false or becomes 110 12 false. Fraudulent certification, by act or omission, may 110 13 result in the state agency or its representative filing for 110 14 damages for breach of contract. 110 15 i. Any affiliate of any person that is required to collect 110 16 and remit sales and use tax under this chapter, provided the 110 17 affiliate makes retail sales. 110 18 Sec. 204. NEW SECTION. 423.14B Sales and use tax reporting 110 19 requirements ==== penalties. 110 20 1. For purposes of this section, "Iowa sales" and 110 21 "marketplace facilitator" all mean the same as defined in 110 22 section 423.14A. 110 23 2. The department may, in its discretion, adopt rules 110 24 pursuant to chapter 17A establishing and imposing notice and 110 25 reporting requirements related to Iowa sales for retailers, 110 26 including but not limited to marketplace facilitators, 110 27 who do not collect and remit sales and use tax under this 110 28 chapter. The rules may include but are not limited to rules 110 29 requiring retailers, including but not limited to marketplace 110 30 facilitators, to do any of the following: 110 31 a. Notify purchasers at the time of an Iowa sales 110 32 transaction of sales and use tax obligations under this 110 33 chapter. 110 34 b. Provide purchasers with periodic reports of purchases 110 35 that are Iowa sales. 111 1 c. Provide the department with annual reports that include 111 2 but are not limited to information relating to purchases, 111 3 purchasers, and Iowa sales. 111 4 3. a. The department may adopt rules pursuant to chapter 111 5 17A establishing and imposing penalties as described in and 111 6 subject to the dollar limitations of paragraph "b", provided 111 7 that any such penalty shall include a procedure for waiver 111 8 of the penalty upon a showing of reasonable cause for such 111 9 failure. 111 10 b. (1) The department may impose penalties for failure to 111 11 provide a notification to a purchaser in the manner and form 111 12 prescribed by the department by rule. Such penalties shall not 111 13 exceed five dollars for each failure. 111 14 (2) The department may impose penalties for failure to 111 15 provide a purchaser with a periodic report of purchases in the 111 16 manner and form prescribed by the department by rule. Such 111 17 penalties shall not exceed ten dollars for each failure. 111 18 (3) The department may impose penalties for failure to 111 19 provide the department with an annual report in the manner 111 20 and form prescribed by the department. Such penalties shall 111 21 not exceed an amount per annual report equal to ten dollars 111 22 multiplied by the number of purchasers for whom information 111 23 should have been but was not included in the annual report. 111 24 Sec. 205. Section 423.15, unnumbered paragraph 1, Code 111 25 2018, is amended to read as follows: 111 26 All sales ofproductstangible personal property, services, 111 27 or specified digital products, except those sales enumerated 111 28 in section 423.16, shall be sourced according to this section 111 29 by sellers obligated to collect Iowa sales and use tax. The 111 30 sourcing rules described in this section apply to sales of 111 31 tangible personal property, specified digitalgoodsproducts, 111 32 and all services other than telecommunications services. This 111 33 section only applies to determine a seller's obligation to pay 111 34 or collect and remitaIowa sales or use tax with respect to 111 35 the seller's sale of a product. This section does not affect 112 1 the obligation of a purchaser or lessee to remit tax on the use 112 2 of the product to the taxing jurisdictions in which the use 112 3 occurs. A seller's obligation to collect Iowa sales tax or 112 4 Iowa use tax only occurs if the sale is sourced to this state. 112 5WhetherIowa sales tax applies to a sale sourced to Iowashall 112 6 be determined based on the location at which the sale is 112 7 consummated by delivery or, in the case of a service, where the 112 8 first use of the service occursmade by a seller subject to 112 9 section 423.1, subsection 48, or section 423.14A. 112 10 Sec. 206. Section 423.15, subsection 1, paragraph e, Code 112 11 2018, is amended to read as follows: 112 12 e. When paragraphs "a", "b", "c", and "d" do not apply, 112 13 including the circumstance where the seller is without 112 14 sufficient information to apply the previous rules, then the 112 15 location will be determined by the address from which tangible 112 16 personal property was shipped, from which the specified digital 112 17goodproduct or the computer software delivered electronically 112 18 was first available for transmission by the seller, or from 112 19 which the service was provided disregarding for these purposes 112 20 any location that merely provided the digital transfer of the 112 21 product sold. 112 22 Sec. 207. Section 423.22, Code 2018, is amended to read as 112 23 follows: 112 24 423.22 Taxation in another state. 112 25 If any person who causes tangible personal property or 112 26 specified digital products to be brought into this state or 112 27 who uses in this state services enumerated in section 423.2 112 28 has already paid a tax in another state in respect to the sale 112 29 or use of the property or the performance of the service, or 112 30 an occupation tax in respect to the property or service, in 112 31 an amount less than the tax imposed by subchapter II or III, 112 32 the provisions of those subchapters shall apply, but at a rate 112 33 measured by the difference only between the rate fixed by 112 34 subchapter II or III and the rate by which the previous tax on 112 35 the sale or use, or the occupation tax, was computed. If the 113 1 tax imposed and paid in the other state is equal to or more than 113 2 the tax imposed by those subchapters, then a tax is not due in 113 3 this state on the personal property or service. 113 4 Sec. 208. Section 423.29, subsection 1, Code 2018, is 113 5 amended to read as follows: 113 6 1. Every seller who is a retailer and who is making taxable 113 7 sales of tangible personal property or specified digital 113 8 products in Iowa shall, at the time ofselling the property 113 9making the sale, collect the sales tax. Every seller who 113 10 is a retailermaintaining a place of business in this state 113 11that is not otherwise required to collect sales tax under the 113 12 provisions of this chapter and who is selling tangible personal 113 13 property or specified digital products for use in Iowa shall, 113 14 at the time of making the sale, whether within or without the 113 15 state, collect the use tax. Sellers required to collect sales 113 16 or use tax shall give to any purchaser a receipt for the tax 113 17 collected in the manner and form prescribed by the director. 113 18 Sec. 209. Section 423.30, subsection 1, Code 2018, is 113 19 amended to read as follows: 113 20 1. The director may, upon application, authorize the 113 21 collection of the use tax by any seller who is a retailer not 113 22 maintaining a place of business within this state and not 113 23 registered under the agreement, who, to the satisfaction of 113 24 the director, furnishes adequate security to ensure collection 113 25 and payment of the tax. Such sellers shall be issued, without 113 26 charge, permits to collect tax subject to any regulations 113 27 which the director shall prescribe. When so authorized, it 113 28 shall be the duty of foreign sellers to collect the tax upon 113 29 all tangible personal property and specified digital products 113 30 sold, to the retailer's knowledge, for use within this state, 113 31 in the same manner and subject to the same requirements as a 113 32 retailer maintaining a place of business within this state. 113 33 The authority and permit may be canceled when, at any time, the 113 34 director considers the security inadequate, or that tax can 113 35 more effectively be collected from the person using property 114 1 in this state. 114 2 Sec. 210. Section 423.31, subsection 1, Code 2018, is 114 3 amended to read as follows: 114 4 1. Each person subject to this section and section 423.36 114 5 and in accordance with the provisions of this section and 114 6 section 423.36 shall, on or before the last day of the month 114 7 following the close of each calendar quarter during which 114 8 such person is or has become or ceased being subject to the 114 9 provisions of this section and section 423.36, make, sign, and 114 10 file a return for the calendar quarter in the form as may be 114 11 required. Returns shall show information relating to sales 114 12 prices includinggoods, wares,tangible personal property, 114 13 specified digital products, and services converted to the 114 14 use of such person, the amounts of sales prices excluded and 114 15 exempt from the tax, the amounts of sales prices subject to 114 16 tax, a calculation of tax due, and any other information for 114 17 the period covered by the return as may be required. Returns 114 18 shall be signed by the retailer or the retailer's authorized 114 19 agent and must be certified by the retailer to be correct in 114 20 accordance with forms and rules prescribed by the director. 114 21 Sec. 211. Section 423.31, subsection 5, paragraph a, Code 114 22 2018, is amended to read as follows: 114 23 a. Upon making application and receiving approval from 114 24 the director, aparent corporationperson and itsaffiliated 114 25 corporationsaffiliates that make retail sales of tangible 114 26 personal property, specified digital products, or taxable 114 27 enumerated services may make deposits and file a consolidated 114 28 sales tax return for the affiliated group, pursuant to rules 114 29 adopted by the director. Aparent corporationperson and each 114 30 affiliatecorporationthat files a consolidated return are 114 31 jointly and severally liable for all tax, penalty, and interest 114 32 found due for the tax period for which a consolidated return is 114 33 filed or required to be filed. 