House File 2352 - Introduced
HOUSE FILE
BY NUNN
A BILL FOR
1 An Act exempting from the state sales tax the sales price from
2 the sale or furnishing of a water service by a water utility
3 and creating related state and local water service excise
4 taxes.
5 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
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1 1 Section 1. Section 423.3, Code 2016, is amended by adding
1 2 the following new subsection:
1 3 NEW SUBSECTION. 103. a. The sales price from the sale or
1 4 furnishing by a water utility of a water service in the state
1 5 to consumers or users.
1 6 b. For purposes of this subsection:
1 7 (1) "Water service" means the delivery of water by piped
1 8 distribution system.
1 9 (2) "Water utility" means a public utility as defined in
1 10 section 476.1 that furnishes water by piped distribution system
1 11 to the public for compensation.
1 12 Sec. 2. NEW SECTION. 423G.1 Short title.
1 13 This chapter may be cited as the "Water Service Tax Act".
1 14 Sec. 3. NEW SECTION. 423G.2 Definitions.
1 15 1. All words and phrases used in this chapter and defined in
1 16 section 423.1 have the same meaning given them by section 423.1
1 17 for purposes of this chapter.
1 18 2. As used in this chapter, "water service" and "water
1 19 utility" mean the same as defined in section 423.3, subsection
1 20 103.
1 21 Sec. 4. NEW SECTION. 423G.3 State=imposed water service
1 22 tax.
1 23 1. A tax at the rate specified in subsection 2 is imposed on
1 24 the sales price from the sale or furnishing by a water utility
1 25 of a water service in the state to consumers or users.
1 26 2. a. If the date of the utility billing or meter reading
1 27 cycle of the customer for the sale or furnishing of water is on
1 28 or after July 1, 2016, but before July 1, 2017, or if the sale
1 29 or furnishing of the water and the delivery of the water occurs
1 30 on or after July 1, 2016, but before July 1, 2017, the rate of
1 31 tax is six percent.
1 32 b. If the date of the utility billing or meter reading cycle
1 33 of the customer for the sale or furnishing of water is on or
1 34 after July 1, 2017, but before July 1, 2018, or if the sale or
1 35 furnishing of the water and the delivery of the water occurs
2 1 on or after July 1, 2017, but before July 1, 2018, the rate of
2 2 tax is five percent.
2 3 c. If the date of the utility billing or meter reading cycle
2 4 of the customer for the sale or furnishing of water is on or
2 5 after July 1, 2018, but before July 1, 2019, or if the sale or
2 6 furnishing of the water and the delivery of the water occurs
2 7 on or after July 1, 2018, but before July 1, 2019, the rate of
2 8 tax is four percent.
2 9 d. If the date of the utility billing or meter reading cycle
2 10 of the customer for the sale or furnishing of water is on or
2 11 after July 1, 2019, but before July 1, 2020, or if the sale or
2 12 furnishing of the water and the delivery of the water occurs on
2 13 or after July 1, 2019, but before July 1, 2020, the rate of tax
2 14 is three percent.
2 15 e. If the date of the utility billing or meter reading cycle
2 16 of the customer for the sale or furnishing of water is on or
2 17 after July 1, 2020, but before July 1, 2021, or if the sale or
2 18 furnishing of the water and the delivery of the water occurs
2 19 on or after July 1, 2020, but before July 1, 2021, the rate of
2 20 tax is two percent.
2 21 f. If the date of the utility billing or meter reading cycle
2 22 of the customer for the sale or furnishing of water is on or
2 23 after July 1, 2021, but before July 1, 2022, or if the sale or
2 24 furnishing of the water and the delivery of the water occurs
2 25 on or after July 1, 2021, but before July 1, 2022, the rate of
2 26 tax is one percent.
2 27 g. If the date of the utility billing or meter reading cycle
2 28 of the customer for the sale or furnishing of water, or the
2 29 date of the sale or furnishing of the water and the delivery of
2 30 the water, is on or after July 1, 2022, the rate of tax is zero
2 31 percent.
