Bill Text: IA HF460 | 2017-2018 | 87th General Assembly | Introduced
Bill Title: A bill for an act concerning retailers who do not collect and remit Iowa sales and use tax by creating certain reporting requirements and modifying the powers and duties of the director of revenue.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Introduced - Dead) 2017-03-07 - Subcommittee: Nunn, Bergan and Jacoby. H.J. 543. [HF460 Detail]
Download: Iowa-2017-HF460-Introduced.html
House File 460 - Introduced HOUSE FILE BY JACOBY A BILL FOR 1 An Act concerning retailers who do not collect and remit Iowa 2 sales and use tax by creating certain reporting requirements 3 and modifying the powers and duties of the director of 4 revenue. 5 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: TLSB 1592HH (4) 87 mm/sc PAG LIN 1 1 Section 1. Section 421.17, Code 2017, is amended by adding 1 2 the following new subsection: 1 3 NEW SUBSECTION. 35. To subpoena from retailers subject to 1 4 section 421.62 any and all records and documents necessary to 1 5 assist the department in administering that section. If any 1 6 retailer subject to section 421.62 refuses to comply with such 1 7 subpoena, the director may make application to the district 1 8 court or judicial magistrate in any county to enforce such 1 9 subpoena by any appropriate order, including but not limited 1 10 to attachment. 1 11 Sec. 2. NEW SECTION. 421.62 Certain retailer reporting 1 12 requirements ==== penalties. 1 13 1. Definitions. For purposes of this section, unless the 1 14 context otherwise requires: 1 15 a. "Department" means the department of revenue. 1 16 b. "Iowa purchaser" means a person who purchases tangible 1 17 personal property and requests that the tangible personal 1 18 property be delivered to a location within Iowa. 1 19 c. "Iowa sale" means a sale of tangible personal property 1 20 which tangible personal property is delivered to a location 1 21 within Iowa. "Iowa sale" does not include the sale of any 1 22 tangible personal property to the extent that disclosure of the 1 23 purchaser of such tangible personal property would violate 18 1 24 U.S.C. {2710. 1 25 d. "Purchase" and "purchaser" mean the same as defined in 1 26 section 423.1. 1 27 e. "Retailer" means the same as defined in section 423.1, 1 28 except that, with respect to any calendar year, it does not 1 29 include any of the following: 1 30 (1) A retailer whose total Iowa sales to Iowa purchasers 1 31 during the calendar year are delivered to the purchaser 1 32 digitally, electronically, or utilizing cable, or by radio 1 33 waves, microwaves, satellites, or fiber optics. 1 34 (2) A retailer whose total gross Iowa sales to Iowa 1 35 purchasers during the calendar year are less than one hundred 2 1 thousand dollars. For purposes of this subparagraph, the total 2 2 gross Iowa sales of a retailer shall include Iowa sales made by 2 3 the retailer and Iowa sales made by any entity controlled by or 2 4 under common control with the retailer. 2 5 f. "Sale" and "tangible personal property" mean the same as 2 6 defined in section 423.1. 2 7 2. Required notifications and statements. Each retailer 2 8 who does not collect and remit sales or use tax under chapter 2 9 423 on Iowa sales to Iowa purchasers shall provide all of the 2 10 following notifications and statements: 2 11 a. A notification for each Iowa sale to the Iowa purchaser 2 12 containing sufficient information to alert the Iowa purchaser 2 13 that Iowa sales or use tax is due on certain purchases 2 14 made from the retailer and that the state of Iowa requires 2 15 purchasers to pay sales or use tax and file sales or use tax 2 16 returns, and including any other information required by the 2 17 department by rule. The notification shall be made in the 2 18 manner, form, and time period prescribed by the department by 2 19 rule. 2 20 b. (1) An annual notification to each Iowa purchaser to 2 21 whom Iowa sales totaling five hundred dollars or more are made 2 22 during the calendar year, in the manner and form prescribed by 2 23 the department by rule. 2 24 (2) The annual notification shall include all of the 2 25 following: 2 26 (a) The total amount of Iowa sales made by the retailer to 2 27 the Iowa purchaser during the calendar year. 2 28 (b) The date, amount, and description of each Iowa sale, if 2 29 available. 2 30 (c) Whether each Iowa sale is taxable or exempt from 2 31 taxation under chapter 423, if known by the retailer. 2 32 (d) Sufficient information to alert the Iowa purchaser that 2 33 Iowa sales or use tax is due on certain purchases made from the 2 34 retailer and that the state of Iowa requires purchasers to pay 2 35 sales or use tax and file sales or use tax returns. 3 1 (e) Any other information required by the department by 3 2 rule. 3 3 (3) The annual notification shall meet all of the following 3 4 requirements: 3 5 (a) It shall be sent separately by first class mail by 3 6 January 31 following the calendar year which is the subject of 3 7 the notification. 3 8 (b) It shall include the words "Important Tax Document 3 9 Enclosed" on the exterior of the mailing. 3 10 (c) It shall include the name of the retailer. 