114 34 Sec. 212. Section 423.32, subsection 1, paragraph b, Code 114 35 2018, is amended to read as follows: 115 1 b. The deposit form is due on or before the twentieth day of 115 2 the month following the month of collection, except a deposit 115 3 is not required for the third month of the calendar quarter, 115 4 and the total quarterly amount, less the amounts deposited for 115 5 the first two months of the quarter, is due with the quarterly 115 6 report on the last day of the month following the month of 115 7 collection. At that time, the retailer shall file with the 115 8 department a return for the preceding quarterly period in the 115 9 form prescribed by the director showing the purchase price of 115 10 the tangible personal property, specified digital products, and 115 11 services sold by the retailer during the preceding quarterly 115 12 period, the use of which is subject to the use tax imposed 115 13 by this chapter, and other information the director deems 115 14 necessary for the proper administration of the use tax. 115 15 Sec. 213. Section 423.33, subsection 3, Code 2018, is 115 16 amended to read as follows: 115 17 3. Event sponsor's liability for sales tax. A person 115 18 sponsoring a flea market or a craft, antique, coin, or stamp 115 19 show or similar event shall obtain from every retailer selling 115 20 tangible personal property, specified digital products, 115 21 or taxable services at the event proof that the retailer 115 22 possesses a valid sales tax permit or secure from the retailer 115 23 a statement, taken in good faith, that tangible personal 115 24 property, specified digital products, or services offered for 115 25 sale are not subject to sales tax. Failure to do so renders 115 26 a sponsor of the event liable for payment of any sales tax, 115 27 interest, and penalty due and owing from any retailer selling 115 28 property or services at the event. Sections 423.31, 423.32, 115 29 423.37, 423.38, 423.39, 423.40, 423.41, and 423.42 apply to the 115 30 sponsors. For purposes of this subsection, a "person sponsoring 115 31 a flea market or a craft, antique, coin, or stamp show or similar 115 32 event" does not include an organization which sponsors an 115 33 event determined to qualify as an event involving casual sales 115 34 pursuant to section 423.3, subsection 39, or the state fair or 115 35 a fair as defined in section 174.1. 116 1 Sec. 214. Section 423.33, Code 2018, is amended by adding 116 2 the following new subsection: 116 3 NEW SUBSECTION. 4. Liability of affiliates. 116 4 a. Notwithstanding any other provision of law to the 116 5 contrary, if any retailer required to collect and remit sales 116 6 and use tax pursuant to sections 423.14, 423.14A, and 423.29, 116 7 or any other provision of this chapter, fails to do so, all 116 8 affiliates that directly, indirectly, or constructively control 116 9 the retailer shall be jointly and severally liable for any tax, 116 10 penalty, and interest under this chapter, regardless of whether 116 11 the affiliate is a retailer. 116 12 b. Pursuant to paragraph "a", the department may elect 116 13 to assess the full amount of any tax, penalty, and interest 116 14 against the retailer, an affiliate of the retailer described 116 15 in paragraph "a", or any combination of the retailer and the 116 16 retailer's affiliates described in paragraph "a". 116 17 c. Notwithstanding any other provision of law to the 116 18 contrary, the department has the discretion to deem an 116 19 affiliate of a retailer an agent or alter ego of that retailer. 116 20 d. Notwithstanding any other provision of law to the 116 21 contrary, the department has the discretion to disregard or 116 22 look through any organizational structure of an enterprise in 116 23 order to assess and collect any tax, penalty, and interest 116 24 against an affiliate that is acting to benefit an affiliate or 116 25 an enterprise of which the affiliate is a part. 116 26 Sec. 215. Section 423.34, Code 2018, is amended to read as 116 27 follows: 116 28 423.34 Liability of user. 116 29 Any person who uses any tangible personal property, 116 30 specified digital products, or services enumerated in section 116 31 423.2 upon which the use tax has not been paid, either to the 116 32 county treasurer or to a retailer or direct to the department 116 33 as required by this subchapter, shall be liable for the payment 116 34 of tax, and shall on or before the last day of the month next 116 35 succeeding each quarterly period pay the use tax upon all 117 1 property or services used by the person during the preceding 117 2 quarterly period in the manner and accompanied by such returns 117 3 as the director shall prescribe. All of the provisions of 117 4 sections 423.32 and 423.33 with reference to the returns and 117 5 payments shall be applicable to the returns and payments 117 6 required by this section. 117 7 Sec. 216. Section 423.36, subsection 1, Code 2018, is 117 8 amended to read as follows: 117 9 1. A person shall not engage in or transact business as a 117 10 retailer making taxable sales of tangible personal property, 117 11 specified digital products, or furnishing services within 117 12 this state or as a retailer making taxable sales of tangible 117 13 personal property, specified digital products, or furnishing 117 14 services for use within this state, unless a permit has been 117 15 issued to the retailer under this section, except as provided 117 16 in subsection 7. Every person desiring to engage in or 117 17 transact business as a retailer shall file with the department 117 18 an application for a permit to collect sales or use tax. Every 117 19 application for a sales or use tax permit shall be made upon 117 20 a form prescribed by the director and shall set forth any 117 21 information the director may require. The application shall 117 22 be signed by an owner of the business if a natural person; in 117 23 the case of a retailer which is an association or partnership, 117 24 by a member or partner; and in the case of a retailer which 117 25 is a corporation, by an executive officer or some person 117 26 specifically authorized by the corporation to sign the 117 27 application, to which shall be attached the written evidence of 117 28 the person's authority. 117 29 Sec. 217. Section 423.36, subsection 2, paragraph a, Code 117 30 2018, is amended to read as follows: 117 31 a. Notwithstanding subsection 1, if any person will make 117 32 taxable sales of tangible personal property, specified digital 117 33 products, or furnish services to any state agency, that person 117 34 shall, prior to the sale, apply for and receive a permit to 117 35 collect sales or use tax pursuant to this section. A state 118 1 agency shall not purchase tangible personal property, specified 118 2 digital products, or services from any person unless that 118 3 person has a valid, unexpired permit issued pursuant to this 118 4 section and is in compliance with all other requirements in 118 5 this chapter imposed upon retailers, including but not limited 118 6 to the requirement to collect and remit sales and use tax and 118 7 file sales and use tax returns. 118 8 Sec. 218. Section 423.36, subsection 7, paragraph b, Code 118 9 2018, is amended to read as follows: 118 10 b. Persons engaged in selling tangible personal property, 118 11 specified digital products, or furnishing services shall not be 118 12 required to obtain or retain a sales tax permit for a place of 118 13 business at which taxable sales of tangible personal property, 118 14 specified digital products, or taxable performance of services 118 15 will not occur. 118 16 Sec. 219. Section 423.36, subsection 9, paragraph a, Code 118 17 2018, is amended to read as follows: 118 18 a. Except as provided in paragraph "b", purchasers, users, 118 19 and consumers of tangible personal property, specified digital 118 20 products, or enumerated services taxed pursuant to subchapter 118 21 II or III of this chapter or chapter 423B may be authorized, 118 22 pursuant to rules adopted by the director, to remit tax owed 118 23 directly to the department instead of the tax being collected 118 24 and paid by the seller. To qualify for a direct pay tax permit, 118 25 the purchaser, user, or consumer must accrue a tax liability 118 26 of more than four thousand dollars in tax under subchapters 118 27 II and III in a semimonthly period and make deposits and file 118 28 returns pursuant to section 423.31. This authority shall not 118 29 be granted or exercised except upon application to the director 118 30 and then only after issuance by the director of a direct pay 118 31 tax permit. 118 32 Sec. 220. Section 423.40, subsection 2, Code 2018, is 118 33 amended to read as follows: 118 34 2. a. Any person who knowingly sells tangible personal 118 35 property, specified digital products, tickets or admissions 119 1 to places of amusement and athletic events, or gas, water, 119 2 electricity, or communication service at retail, or engages in 119 3 the furnishing of services enumerated in section 423.2, in this 119 4 state without procuring a permit to collect tax, as provided 119 5 in section 423.36, or who violates section 423.24 and the 119 6 officers of any corporation who so act are guilty of a serious 119 7 misdemeanor. 119 8 b. A person who knowingly sells tangible personal property, 119 9 specified digital products, tickets or admissions to places of 119 10 amusement and athletic events, or gas, water, electricity, or 119 11 communication service at retail, or engages in the furnishing 119 12 of services enumerated in section 423.2, in this state after 119 13 the person's sales tax permit has been revoked and before it 119 14 has been restored as provided in section 423.36, subsection 6, 119 15 and the officers of any corporation who so act are guilty of an 119 16 aggravated misdemeanor. 119 17 Sec. 221. Section 423.41, Code 2018, is amended to read as 119 18 follows: 119 19 423.41 Books ==== examination. 