2 32 3. This section is repealed January 1, 2023.
2 33 Sec. 5. NEW SECTION. 423G.4 Locally imposed water service
2 34 tax.
2 35 1. a. A county that is not subject to subsection 2 may
3 1 impose a local water service tax at a rate of not more than one
3 2 percent of the sales price from the sale or furnishing by a
3 3 water utility of a water service in the state to consumers or
3 4 users. The tax shall be imposed, collected, and administered
3 5 in the same manner as the local sales and services tax in
3 6 chapter 423B and sections 423B.1 and 423B.5 through 423B.10,
3 7 consistent with the provisions of this chapter, shall apply
3 8 with respect to the tax authorized under this subsection, in
3 9 the same manner and with the same effect as if the local water
3 10 service tax was a local sales and services tax within the
3 11 meaning of chapter 423B.
3 12 b. The question of the imposition of a local water service
3 13 tax may be submitted at the same election as the local option
3 14 taxes authorized under chapter 423B and shall be stated on the
3 15 ballot as questions to be voted on separately.
3 16 c. This subsection shall not be construed to require a
3 17 county to impose a local water service tax if the question
3 18 of imposing a local sales and services tax is approved at
3 19 election.
3 20 2. a. If a city or county has in effect a local sales
3 21 and services tax under chapter 423B on the effective date of
3 22 this Act, that city or county shall impose on and after the
3 23 effective date of this Act a local water service tax at the
3 24 same rate as the local sales and services tax on the sales
3 25 price from the sale or furnishing by a water utility of a water
3 26 service in the state to consumers or users. The local water
3 27 service tax shall be imposed, collected, and administered in
3 28 the same manner and with the same effect as the city's or
3 29 county's local sales and services tax under chapter 423B and
3 30 sections 423B.1 and 423B.5 through 423B.10, consistent with the
3 31 provisions of this chapter, shall apply with respect to the tax
3 32 imposed under this subsection, in the same manner and with the
3 33 same effect as if the local water service tax was a local sales
3 34 and services tax within the meaning of chapter 423B.
3 35 b. The city or county shall within sixty days of the
4 1 effective date of this Act amend its local sales and services
4 2 tax ordinance to reflect the imposition of the local water
4 3 service tax under this subsection.
4 4 c. The city or county shall continue to collect the local
4 5 water service tax imposed under this subsection until such time
4 6 as the local sales and services tax in effect on the effective
4 7 date of this Act is repealed by the city or county.
4 8 Sec. 6. NEW SECTION. 423G.5 Exemptions.
4 9 The sales price from transactions exempt from state sales
4 10 tax under section 423.3, except section 423.3, subsection 103,
4 11 is also exempt from the tax imposed by this chapter.
4 12 Sec. 7. NEW SECTION. 423G.6 Administration by director.
4 13 1. The director of revenue shall administer the state and
4 14 local water service tax as nearly as possible in conjunction
4 15 with the administration of the state sales and use tax law,
4 16 except that portion of the law that implements the streamlined
4 17 sales and use tax agreement. The director shall provide
4 18 appropriate forms, or provide on the regular state tax forms,
4 19 for reporting state and local water service tax liability.
4 20 2. The director may require all persons who are engaged
4 21 in the business of deriving any sales price or purchase
4 22 price subject to tax under this chapter to register with
4 23 the department. The director may also require a tax permit
4 24 applicable only to this chapter for any retailer not
4 25 collecting, or any user not paying, taxes under chapter 423.
4 26 3. Section 422.25, subsection 4, sections 422.30, 422.67,
4 27 and 422.68, section 422.69, subsection 1, sections 422.70,
4 28 422.71, 422.72, 422.74, and 422.75, section 423.14, subsection
4 29 1, and sections 423.23, 423.24, 423.25, 423.31 through
4 30 423.35, 423.37 through 423.42, and 423.47, consistent with
4 31 the provisions of this chapter, shall apply with respect to
4 32 the taxes authorized under this chapter, in the same manner
4 33 and with the same effect as if the excise taxes on the sale
4 34 or furnishing of a water service were retail sales taxes
4 35 within the meaning of those statutes. Notwithstanding this
5 1 subsection, the director shall provide for quarterly filing of
5 2 returns and for other than quarterly filing of returns both as
5 3 prescribed in section 423.31. All taxes collected under this
5 4 chapter by a retailer or any user are deemed to be held in trust
5 5 for the state of Iowa.