3 11 c. (1) An annual statement to the department in the manner 3 12 and form prescribed by the department showing the total amounts 3 13 paid to the retailer by each Iowa purchaser for Iowa sales 3 14 during the calendar year, and any other information required by 3 15 the department by rule. The annual statement shall be filed 3 16 by March 1 following the calendar year which is the subject of 3 17 the statement. 3 18 (2) The department may require any retailer whose total 3 19 gross sales to Iowa purchasers during the calendar year exceeds 3 20 one hundred thousand dollars to provide the annual statement 3 21 required in this paragraph in an electronic format. 3 22 (3) A retailer who is not required to send any annual 3 23 notices under paragraph "b" shall be exempt from the annual 3 24 statement requirement in this paragraph "c". 3 25 3. Penalties. 3 26 a. Failure to timely provide a notice required in subsection 3 27 2, paragraph "a", shall subject a retailer to a penalty of 3 28 five dollars for each such failure, subject to the following 3 29 limitations: 3 30 (1) The total penalty imposed upon a retailer under this 3 31 paragraph for the first calendar year for which the retailer 3 32 is obligated to provide the notices shall not exceed fifty 3 33 thousand dollars. 3 34 (2) If a retailer has no actual knowledge of the notice 3 35 requirement before being issued a demand from the department, 4 1 and begins providing the required notices within sixty days of 4 2 being issued such demand, the total penalty imposed under this 4 3 paragraph for the year in which the demand was issued, and for 4 4 each previous year, shall not exceed five thousand dollars per 4 5 year. The burden of proving that the retailer had no actual 4 6 knowledge of the notice requirement is upon the retailer. 4 7 b. Failure to timely provide an annual notification required 4 8 in subsection 2, paragraph "b", shall subject the retailer to a 4 9 penalty of ten dollars for each such failure, subject to the 4 10 following limitations: 4 11 (1) If for any calendar year a retailer provides all the 4 12 required annual notifications within thirty days of the due 4 13 date, the total penalty imposed under this paragraph for that 4 14 calendar year shall not exceed one thousand dollars. 4 15 (2) If a retailer has no actual knowledge of the annual 4 16 notification requirement before being issued a demand from the 4 17 department, and provides the required annual notifications 4 18 within sixty days of being issued such demand, the total 4 19 penalty imposed under this paragraph for the year in which the 4 20 demand was issued, and for each previous year, shall not exceed 4 21 ten thousand dollars per year. The burden of proving that the 4 22 retailer had no actual knowledge of the notice requirement is 4 23 upon the retailer. 4 24 (3) The total penalty imposed upon a retailer under this 4 25 paragraph for the first calendar year for which the retailer is 4 26 obligated to provide the annual notification under subsection 4 27 2, paragraph "b", shall not exceed fifty thousand dollars. 4 28 c. Failure to timely provide an annual statement required 4 29 in subsection 2, paragraph "c", shall subject the retailer to 4 30 a penalty equal to the product of ten dollars multiplied by 4 31 the number of Iowa purchasers for which the retailer failed 4 32 to provide the required information in its annual statement, 4 33 subject to the following limitations: 4 34 (1) If for any calendar year a retailer provides a complete 4 35 annual statement within thirty days of the due date, the total 5 1 penalty imposed under this paragraph for that calendar year 5 2 shall not exceed one thousand dollars. 5 3 (2) If a retailer has no actual knowledge of the annual 5 4 statement requirement before being issued a demand from the 5 5 department, and provides the required annual statements within 5 6 sixty days of being issued such demand, the total penalty 5 7 imposed under this paragraph for the year in which the demand 5 8 was issued, and for each previous year, shall not exceed ten 5 9 thousand dollars per year. The burden of proving that the 5 10 retailer had no actual knowledge of the notice requirement is 5 11 upon the retailer. 5 12 4. Penalty exception and waiver. 5 13 a. The penalties in subsection 3 shall not apply to a 5 14 retailer for any calendar year in which all of the retailer's 5 15 Iowa sales to Iowa purchasers are exempt from the sales or use 5 16 tax under chapter 423. 5 17 b. The department may waive all or a portion of the 5 18 penalties imposed in subsection 3 upon a showing of reasonable 5 19 cause by the retailer. 5 20 5. Rules. The department shall adopt rules pursuant to 5 21 chapter 17A to administer this section. 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 concerns retailers who do not collect and remit 5 26 Iowa sales and use tax (noncollecting retailer). The bill 5 27 creates three reporting requirements for noncollecting 5 28 retailers who make sales of tangible personal property that 5 29 are delivered to purchasers within Iowa. The bill defines 5 30 several terms, including "Iowa purchaser" and "Iowa sale". The 5 31 bill exempts from the reporting requirements any noncollecting 5 32 retailer whose Iowa sales during a calendar year are all 5 33 delivered digitally, and any noncollecting retailer whose 5 34 total gross Iowa sales during a calendar year are less than 5 35 $100,000. For purposes of this $100,000 threshold, total gross 6 1 Iowa sales includes the sales of the noncollecting retailer and 6 2 of any entity controlled by or under common control with the 6 3 noncollecting retailer. 