119 20 Every retailer required or authorized to collect taxes 119 21 imposed by this chapter and every person using in this state 119 22 tangible personal property, specified digital products, 119 23 services, or the product of services shall keep records, 119 24 receipts, invoices, and other pertinent papers as the director 119 25 shall require, in the form that the director shall require, 119 26 for as long as the director has the authority to examine and 119 27 determine tax due. The director or any duly authorized agent 119 28 of the department may examine the books, papers, records, 119 29 and equipment of any personeitherselling tangible personal 119 30 property, specified digital products, or services or liable 119 31 for the tax imposed by this chapter, and investigate the 119 32 character of the business of any person in order to verify 119 33 the accuracy of any return made, or if a return was not made 119 34 by the person, ascertain and determine the amount due under 119 35 this chapter. These books, papers, and records shall be made 120 1 available within this state for examination upon reasonable 120 2 notice when the director deems it advisable and so orders. If 120 3 the taxpayer maintains any records in an electronic format, 120 4 the taxpayer shall comply with reasonable requests by the 120 5 director or the director's authorized agents to provide those 120 6 electronic records in a standard record format. The preceding 120 7 requirements shall likewise apply to users and persons 120 8 furnishing services enumerated in section 423.2. 120 9 Sec. 222. Section 423.45, subsection 4, paragraphs a, b, and 120 10 e, Code 2018, are amended to read as follows: 120 11 a. The department shall issue or the seller may separately 120 12 provide exemption certificates in the form prescribed by the 120 13 director, including certificates not made of paper, which 120 14 conform to the requirements of paragraph "c", to assist 120 15 retailers in properly accounting for nontaxable sales of 120 16 tangible personal property, specified digital products, 120 17 or services to purchasers for a nontaxable purpose. The 120 18 department shall also allow the use of exemption certificates 120 19 for those circumstances in which a sale is taxable but the 120 20 seller is not obligated to collect tax from the buyer. 120 21 b. The sales tax liability for all sales of tangible 120 22 personal property and specified digital products and all sales 120 23 of services is upon the seller and the purchaser unless the 120 24 seller takes from the purchaser a valid exemption certificate 120 25 stating under penalty of perjury that the purchase is for a 120 26 nontaxable purpose and is not a retail sale as defined in 120 27 section 423.1, or the seller is not obligated to collect tax 120 28 due, or unless the seller takes a fuel exemption certificate 120 29 pursuant to subsection 5. If the tangible personal property, 120 30 specified digital products, or services are purchased tax free 120 31 pursuant to a valid exemption certificate and the tangible 120 32 personal property, specified digital products, or services are 120 33 used or disposed of by the purchaser in a nonexempt manner, the 120 34 purchaser is solely liable for the taxes and shall remit the 120 35 taxes directly to the department and sections 423.31, 423.32, 121 1 423.37, 423.38, 423.39, 423.40, 423.41, and 423.42 shall apply 121 2 to the purchaser. 121 3 e. If the circumstances change and as a result the tangible 121 4 personal property, specified digital products, or services are 121 5 used or disposed of by the purchaser in a nonexempt manner or 121 6 the purchaser becomes obligated to pay the tax, the purchaser 121 7 is liable solely for the taxes and shall remit the taxes 121 8 directly to the department in accordance with this subsection. 121 9 Sec. 223. Section 423.57, Code 2018, is amended to read as 121 10 follows: 121 11 423.57 Statutes applicable. 121 12 The director shall administer this subchapter as it relates 121 13 to the taxes imposed in this chapter in the same manner and 121 14 subject to all the provisions of, and all of the powers, 121 15 duties, authority, and restrictions contained in sections 121 16 423.14, 423.14A, 423.14B, 423.15, 423.16, 423.17, 423.19, 121 17 423.20, 423.21, 423.22, 423.23, 423.24, 423.25, 423.29, 423.31, 121 18 423.32, 423.33, 423.34, 423.34A, 423.35, 423.37, 423.38, 121 19 423.39, 423.40, 423.41, and 423.42, section 423.43, subsection 121 20 1, and sections 423.45, 423.46, and 423.47. 121 21 Sec. 224. Section 423.58, Code 2018, is amended to read as 121 22 follows: 121 23 423.58 Collection, permit, and tax return exemption for 121 24 certain out=of=state businesses. 121 25 Notwithstanding sections 423.14, 423.14A, 423.14B, 423.29, 121 26 423.31, 423.32, and 423.36, a person meeting the requirements 121 27 of section 29C.24 is not required to obtain a sales or use tax 121 28 permit, collect and remit sales and use tax, or make and file 121 29 applicable sales or use tax returns, as provided in section 121 30 29C.24, subsection 3, paragraph "a", subparagraph (2). 121 31 Sec. 225. Section 423B.5, subsection 1, Code 2018, is 121 32 amended to read as follows: 121 33 1. A local sales and services tax at the rate of not more 121 34 than one percent may be imposed by a county on the sales price 121 35 taxed by the state under chapter 423, subchapter II. A local 122 1 sales and services tax shall be imposed on the same basis as 122 2 the state sales and services tax or in the case of the use of 122 3 natural gas, natural gas service, electricity, or electric 122 4 service on the same basis as the state use tax and shall not 122 5 be imposed on the sale of any property or on any service not 122 6 taxed by the state, except the tax shall not be imposed on 122 7 the sales price from the sale of motor fuel or special fuel 122 8 as defined in chapter 452A which is consumed for highway use 122 9 or in watercraft or aircraft if the fuel tax is paid on the 122 10 transaction and a refund has not or will not be allowed, on the 122 11 sales price from the sale of equipment by the state department 122 12 of transportation, or on the sales price from the sale or use 122 13 of natural gas, natural gas service, electricity, or electric 122 14 service in a city or county where the sales price from the sale 122 15 of natural gas or electric energy is subject to a franchise 122 16 fee or user fee during the period the franchise or user fee 122 17 is imposed. A local sales and services tax is applicable 122 18 to transactions within those incorporated and unincorporated 122 19 areas of the county where it is imposedand, which transactions 122 20 include but are not limited to sales sourced pursuant to 122 21 section 423.15, 423.17, 423.19, or 423.20, to a location within 122 22 that city or unincorporated area of the county. The tax shall 122 23 be collected by all persons required to collect state sales 122 24 taxes. All cities contiguous to each other shall be treated 122 25 as part of one incorporated area and the tax would be imposed 122 26 in each of those contiguous cities only if the majority of 122 27 those voting in the total area covered by the contiguous cities 122 28 favors its imposition. In the case of a local sales and 122 29 services tax submitted to the registered voters of two or more 122 30 contiguous counties as provided in section 423B.1, subsection 122 31 4, paragraph "c", all cities contiguous to each other shall be 122 32 treated as part of one incorporated area, even if the corporate 122 33 boundaries of one or more of the cities include areas of more 122 34 than one county, and the tax shall be imposed in each of those 122 35 contiguous cities only if a majority of those voting on the tax 123 1 in the total area covered by the contiguous cities favored its 123 2 imposition. 123 3 Sec. 226. Section 423B.6, subsection 2, paragraph b, Code 123 4 2018, is amended to read as follows: 123 5 b. The ordinance of a county board of supervisors imposing 123 6 a local sales and services tax shall adopt by reference the 123 7 applicable provisions of the appropriate sections of chapter 123 8 423. All powers and requirements of the director to administer 123 9 the state sales tax law and use tax law are applicable to the 123 10 administration of a local sales and services tax law and the 123 11 local excise tax, including but not limited to the provisions 123 12 of section 422.25, subsection 4, sections 422.30, 422.67, 123 13 and 422.68, section 422.69, subsection 1, sections 422.70 123 14 through 422.75, section 423.14, subsection 1 and subsection 123 15 2, paragraphs "b" through "e", and sections 423.14A, 423.15, 123 16 423.23, 423.24, 423.25, 423.31 through 423.35, 423.37 through 123 17 423.42, 423.46, and 423.47. Local officials shall confer 123 18 with the director of revenue for assistance in drafting the 123 19 ordinance imposing a local sales and services tax. A certified 123 20 copy of the ordinance shall be filed with the director as soon 123 21 as possible after passage. 123 22 Sec. 227. LEGISLATIVE INTENT. It is the intent of the 123 23 general assembly that the provisions of this division of this 123 24 Act amending the definition of "place of business" in section 123 25 423.1, subsection 37, and "sales" in section 423.1, subsection 123 26 50, enacting definitions of "sold at retail in the state" in 123 27 section 423.1, subsection 55A, and "subscription" in section 123 28 423.1, subsection 57A, and amending the enumerated service of 123 29 pay television in 423.2, subsection 6, paragraph "al", are 123 30 conforming amendments consistent with current state law, and 123 31 that the amendments do not change the application of current 123 32 law but instead reflect current law both before and after the 123 33 enactment of this division of this Act. 123 34 Sec. 228. RELATIONSHIP TO EXISTING LAW FOR TAXATION OF 123 35 SPECIFIED DIGITAL PRODUCTS. The provisions of this division of 124 1 this Act relating to the imposition of tax on the sale or use of 124 2 "specified digital products", as defined in this division of 124 3 this Act, shall not be construed as affecting the taxability 124 4 or nontaxability under other provisions of existing law of 124 5 sales or uses occurring prior to the enactment of this division 124 6 of this Act of products meeting the definition of "specified 124 7 digital products", as defined in this division of this Act. 124 8 Sec. 229. EFFECTIVE DATE. Except as otherwise provided 124 9 in this division of this Act, this division of this Act takes 124 10 effect January 1, 2019. 