5 6 Sec. 8. NEW SECTION. 423G.7 Deposit of revenues.
5 7 1. All moneys received and all refunds shall be deposited in
5 8 or withdrawn from the general fund of the state.
5 9 2. The director, in consultation with local officials,
5 10 shall collect and account for a local water service tax and
5 11 shall credit all revenues in the same manner as provided in
5 12 section 423B.7. Local authorities shall not require any tax
5 13 permit not required by the director of revenue.
5 14 3. Subsequent to the deposit in the general fund of the
5 15 state, the department shall do the following in the order
5 16 prescribed:
5 17 a. Transfer the revenues collected under section 423G.3 in
5 18 the manner prescribed in section 423B.7.
5 19 b. Transfer one=sixth of the remaining revenues to the
5 20 secure an advanced vision for education fund created in section
5 21 423F.2.
5 22 EXPLANATION
5 23 The inclusion of this explanation does not constitute agreement with
5 24 the explanation's substance by the members of the general assembly.
5 25 This bill relates to the taxation of the sale of a water
5 26 service by water utilities.
5 27 The bill exempts from the state sales tax the sales price
5 28 from the sale or furnishing by a water utility of a water
5 29 service in the state to consumers or users. "Water service"
5 30 and "water utility" are defined in the bill.
5 31 By operation of Code section 423.6, an item exempt from the
5 32 imposition of the sales tax is also exempt from the use tax
5 33 imposed in Code section 423.5.
5 34 The bill creates a state excise tax on the sales price from
5 35 the sale or furnishing by a water utility of a water service in
6 1 the state to consumers or users. The rate of the excise tax
6 2 begins at 6 percent for fiscal year 2016=2017, which is the
6 3 same rate as the state sales tax, and is reduced one percentage
6 4 point each fiscal year for the next five fiscal years until it
6 5 is completely phased out beginning July 1, 2022.
6 6 The bill requires that one=sixth of the state water service
6 7 tax revenues collected each year be transferred to the secure
6 8 an advanced vision for education fund created in Code section
6 9 423F.2.
6 10 The bill also creates a locally imposed water service tax
6 11 of up to 1 percent that may, at the option of a county that
6 12 is not imposing a local sales and services tax on July 1,
6 13 2016, be imposed, collected, and administered by the county in
6 14 the same manner as the local sales and services tax in Code
6 15 chapter 423B if approved at election. The bill incorporates
6 16 by reference many of the provisions of Code chapter 423B. The
6 17 bill allows an election for the imposition of a local water
6 18 service tax to occur at the same election as for a local option
6 19 tax authorized under Code chapter 423B, but the ballot shall
6 20 state the questions so as to be voted separately.
6 21 The bill provides that a city or county that has a local
6 22 sales and services tax in effect on July 1, 2016, is required
6 23 to impose a local water service tax at the same rate and in the
6 24 same manner as the city's or county's local sales and services
6 25 tax. The city or county is required to amend its local sales
6 26 and services tax ordinance within 60 days of the effective
6 27 date of the bill to reflect the imposition of the local water
6 28 service tax. The city or county shall continue to collect the
6 29 required local water service tax until the city's or county's
6 30 sales and services tax in effect on July 1, 2016, is repealed.
6 31 The director of revenue is required to administer the
6 32 state and local water service tax as nearly as possible
6 33 in conjunction with the administration of the state sales
6 34 and use tax law, and to that end the bill incorporates by
6 35 reference numerous Code sections that relate to general tax
7 1 administration and the sales and use tax laws.
7 2 Revenues collected from the local option water service tax
7 3 are credited to local governments in the same manner as local
7 4 option taxes under Code chapter 423B.
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