6 4 SALE NOTIFICATION. The bill requires a noncollecting 6 5 retailer to provide Iowa purchasers with a notification for 6 6 each sale (sale notification) that contains information as 6 7 described in the bill and as prescribed by the department of 6 8 revenue (department) by rule regarding the obligations to pay 6 9 applicable Iowa sales and use tax and file Iowa sales and use 6 10 tax returns. The bill requires each sale notification to be 6 11 made in the manner, form, and time period prescribed by the 6 12 department. 6 13 The bill imposes a penalty of $5 for each failure to timely 6 14 provide a sale notification, but also imposes fine limits 6 15 under certain circumstances. First, the total amount of sale 6 16 notification penalties for the first year the noncollecting 6 17 retailer is required to provide sale notifications shall not 6 18 exceed $50,000. Second, if a noncollecting retailer has no 6 19 actual knowledge of the sale notification requirement before 6 20 being issued a demand from the department, and begins providing 6 21 the required sale notifications within 60 days of the demand, 6 22 the total sale notification penalties for that year, and for 6 23 each previous year, shall not exceed $5,000 per year. The 6 24 noncollecting retailer bears the burden of proving it did not 6 25 have actual knowledge. 6 26 ANNUAL NOTIFICATION. The bill requires a noncollecting 6 27 retailer to provide an annual notification to Iowa purchasers 6 28 who make Iowa purchases of $500 or more from the noncollecting 6 29 retailer during the year. The annual notification must be made 6 30 by January 31 of each year summarizing the sales made to the 6 31 Iowa purchaser for the previous year. The annual notification 6 32 must also contain other information and meet other requirements 6 33 as described in the bill and as prescribed by the department. 6 34 The bill imposes a penalty of $10 for each failure to timely 6 35 provide an annual notification, but also imposes fine limits 7 1 under certain circumstances. First, the total amount of annual 7 2 notification penalties for the first year the noncollecting 7 3 retailer is required to provide annual notifications shall 7 4 not exceed $50,000. Second, if for any calendar year a 7 5 noncollecting retailer provides all the annual notifications 7 6 within 30 days of the due date, the total annual notification 7 7 penalties for that year shall not exceed $1,000. Third, if a 7 8 noncollecting retailer has no actual knowledge of the annual 7 9 notification requirement before being issued a demand from the 7 10 department, and provides the required annual notifications 7 11 within 60 days of the demand, the total annual notification 7 12 penalties for that year, and for each previous year, shall not 7 13 exceed $10,000 per year. The noncollecting retailer bears the 7 14 burden of proving it did not have actual knowledge. 7 15 ANNUAL STATEMENT. The bill requires a noncollecting 7 16 retailer to provide by March 31 of each year an annual 7 17 statement to the department showing the Iowa sales made to each 7 18 Iowa purchaser for the previous year, and any other information 7 19 prescribed by the department. Noncollecting retailers who 7 20 are not required to provide any annual notifications are 7 21 exempt from filing an annual statement with the department. 7 22 The department may require noncollecting retailers with over 7 23 $100,000 in total gross Iowa sales during a calendar year to 7 24 file the annual statement in an electronic format. 7 25 The bill imposes a penalty for failure to timely file an 7 26 annual statement that is equal to the product of $10 multiplied 7 27 by the number of Iowa purchasers for which the retailer failed 7 28 to provide the required information in the annual statement, 7 29 but imposes fine limits under certain circumstances. First, if 7 30 for any calendar year the annual statement is filed within 30 7 31 days of the due date, the total annual statement penalties for 7 32 that year shall not exceed $1,000. Second, if a noncollecting 7 33 retailer has no actual knowledge of the annual statement 7 34 requirement before being issued a demand from the department, 7 35 and provides the required annual statements within 60 days of 8 1 the demand, the total annual statement penalties for that year, 8 2 and for each previous year, shall not exceed $10,000 per year. 8 3 The noncollecting retailer bears the burden of proving it did 8 4 not have actual knowledge. 8 5 The bill provides that the sale notification, annual 8 6 notification, or annual statement penalties shall not apply to 8 7 a noncollecting retailer for any calendar year in which all of 8 8 the noncollecting retailer's Iowa sales to Iowa purchasers are 8 9 exempt from the Iowa sales or use tax. Also, the bill allows 8 10 the department to waive all or a portion of any penalty upon a 8 11 showing of reasonable cause by the noncollecting retailer. 8 12 Finally, the bill provides that the director of the 8 13 department shall have the power to subpoena from noncollecting 8 14 retailers any records and documents necessary to administer 8 15 the reporting requirements, and may make application to 8 16 any district court or judicial magistrate to enforce such 8 17 subpoenas. LSB 1592HH (4) 87 mm/sc