124 11 Sec. 230. EFFECTIVE DATE. The following, being deemed of 124 12 immediate importance, take effect upon enactment: 124 13 1. The sections of this division of this Act amending 124 14 section 423.1, subsections 37 and 50. 124 15 2. The sections of this division of this Act enacting 124 16 section 423.1, subsections 55A and 57A. 124 17 3. The section of this division of this Act amending section 124 18 423.3, subsection 47, paragraph "d", subparagraph (4). 124 19 4. The provision amending the enumerated service of pay 124 20 television to include but not be limited to streaming video, 124 21 video on=demand, and pay=per=view, in the section of this 124 22 division of this Act amending section 423.2, subsection 6, by 124 23 designating paragraph "al". 124 24 5. The section of this division of this Act entitled 124 25 "legislative intent" which describes the intent of the general 124 26 assembly with respect to certain amendments in this division of 124 27 this Act to the definition of "place of business" in section 124 28 423.1, subsection 37, "sales" in section 423.1, subsection 50, 124 29 the enactment of a definition for "subscription" in section 124 30 423.1, subsection 57A, and "sold at retail" in section 423.1, 124 31 subsection 55A, and amendments to the enumerated service of pay 124 32 television in section 423.2, subsection 6, paragraph "al". 124 33 Sec. 231. EFFECTIVE DATE. The following take effect July 124 34 1, 2018: 124 35 1. The section of this division of this Act amending section 125 1 423.2, subsection 1, paragraph "a", subparagraph (1). 125 2 2. The provisions adding photography and retouching to the 125 3 list of enumerated services subject to the sales tax in the 125 4 section of this division of this Act amending section 423.2, 125 5 subsection 6, by enacting paragraphs "bo" and "bp". 125 6 3. The section of this division of this Act enacting section 125 7 423.2, subsection 8, paragraph "d". 125 8 4. The section of this division of this Act amending section 125 9 423.5, subsection 1, paragraph "a". 125 10 DIVISION XII 125 11 APPROVAL AND IMPOSITION OF LOCAL OPTION SALES AND SERVICES TAX 125 12 Sec. 232. Section 423B.1, subsection 2, paragraph b, 125 13 subparagraph (3), Code 2018, is amended to read as follows: 125 14 (3) The tax once imposed shall continue to be imposed until 125 15 the county=imposed tax isreduced or increased in rate or125 16 repealed, andthenthe city=imposed tax shall also bereduced 125 17 or increased in rate orrepealedin the same amount and be125 18 effective on the same date. 125 19 Sec. 233. Section 423B.1, subsections 3, 4, and 5, Code 125 20 2018, are amended to read as follows: 125 21 3. a.A local option tax shall be imposed only after an 125 22 election at whichIf a majority of those voting on the question 125 23 of imposition of a local option tax favors impositionand, the 125 24 local option tax shallthenbe imposed at the rate specified 125 25 on the ballot until repealed as provided insubsection 6, 125 26 paragraph "a"this chapter. 125 27 b. If the tax is a local vehicle tax imposed by a county, 125 28 it shall apply to all incorporated and unincorporated areas of 125 29 the county. 125 30 c. (1) If the tax is a local sales and services tax 125 31 imposed by a county, it shall only apply to those incorporated 125 32 areas and the unincorporated area of that county in which a 125 33 majority of those voting in the area on the tax favors its 125 34 imposition. For purposes of the local sales and services tax, 125 35 all cities contiguous to each other shall be treated as part of 126 1 one incorporated area and the tax would be imposed in each of 126 2 those contiguous cities only if the majority of those voting 126 3 in the total area covered by the contiguous cities favors its 126 4 imposition.In the case of a local sales and services tax 126 5 submitted to the registered voters of two or more contiguous 126 6 counties as provided in subsection 4, paragraph "c", all cities 126 7 contiguous to each other shall be treated as part of one 126 8 incorporated area, even if the corporate boundaries of one or 126 9 more of the cities include areas of more than one county, and 126 10 the tax shall be imposed in each of those contiguous cities 126 11 only if a majority of those voting on the tax in the total area 126 12 covered by the contiguous cities favored its imposition.For 126 13 purposes of the local sales and services tax, a city is not 126 14 contiguous to another city if the only road access between the 126 15 two cities is through another state. 126 16 (2) The treatment of contiguous cities as one incorporated 126 17 area for the purpose of determining whether a majority of those 126 18 voting favors imposition does not apply to elections on the 126 19 question of imposition of a local sales and services tax in 126 20 all or a portion of a county that is a qualified county if the 126 21 election occurs on or after January 1, 2019. For purposes 126 22 of this chapter, "qualified county" means a county with a 126 23 population in excess of four hundred thousand, a county with 126 24 a population of at least one hundred thirty thousand but not 126 25 more than one hundred thirty=one thousand, or a county with a 126 26 population of at least sixty thousand but not more than seventy 126 27 thousand, according to the 2010 federal decennial census. 126 28 4. a. (1)AThe county board of supervisors shall direct 126 29 within thirty days the county commissioner of elections to 126 30 submit the question of imposition of a local vehicle taxor 126 31 a local sales and services taxto the registered voters of 126 32 the incorporated and unincorporated areas of the county upon 126 33 receipt of a petition,requesting imposition of a local vehicle 126 34 taxor a local sales and services tax, signed by eligible 126 35 electors of the whole county equal in number to five percent of 127 1 the persons in the whole county who voted at the last preceding 127 2 general election.In the case of a local vehicle tax, theThe 127 3 petition requesting imposition shall specify the rate of tax 127 4 and the classes, if any, that are to be exempt. If more than 127 5 one valid petition is received, the earliest received petition 127 6 shall be used. 127 7 (2) The county board of supervisors shall direct within 127 8 thirty days the county commissioner of elections to submit the 127 9 question of imposition of a local sales and services tax to the 127 10 registered voters of the incorporated and unincorporated areas 127 11 of the county upon receipt of a petition requesting imposition 127 12 of a local sales and services tax, signed by eligible electors 127 13 of the whole county equal in number to five percent of the 127 14 persons in the whole county who voted at the last preceding 127 15 general election. If more than one valid petition is received, 127 16 the earliest received petition shall be used. 127 17 (3) In lieu of the petition requirement of subparagraph 127 18 (2), the county board of supervisors for a county that is a 127 19 qualified county shall direct within thirty days the county 127 20 commissioner of elections to submit the question of imposition 127 21 of a local sales and services tax to the registered voters of a 127 22 city, or the portion thereof located in the county, or to the 127 23 registered voters of the unincorporated area of the county upon 127 24 receipt by the board of supervisors of a petition requesting 127 25 imposition of a local sales and services tax, signed by 127 26 eligible electors of the city, or the portion thereof located 127 27 in the county, or eligible electors of the unincorporated area 127 28 of the county, as applicable, equal in number to five percent 127 29 of the persons in the city, or applicable portion thereof, or 127 30 in the unincorporated area of the county who voted at the last 127 31 preceding general election. If more than one valid petition 127 32 is received for a city or for the unincorporated area of the 127 33 county, the earliest received petition shall be used. This 127 34 subparagraph applies to petitions received on or after January 127 35 1, 2019. 128 1 b. (1) The question of the imposition of a local sales 128 2 and services tax shall be submitted to the registered voters 128 3 of the incorporated and unincorporated areas of the county 128 4 upon receipt by the county commissioner of elections of the 128 5 motion or motions, requesting such submission, adopted by 128 6 the governing body or bodies of the city or cities located 128 7 within the county or of the county, for the unincorporated 128 8 areas of the county, representing at least one half of the 128 9 population of the county. Upon adoption of such motion, the 128 10 governing body of the city or county, for the unincorporated 128 11 areas, shall submit the motion to the county commissioner of 128 12 elections and in the case of the governing body of the city 128 13 shall notify the board of supervisors of the adoption of the 128 14 motion. The county commissioner of elections shall keep a file 128 15 on all the motions received and, upon reaching the population 128 16 requirements, shall publish notice of the ballot proposition 128 17 concerning the imposition of the local sales and services tax. 128 18 A motion ceases to be valid at the time of the holding of the 128 19 regular election for the election of members of the governing 128 20 bodywhichthat adopted the motion. The county commissioner of 128 21 elections shall eliminate from the file any motion that ceases 128 22 to be valid. 128 23 (2) In lieu of the motion requirements of subparagraph (1), 128 24 the question of the imposition of a local sales and services 128 25 tax shall be submitted to the registered voters of a city 128 26 located in a county that is a qualified county, or the portion 128 27 thereof located in the county, or to the registered voters 128 28 of the unincorporated area of a county that is a qualified 128 29 county upon receipt by the county commissioner of elections of 128 30 a motion requesting such submission, adopted by the governing 128 31 body of the city or the county for the unincorporated area of 128 32 the county, as applicable. Upon adoption of such motion, the 128 33 governing body of the city or county for the unincorporated 128 34 area shall submit the motion to the county commissioner of 128 35 elections. The county commissioner of elections shall publish 129 1 notice of the ballot proposition concerning the imposition of 129 2 the local sales and services tax. This subparagraph applies to 129 3 motions received by the county commissioner of elections on or 129 4 after January 1, 2019. 