Bill Text: IA HF288 | 2017-2018 | 87th General Assembly | Introduced
Bill Title: A bill for an act relating to water service taxation by exempting from the state sales tax the sales price from the sale or furnishing of a water service by a water utility and creating related state and local water service excise taxes and providing for transfer and distribution of the water service excise taxes.
Spectrum: Partisan Bill (Republican 1-0)
Status: (Introduced - Dead) 2017-02-09 - Introduced, referred to Ways and Means. H.J. 260. [HF288 Detail]
Download: Iowa-2017-HF288-Introduced.html
House File 288 - Introduced HOUSE FILE BY NUNN A BILL FOR 1 An Act relating to water service taxation by exempting from the 2 state sales tax the sales price from the sale or furnishing 3 of a water service by a water utility and creating related 4 state and local water service excise taxes and providing for 5 transfer and distribution of the water service excise taxes. 6 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: TLSB 2077YH (3) 87 mm/sc/rj PAG LIN 1 1 Section 1. Section 423.3, Code 2017, 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, 2017, but before July 1, 2018, 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, 2017, but before July 1, 2018, 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, 2018, but before July 1, 2019, 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, 2018, but before July 1, 2019, 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, 2019, but before July 1, 2020, 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, 2019, but before July 1, 2020, 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, 2020, but before July 1, 2021, 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, 2020, but before July 1, 2021, 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, 2021, but before July 1, 2022, 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, 2021, but before July 1, 2022, 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, 2022, but before July 1, 2023, 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, 2022, but before July 1, 2023, 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, 2023, the rate of tax is zero 2 31 percent. 2 32 3. This section is repealed January 1, 2024. 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 2017=2018, 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, 2023. 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 2017, 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, 2017, 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, 2017, 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. LSB 2077YH (3) 87 mm/sc/rj