129 5 (3) Themannermethods provided under this paragraph for the 129 6 submission of the question of imposition of a local sales and 129 7 services taxis an alternativeare alternatives to themanner 129 8methods provided in paragraph "a". 129 9c. Upon receipt of petitions or motions calling for the 129 10 submission of the question of the imposition of a local sales 129 11 and services tax as described in paragraph "a" or "b", the 129 12 boards of supervisors of two or more contiguous counties in 129 13 which the question is to be submitted may enter into a joint 129 14 agreement providing that for purposes of this chapter, a 129 15 city whose corporate boundaries include areas of more than 129 16 one county shall be treated as part of the county in which a 129 17 majority of the residents of the city reside. In such event, 129 18 the county commissioners of elections from each such county 129 19 shall cooperate in the selection of a single date upon which 129 20 the election shall be held, and for all purposes of this 129 21 chapter relating to the imposition, repeal, change of use, 129 22 or collection of the tax, such a city shall be deemed to be 129 23 part of the county in which a majority of the residents of the 129 24 city reside. A copy of the joint agreement shall be provided 129 25 promptly to the director of revenue.129 26 5. a. The county commissioner of elections shall submit 129 27 the question of imposition of a local option tax at an election 129 28 held on a date specified in section 39.2, subsection 4, 129 29 paragraph "a" or "b", as applicable. The election shall not be 129 30 held sooner than sixty days after publication of notice of the 129 31 ballot proposition. 129 32 b. The ballot proposition shall specify the type and rate of 129 33 tax and, in the case of a vehicle tax, the classes that will be 129 34 exempt and, in the case of a local sales and services tax, the 129 35 date it will be imposed which date shall not be earlier than 130 1 ninety days following the election. The ballot proposition 130 2 shall also specify the approximate amount of local option tax 130 3 revenues that will be used for property tax relief, subject to 130 4 the requirement of section 423B.7, subsection 7, paragraph "b", 130 5 and shall contain a statement as to the specific purpose or 130 6 purposes for which the revenues shall otherwise be expended. 130 7 If the county board of supervisors or governing body of the 130 8 city, as applicable, decides under subsection 6 to specify a 130 9 date on which the local option sales and services tax shall 130 10 automatically be repealed, the date of the repeal shall also be 130 11 specified on the ballot. 130 12 c. The rate of the vehicle tax shall be in increments of one 130 13 dollar per vehicle as set by the petition seeking to impose the 130 14 tax. 130 15 d. The rate of a local sales and services tax shallnotbe 130 16more thanone percentas set by the governing body. 130 17 e. The state commissioner of elections shall establish by 130 18 rule the form for the ballot proposition which form shall be 130 19 uniform throughout the state. 130 20 Sec. 234. Section 423B.1, subsection 6, paragraph a, 130 21 subparagraph (1), Code 2018, is amended by striking the 130 22 subparagraph. 130 23 Sec. 235. Section 423B.1, subsection 6, paragraph a, 130 24 subparagraphs (2) and (3), Code 2018, are amended to read as 130 25 follows: 130 26 (2) (a)TheA local option tax may be repealed or the 130 27 rate of the local vehicle tax increased or decreased or the 130 28 usethereofof a local option tax changed after an election at 130 29 which a majority of those voting on the question of repeal or 130 30 rate or use changefavoredfavors the repeal or rate or use 130 31 change. 130 32 (b) The date on which the repeal, rate, or use change is 130 33 to take effect shall not be earlier than ninety days following 130 34 the election. The election at which the question of repeal 130 35 or rate or use change is offered shall be called and held in 131 1 the same manner and under the same conditions as provided in 131 2 subsections 4 and 5 for the election on the imposition of the 131 3 local option tax. However, in the case of a local sales and 131 4 services tax where the tax has not been imposed countywide, the 131 5 question of repeal or impositionor rateor use change shall 131 6 be voted on only by the registered voters of the areas of the 131 7 county where the tax has been imposed or has not been imposed, 131 8 as appropriate. 131 9 (c)However, theThe governing body of theincorporated 131 10 areacity or unincorporated area where the local sales and 131 11 services tax is imposed may, upon its own motion, request the 131 12 county commissioner of elections to hold an election in the 131 13incorporatedcity, or portion thereof located in the county, 131 14 or unincorporated area, as appropriate, on the question of the 131 15 change in use of local sales and services tax revenues. The 131 16 election may be held at any time but not sooner than sixty days 131 17 following publication of the ballot proposition. If a majority 131 18 of those voting in theincorporatedcity, or portion thereof 131 19 located in the county, or unincorporated area on the change in 131 20 use favors the change, the governing body of that area shall 131 21 change the use to which the revenues shall be used. The ballot 131 22 proposition shall list the present use of the revenues, the 131 23 proposed use, and the date after which revenues received will 131 24 be used for the new use. 131 25 (3) When submitting the question of the imposition of a 131 26 local sales and services tax, thecountyboard of supervisors 131 27 or if the election is initiated under subsection 4, paragraph 131 28 "a", subparagraph (3), or subsection 4, paragraph "b", 131 29 subparagraph (2), the governing board of a city, may direct 131 30 that the question contain a provision for the repeal, without 131 31 election, of the local sales and services tax on a specific 131 32 date, which date shall be as provided in section 423B.6, 131 33 subsection 1. 131 34 Sec. 236. Section 423B.1, subsection 7, paragraph b, Code 131 35 2018, is amended to read as follows: 132 1 b. Costs of local option tax elections shall be apportioned 132 2 among jurisdictions within the county voting on the question 132 3 at the same election on a pro rata basis in proportion to the 132 4 number of registered voters in each taxing jurisdiction voting 132 5 on the question and the total number of registered voters in 132 6 all of the taxing jurisdictions voting on the question. 132 7 Sec. 237. Section 423B.1, subsection 8, Code 2018, is 132 8 amended by striking the subsection. 132 9 Sec. 238. Section 423B.1, subsections 9 and 10, Code 2018, 132 10 are amended to read as follows: 132 11 9. a. In a county that has imposed a local option sales and 132 12 services tax, the board of supervisors shall, notwithstanding 132 13 any contrary provision of this chapter, repeal the local 132 14 option sales and services tax in the unincorporated areas or 132 15 in an incorporated city area in which the tax has been imposed 132 16 upon adoption ofitsthe board's own motion for repeal in the 132 17 unincorporated areas or upon receipt of a motion adopted by 132 18 the governing body of that incorporated city area requesting 132 19 repeal. The board of supervisors shall repeal the local 132 20 option sales and services tax effective on thelater of the 132 21 date of the adoption of the repeal motion or theearliest date 132 22 specified in section 423B.6, subsection 1, following adoption 132 23 of the motion. For purposes of thissubsectionparagraph, 132 24 incorporated city area includes an incorporated city which is 132 25 contiguous to another incorporated city. 132 26 b. If imposition of the local option sales and services tax 132 27 is initiated under subsection 4, paragraph "a", subparagraph 132 28 (3), or subsection 4, paragraph "b", subparagraph (2), 132 29 notwithstanding any contrary provision of this chapter, the 132 30 board of supervisors may repeal the local sales and services 132 31 tax in a city, or portion thereof located in the county, upon 132 32 receipt of a motion adopted by the governing board of the city 132 33 requesting the repeal. The board of supervisors shall repeal 132 34 the local sales and services tax effective on the earliest date 132 35 specified in section 423B.6, subsection 1, following adoption 133 1 of the motion. 133 2 10. Notwithstanding subsection 9 or any other contrary 133 3 provision of this chapter, a local option sales and services 133 4 tax shall not be repealedor reduced in rateif obligations are 133 5 outstanding which are payable as provided in section 423B.9, 133 6 unless funds sufficient to pay the principal, interest, and 133 7 premium, if any, on the outstanding obligations at and prior 133 8 to maturity have been properly set aside and pledged for that 133 9 purpose. 133 10 Sec. 239. Section 423B.5, subsections 1 and 4, Code 2018, 133 11 are amended to read as follows: 133 12 1. A local sales and services taxat the rate of not more 133 13 than one percentmay be imposed by a county on the sales price 133 14 taxed by the state under chapter 423, subchapter II. A local 133 15 sales and services tax shall be imposed on the same basis as 133 16 the state sales and services tax or in the case of the use of 133 17 natural gas, natural gas service, electricity, or electric 133 18 service on the same basis as the state use tax and shall not 133 19 be imposed on the sale of any property or on any service not 133 20 taxed by the state, except the tax shall not be imposed on 133 21 the sales price from the sale of motor fuel or special fuel 133 22 as defined in chapter 452A which is consumed for highway use 133 23 or in watercraft or aircraft if the fuel tax is paid on the 133 24 transaction and a refund has not or will not be allowed, 133 25 on the sales price from the sale of equipment by the state 133 26 department of transportation, or on the sales price from the 133 27 sale or use of natural gas, natural gas service, electricity, 133 28 or electric service in a city or county where the sales price 133 29 from the sale of natural gas or electric energy is subject to 133 30 a franchise fee or user fee during the period the franchise 133 31 or user fee is imposed. A local sales and services tax is 133 32 applicable to transactions within thoseincorporatedcities 133 33 and unincorporated areas of the county where it is imposed and 133 34 shall be collected by all persons required to collect state 133 35 sales taxes.All cities contiguous to each other shall be 134 1 treated as part of one incorporated area and the tax would be 134 2 imposed in each of those contiguous cities only if the majority 134 3 of those voting in the total area covered by the contiguous 134 4 cities favors its imposition. In the case of a local sales and 134 5 services tax submitted to the registered voters of two or more 134 6 contiguous counties as provided in section 423B.1, subsection 134 7 4, paragraph "c", all cities contiguous to each other shall be 134 8 treated as part of one incorporated area, even if the corporate 134 9 boundaries of one or more of the cities include areas of more 134 10 than one county, and the tax shall be imposed in each of those 134 11 contiguous cities only if a majority of those voting on the 134 12 tax in the total area covered by the contiguous cities favored 134 13 its imposition.However, a local sales and services tax is 134 14 not applicable to transactions sourced under chapter 423 to a 134 15 place of business, as defined in section 423.1, of a retailer 134 16 if such place of business is located in part within a city or 134 17 unincorporated area of the county where the tax is not imposed. 134 18 4. If a local sales and services tax is imposed by a county 134 19 pursuant to this chapter, a local excise tax at the same rate 134 20 shall be imposed by the county on the purchase price of natural 134 21 gas, natural gas service, electricity, or electric service 134 22 subject to tax under chapter 423, subchapter III, and not 134 23 exempted from tax by any provision of chapter 423, subchapter 134 24 III. The local excise tax is applicable only to the use of 134 25 natural gas, natural gas service, electricity, or electric 134 26 service within thoseincorporatedcities and unincorporated 134 27 areas of the county where it is imposed and, except as 134 28 otherwise provided in this chapter, shall be collected and 134 29 administered in the same manner as the local sales and services 134 30 tax. For purposes of this chapter, "local sales and services 134 31 tax" shall also include the local excise tax. 134 32 Sec. 240. Section 423B.6, subsection 1, paragraph c, Code 134 33 2018, is amended to read as follows: 134 34 c. The imposition ofor a rate change fora local sales and 134 35 services tax shall not be applied to purchases from a printed 135 1 catalog wherein a purchaser computes the local tax based on 135 2 rates published in the catalog unless a minimum of one hundred 135 3 twenty days' notice of the impositionor rate changehas been 135 4 given to the seller from the catalog and the first day of a 135 5 calendar quarter has occurred on or after the one hundred 135 6 twentieth day. 135 7 Sec. 241. Section 423B.7, subsection 1, Code 2018, is 135 8 amended to read as follows: 135 9 1. a. Except as provided inparagraphparagraphs "b" and 135 10 "c", the director shall credit the local sales and services 135 11 tax receipts and interest and penalties from a county=imposed 135 12 tax to the county's account in the local sales and services 135 13 tax fundand from a city=imposed tax under section 423B.1, 135 14 subsection 2, to the city's account in the local sales 135 15 and services tax fundfor the county in which the tax was 135 16 collected. If the director is unable to determine from which 135 17 county any of the receipts were collected, those receipts shall 135 18 be allocated among the possible counties based on allocation 135 19 rules adopted by the director. 135 20 b.Notwithstanding paragraph "a", theThe director shall 135 21 credit the designated amount of the increase in local sales 135 22 and services tax receipts, as computed in section 423B.10, 135 23 collected in an urban renewal area of an eligible city that has 135 24 adopted an ordinance pursuant to section 423B.10, subsection 135 25 2, into a special city account in the local sales and services 135 26 tax fund. 135 27 c. The director shall credit the local sales and services 135 28 tax receipts and interest and penalties from a city=imposed tax 135 29 under section 423B.1, subsection 2, to the city's account in 135 30 the local sales and services tax fund. 135 31 Sec. 242. Section 423B.7, subsection 7, Code 2018, is 135 32 amended to read as follows: 135 33 7. a.LocalSubject to the requirement of paragraph "b", 135 34 local sales and services tax moneys received by a city or 135 35 county may be expended for any lawful purpose of the city or 136 1 county. 136 2 b. Each city located in whole or in part in a qualified 136 3 county and each qualified county for the unincorporated area 136 4 for which the imposition of the local sales and services tax 136 5 in the city or portion thereof or the unincorporated area, 136 6 as applicable, was approved at election on or after January 136 7 1, 2019, shall use not less than fifty percent of the moneys 136 8 received from the qualified county's account in the local sales 136 9 and services tax fund for property tax relief. 136 10 Sec. 243. Section 423B.8, subsection 1, paragraph a, Code 136 11 2018, is amended to read as follows: 136 12 a. The goods, wares, or merchandise are incorporated into 136 13 an improvement to real estate in fulfillment of a written 136 14 contract fully executed prior to the date of the impositionor 136 15 increase in rateof a local sales and services tax under this 136 16 chapter. The refund shall not apply to equipment transferred 136 17 in fulfillment of a mixed construction contract. 136 18 Sec. 244. IMPLEMENTATION. This division of this Act shall 136 19 not affect the imposition of local option taxes in effect on 136 20 the effective date of this division of this Act and such taxes 136 21 shall continue to be imposed until their repeal pursuant to 136 22 chapter 423B. The law regarding repeal in effect at the time 136 23 of the repeal governs the repeal of the local option taxes. 136 24 Sec. 245. EFFECTIVE DATE. This division of this Act takes 136 25 effect January 1, 2019. 136 26 DIVISION XIII 136 27 HOTEL AND MOTEL EXCISE TAX AND AUTOMOBILE RENTAL EXCISE TAX 136 28 CHANGES 136 29 Sec. 246. Section 423A.2, subsection 1, Code 2018, is 136 30 amended to read as follows: 136 31 1. For the purposes of this chapter, unless the context 136 32 otherwise requires: 136 33 a. "Affiliate" means the same as defined in section 423.1. 136 34a.b. "Department" means the department of revenue. 136 35b. "Lessor" means any person engaged in the business of 137 1 renting lodging to users.137 2 c. "Facilitate" or "facilitation" includes brokering, 137 3 coordinating, or in any way arranging for the rental of lodging 137 4 by users. 137 5 d. "Facilitation fee" means any consideration, by whatever 137 6 name called, that a lodging facilitator or lodging platform 137 7 charges to a user for facilitating the user's rental of 137 8 lodging. "Facilitation fee" does not include any commission 137 9 a lodging provider pays to a lodging facilitator or a lodging 137 10 platform for facilitating the rental of lodging. 137 11c.e. "Lodging" means rooms, apartments, or sleeping 137 12 quarters in a hotel, motel, inn, public lodging house, rooming 137 13 house, cabin, apartment, residential property, or manufactured 137 14 or mobile home which is tangible personal property, or in a 137 15 tourist court, or in any place where sleeping accommodations 137 16 are furnished to transient guests for rent, whether with or 137 17 without meals. Lodging does not include conference, meeting, 137 18 or banquet rooms that are not used for or offered as part of 137 19 sleeping accommodations. 137 20 f. "Lodging facilitator" means a person or any affiliate of 137 21 a person, other than a lodging provider or a lodging platform, 137 22 that facilitates the renting of lodging and collects or 137 23 processes the sales price charged to the user. 137 24 g. "Lodging platform" means a person or any affiliate of 137 25 a person, other than a lodging provider, that facilitates the 137 26 renting of lodging by doing all of the following: 137 27 (1) The person or an affiliate of the person owns, operates, 137 28 or controls a lodging marketplace that allows a lodging 137 29 provider who is not an affiliate of the person to offer or 137 30 list lodging for rent on the marketplace. For purposes of 137 31 this subparagraph, it is immaterial whether or not the lodging 137 32 provider has a tax permit under this chapter or in what manner 137 33 the lodging is classified for property tax or zoning purposes. 137 34 (2) The person or an affiliate of the person collects or 137 35 processes the sales price charged to the user. 138 1 h. "Lodging provider" means any of the following: 138 2 (1) A person or any affiliate of a person that owns, 138 3 operates, or manages lodging and makes the lodging available 138 4 for rent through the person or any affiliate, or through a 138 5 lodging platform or a lodging facilitator. 138 6 (2) A person or any affiliate of a person who possesses or 138 7 acquires a right to or interest in any lodging with an intent 138 8 to rent the lodging to another person through the person or 138 9 any affiliate, or through a lodging platform or a lodging 138 10 facilitator. 138 11d.i. "Person" means the same as the term is defined in 138 12 section 423.1. 138 13e.j. "Renting", "rental", or "rent" means a transfer 138 14 of use, possession, or control of lodging for a fixed or 138 15 indeterminate term for considerationand includes any kind of 138 16 direct or indirect charge for such lodging or its use. 138 17f.k. "Sales price" meanstheall consideration charged 138 18 for the renting and facilitation of renting of lodgingand 138 19 means the same as the term is defined in section 423.1before 138 20 taxes, including but not limited to facilitation fees, cleaning 138 21 fees, linen fees, towel fees, nonrefundable deposits, and any 138 22 other direct or indirect charge made or consideration provided 138 23 in connection with the renting and facilitation of renting of 138 24 lodging. 138 25g.l. "User" means a person to whom lodging is rented. 138 26 Sec. 247. Section 423A.3, Code 2018, is amended to read as 138 27 follows: 138 28 423A.3 State=imposed hotel and motel tax. 138 29 A tax of five percent is imposed upon the sales price for 138 30 the renting of any lodging if therenting occurslodging is 138 31 located in this state. The tax shall be collectedby any 138 32 lessor of lodging from the user of that lodgingand remitted 138 33 as provided in section 423A.5A.The lessor shall add the tax 138 34 to the sales price of the lodging, and the state=imposed tax, 138 35 when collected, shall be stated as a distinct item, separate 139 1 and apart from the sales price of the lodging and the local tax 139 2 imposed, if any, under section 423A.4.139 3 Sec. 248. Section 423A.4, Code 2018, is amended by adding 139 4 the following new subsection: 139 5 NEW SUBSECTION. 5. The locally imposed hotel and motel tax 139 6 shall be collected and remitted as provided in section 423A.5A. 139 7 Sec. 249. Section 423A.5, Code 2018, is amended to read as 139 8 follows: 139 9 423A.5 Exemptions. 139 101.There are exempted from the provisions of this chapter 139 11 and from the computation of any amount of tax imposed by 139 12section 423A.3this chapter all of the following: 139 13a.1. The sales price from the renting of lodging which is 139 14 rented by the same person for a period of more than thirty=one 139 15 consecutive days. 139 16b.2. The sales price from the renting of sleeping rooms 139 17 in dormitoriesand in memorial unionsat all universities and 139 18 colleges located in the state of Iowa. 139 192. There is exempted from the provisions of this chapter and 139 20 from the computation of any amount of tax imposed by section 139 21 423A.4 all of the following:139 22a. The sales price from the renting of lodging or rooms 139 23 exempt under subsection 1.139 24b.3. The sales price of lodging furnished to the guests of 139 25 a religious institution if the property is exempt under section 139 26 427.1, subsection 8, and the purpose of renting is to provide a 139 27 place for a religious retreat or function and not a place for 139 28 transient guests generally. 139 29 Sec. 250. NEW SECTION. 423A.5A Collection and remittance 139 30 of hotel and motel tax. 139 31 1. For purposes of this section: 139 32 a. "Discount room charge" means the amount a lodging 139 33 provider charges a lodging facilitator for lodging, excluding 139 34 any applicable tax. 139 35 b. "Travel package" means lodging bundled with one or more 140 1 separate components such as air transportation, car rental, or 140 2 similar items and charged for a single retail price. 140 3 2. This section shall govern the collection and remittance 140 4 of all taxes imposed under this chapter. 140 5 3. Unless otherwise provided in this section, the 140 6 state=imposed tax under section 423A.3 and any locally 140 7 imposed tax under section 423A.4 shall be collected by the 140 8 lodging provider from the user of that lodging and shall be 140 9 remitted to the department. The lodging provider shall add 140 10 the state=imposed tax to the sales price of the lodging and 140 11 the tax, when collected, shall be stated as a distinct item, 140 12 separate and apart from the sales price of the lodging and from 140 13 the locally imposed tax, if any. The lodging provider shall 140 14 add the locally imposed tax, if any, to the sales price of 140 15 the lodging and the tax, when collected, shall be stated as a 140 16 distinct item, separate and apart from the sales price of the 140 17 lodging and from the state=imposed tax. 140 18 4. If a transaction for the rental of lodging involves a 140 19 lodging facilitator, all of the following shall occur in the 140 20 order prescribed: 140 21 a. The lodging facilitator shall collect the taxes imposed 140 22 under this chapter on any sales price that the user pays to the 140 23 lodging facilitator in the same manner as a lodging provider 140 24 under subsection 3. 140 25 b. (1) Unless otherwise required by rule or order of the 140 26 department, the lodging facilitator shall remit to the lodging 140 27 provider that portion of the taxes collected on the sales price 140 28 that represents the discount room charge. 140 29 (2) No assessment shall be made against a lodging 140 30 facilitator for tax due on a discount room charge if the 140 31 lodging facilitator collected the tax and remitted it to a 140 32 lodging provider that has a valid tax permit required under 140 33 this chapter. This subparagraph shall not apply if the lodging 140 34 facilitator and lodging provider are affiliates, or if the 140 35 department requires the lodging facilitator to remit taxes 141 1 collected on that portion of the sales price that represents 141 2 the discount room charge directly to the department. 141 3 c. The lodging facilitator shall remit any remaining tax it 141 4 collected to the department. 141 5 d. (1) The lodging provider shall collect and remit to the 141 6 department any taxes the lodging facilitator remitted to the 141 7 lodging provider, and shall collect and remit to the department 141 8 any taxes due on any amount of sales price the user paid to the 141 9 lodging provider. 141 10 (2) No assessment shall be made against a lodging provider 141 11 for any tax due on a discount room charge that was not remitted 141 12 to the lodging provider by a lodging facilitator. This 141 13 subparagraph shall not apply if the lodging provider and 141 14 lodging facilitator are affiliates. 141 15 e. Notwithstanding any other provision of this section 141 16 to the contrary, if a lodging facilitator and its affiliates 141 17 facilitate total rentals under this chapter and chapter 141 18 423C that are equal to or less than an aggregate amount of 141 19 sales price and rental price of ten thousand dollars for an 141 20 immediately preceding calendar year or a current calendar year, 141 21 or in ten or fewer separate transactions for an immediately 141 22 preceding calendar year or a current calendar year, the lodging 141 23 facilitator shall not be required to collect tax on the amount 141 24 of sales price that represents the lodging facilitator's 141 25 facilitation fee. 141 26 5. If a transaction for the rental of lodging involves a 141 27 lodging platform, the lodging platform shall collect and remit 141 28 the taxes imposed under this chapter in the same manner as a 141 29 lodging provider under subsection 3. 141 30 6. If a transaction for the rental of lodging is part of a 141 31 travel package, the portion of the total price that represents 141 32 the sales price for the rental of lodging may be determined by 141 33 the person required under this section to collect the taxes 141 34 from the person's books and records that are kept in the 141 35 regular course of business including but not limited to books 142 1 and records kept for non=tax purposes. 142 2 Sec. 251. Section 423A.6, subsection 4, Code 2018, is 142 3 amended to read as follows: 142 4 4. Section 422.25, subsection 4, sections 422.30, 422.67, 142 5 and 422.68, section 422.69, subsection 1, sections 422.70, 142 6 422.71, 422.72, 422.74, and 422.75, section 423.14, subsection 142 7 1, and sections 423.23, 423.24, 423.25, 423.31, 423.33, 142 8 423.35, 423.37 through 423.42, and 423.47, consistent with the 142 9 provisions of this chapter, apply with respect to the taxes 142 10 authorized under this chapter, in the same manner and with the 142 11 same effect as if the state and local hotel and motel taxes 142 12 were retail sales taxes within the meaning of those statutes. 142 13 Notwithstanding this subsection, the director shall provide 142 14 for quarterly filing of returns and for other than quarterly 142 15 filing of returns both as prescribed in section 423.31. The 142 16 director may require all persons who are engaged in the 142 17 business of deriving any sales price subject to tax under this 142 18 chapter to register with the department. All taxes collected 142 19 under this chapter by a retailer, lodging provider, lodging 142 20 facilitator, lodging platform, or anyindividualother person 142 21 are deemed to be held in trust for the state of Iowa and the 142 22 local jurisdictions imposing the taxes. 142 23 Sec. 252. Section 423C.2, Code 2018, is amended to read as 142 24 follows: 142 25 423C.2 Definitions. 142 26 For purposes of this chapter, unless the context otherwise 142 27 requires: 142 28 1. "Affiliate" means the same as defined in section 423.1. 142 291.2. "Automobile" means a motor vehicle subject to 142 30 registration in any state designed primarily for carrying 142 31 nine passengers or less, excluding motorcycles and motorized 142 32 bicycles. 142 33 3. "Automobile provider" means any of the following: 142 34 a. A person or any affiliate of a person that owns or 142 35 controls an automobile and makes the automobile available for 143 1 rent through the person or any affiliate, or through a rental 143 2 platform or rental facilitator. 143 3 b. A person or any affiliate of a person who possesses or 143 4 acquires a right or interest in any automobile with an intent 143 5 to rent the automobile to another person through the person 143 6 or any affiliate, or through a rental platform or a rental 143 7 facilitator. 143 82.4. "Department" means the department of revenue. 143 93. "Lessor" means a person engaged in the business of 143 10 renting automobiles to users. "Lessor" includes a motor vehicle 143 11 dealer licensed pursuant to chapter 322 who rents automobiles 143 12 to users. For this purpose, the objective of making a profit 143 13 is not necessary to make the renting activity a business.143 14 5. "Facilitate" or "facilitation" includes brokering, 143 15 coordinating, or in any way arranging for the rental of 143 16 automobiles by users. 143 17 6. "Facilitation fee" means any consideration, by whatever 143 18 name called, that a rental facilitator or a rental platform 143 19 charges to a user for facilitating the user's rental of an 143 20 automobile. "Facilitation fee" does not include any commission 143 21 an automobile provider pays to a rental facilitator or a rental 143 22 platform for facilitating the rental of an automobile. 143 234.7. "Person" means person as defined in section 423.1. 143 245.8. "Rental", "renting", or "rent" means a transfer 143 25 of the use, control, or possession or right to use, control, 143 26 or possession of an automobile to a user fora valuable143 27 consideration for a period of sixty days or less. 143 28 9. "Rental facilitator" means a person or any affiliate of a 143 29 person, other than an automobile provider or a rental platform, 143 30 that facilitates the renting of an automobile and collects or 143 31 processes the rental price charged to the user. 143 32 10. "Rental platform" means a person or any affiliate of a 143 33 person, other than an automobile provider, that facilitates the 143 34 renting of an automobile by doing all of the following: 143 35 a. The person or an affiliate of the person owns, operates, 144 1 or controls an automobile rental marketplace that allows an 144 2 automobile provider who is not an affiliate of the person to 144 3 offer or list an automobile for rent on the marketplace. For 144 4 purposes of this paragraph, it is immaterial whether or not 144 5 the automobile provider has a tax permit under this chapter or 144 6 chapter 423 or whether the automobile is owned by a natural 144 7 person or by a business entity. 144 8 b. The person or an affiliate of the person collects or 144 9 processes the rental price charged to the user. 144 106.11. "Rental price" meanstheall consideration charged 144 11 for the renting and facilitation of renting of an automobile 144 12valued in money, and means the same as "sales price" as 144 13 defined in section 423.1before taxes, including but not 144 14 limited to facilitation fees, reservation fees, services fees, 144 15 nonrefundable deposits, and any other direct or indirect charge 144 16 made or consideration provided in connection with the renting 144 17 or facilitation of renting of an automobile. 144 187.12. "User" means a person to whomthe possession or 144 19 the right to possession of an automobile is transferred for 144 20 a period of sixty days or less for a valuable consideration 144 21 which is paid by the user or by another personan automobile is 144 22 rented. 144 23 Sec. 253. Section 423C.3, Code 2018, is amended to read as 144 24 follows: 144 25 423C.3 Tax on rental of automobiles ==== collection and 144 26 remittance of tax. 144 27 1. For purposes of this section: 144 28 a. "Discount rental charge" means the amount an automobile 144 29 provider charges to a rental facilitator for the rental of an 144 30 automobile, excluding any applicable tax. 144 31 b. "Travel package" means an automobile rental bundled 144 32 with one or more separate components such as lodging, air 144 33 transportation, or similar items and charged for a single 144 34 retail price. 144 351.2. A tax of five percent is imposed upon the rental 145 1 price of an automobile if the rental transaction is subject to 145 2 the sales and services tax under chapter 423, subchapter II, or 145 3 the use tax under chapter 423, subchapter III. The tax shall 145 4 not be imposed on any rental transaction not taxable under the 145 5 state sales and services tax, as provided in section 423.3, or 145 6 the state use tax, as provided in section 423.6, on automobile 145 7 rental receipts. 145 82.3.The lessorThis subsection shall govern the 145 9 collection and remittance of the tax imposed under subsection 145 10 2. 145 11 a. Unless otherwise provided in this subsection, the 145 12 automobile provider shall collect the tax by adding the tax to 145 13 the rental price of the automobile.145 143.Theand the tax, when collected, shall be stated as a 145 15 distinct item separate and apart from the rental price of the 145 16 automobile and the sales and services tax imposed under chapter 145 17 423, subchapter II, or the use tax imposed under chapter 423, 145 18 subchapter III. 145 19 b. If a transaction for the rental of an automobile involves 145 20 a rental facilitator, all of the following shall occur in the 145 21 order prescribed: 145 22 (1) The rental facilitator shall collect the tax on any 145 23 rental price that the user pays to the rental facilitator in 145 24 the same manner as an automobile provider under paragraph "a". 145 25 (2) (a) Unless otherwise required by rule or order of 145 26 the department, the rental facilitator shall remit to the 145 27 automobile provider that portion of the tax collected on the 145 28 rental price that represents the discount rental charge. 145 29 (b) No assessment shall be made against a rental facilitator 145 30 for tax due on a discount rental charge if the rental 145 31 facilitator collected the tax and remitted it to an automobile 145 32 provider that has a valid tax permit required under this 145 33 chapter or under chapter 423. This subparagraph division shall 145 34 not apply if the rental facilitator and automobile provider 145 35 are affiliates, or if the department requires the rental 146 1 facilitator to remit taxes collected on that portion of the 146 2 sales price that represents the discount rental charge directly 146 3 to the department. 146 4 (3) The rental facilitator shall remit any remaining tax it 146 5 collected to the department. 146 6 (4) (a) The automobile provider shall collect and remit 146 7 to the department any taxes the rental facilitator remitted to 146 8 the automobile provider, and shall collect and remit to the 146 9 department any taxes due on any amount of rental price the user 146 10 paid to the automobile provider. 146 11 (b) No assessment shall be made against an automobile 146 12 provider for any tax due on a discount rental charge that 146 13 was not remitted to the automobile provider by a rental 146 14 facilitator. This subparagraph division shall not apply if the 146 15 automobile provider and the rental facilitator are affiliates. 146 16 (5) Notwithstanding any other provision of this paragraph 146 17 to the contrary, if a rental facilitator and its affiliates 146 18 facilitate total rentals under this chapter and chapter 146 19 423A that are equal to or less than an aggregate amount of 146 20 rental price and sales price of ten thousand dollars for an 146 21 immediately preceding calendar year or a current calendar year, 146 22 or in ten or fewer separate transactions for an immediately 146 23 preceding calendar year or a current calendar year, the 146 24 rental facilitator shall not be required to collect tax on the 146 25 amount of sales price that represents the rental facilitator's 146 26 facilitation fee. 146 27 c. (1) If a transaction for the rental of an automobile 146 28 involves a rental platform, other than a rental platform 146 29 described in subparagraph (2), the rental platform shall 146 30 collect and remit the tax imposed under this chapter in the 146 31 same manner as an automobile provider under paragraph "a". 146 32 (2) A rental platform is not required to collect and remit 146 33 the tax imposed under this chapter in the same manner as an 146 34 automobile provider under paragraph "a" if the rental platform 146 35 meets all of the following requirements: 147 1 (a) The only sales the rental platform and its affiliates 147 2 facilitate that are subject to tax under chapter 423 are sales 147 3 of a transportation service under section 423.2, subsection 6, 147 4 paragraph "bf", or section 423.5, subsection 1, paragraph "e", 147 5 consisting of the rental of vehicles subject to registration 147 6 which are registered for a gross weight of thirteen tons or 147 7 less for a period of sixty days or less. 147 8 (b) The rental platform operates a peer=to=peer automobile 147 9 sharing marketplace. 147 10 (3) For any rental transaction for which the rental platform 147 11 is required to or elects to collect and remit the tax under 147 12 this chapter, the rental platform shall also be liable for the 147 13 collection and remittance of any sales or use tax due on that 147 14 transaction under section 423.2, subsection 6, paragraph "bf", 147 15 or section 423.5, subsection 1, paragraph "e", notwithstanding 147 16 any other provision to the contrary in chapter 423. 147 17 (4) For any rental transaction for which the rental platform 147 18 is not required to collect and remit the tax under this chapter 147 19 as provided under subparagraph (2), the automobile provider 147 20 shall be solely liable for any amount of uncollected or 147 21 unremitted tax under this chapter. 147 22 Sec. 254. LEGISLATIVE INTENT. It is the intent of the 147 23 general assembly that the provision of this division of this 147 24 Act amending the definition of "lodging" in section 423A.2, 147 25 subsection 1, is a conforming amendment consistent with 147 26 current state law, and that the amendment does not change the 147 27 application of current law but instead reflects current law 147 28 both before and after the enactment of this division of this 147 29 Act. 147 30 Sec. 255. EFFECTIVE DATE. Except as otherwise provided 147 31 in this division of this Act, this division of this Act takes 147 32 effect January 1, 2019. 147 33 Sec. 256. EFFECTIVE DATE. The following, being deemed of 147 34 immediate importance, take effect upon enactment: 147 35 1. The provision amending the definition of "lodging" in the 148 1 section of this division of this Act amending section 423A.2, 148 2 subsection 1. 148 3 2. The section of this division of this Act entitled 148 4 "legislative intent" which describes the intent of the general 148 5 assembly with respect to the amendment in this division of 148 6 this Act to the definition of "lodging" in section 423A.2, 148 7 subsection 1. SF 2417 (3) 87 mm/jh
