Bill Text: IA HF544 | 2021-2022 | 89th General Assembly | Introduced

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Bill Title: A bill for an act relating to the state sales and use tax by funding the natural resources and outdoor recreation trust fund through the sales tax, using sales and use taxes to create a baby bond program and fund, and including effective date provisions.

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Introduced - Dead) 2021-02-16 - Introduced, referred to Ways and Means. H.J. 401. [HF544 Detail]

Download: Iowa-2021-HF544-Introduced.html

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House File 544 - Introduced
HOUSE FILE 544
BY WESSEL-KROESCHELL
A BILL FOR
An Act relating to the state sales and use tax by funding
the natural resources and outdoor recreation trust fund
through the sales tax, using sales and use taxes to create
a baby bond program and fund, and including effective date
provisions.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
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DIVISION I
SALES AND USE TAXES
Section 1. Section 423.2, subsection 1, unnumbered
paragraph 1, Code 2021, is amended to read as follows:
There is imposed a tax of six percent at a rate specified
in subsection 12 upon the sales price of all sales of tangible
personal property, consisting of goods, wares, or merchandise,
sold at retail in the state to consumers or users except as
otherwise provided in this subchapter .
Sec. 2. Section 423.2, subsections 2 and 3, Code 2021, are
amended to read as follows:
2. A tax of six percent at a rate specified in subsection
12 is imposed upon the sales price of the sale or furnishing
of gas, electricity, water, heat, pay television service, and
communication service, including the sales price from such
sales by any municipal corporation or joint water utility
furnishing gas, electricity, water, heat, pay television
service, and communication service to the public in its
proprietary capacity, except as otherwise provided in this
subchapter , when sold at retail in the state to consumers or
users.
3. A tax of six percent at a rate specified in subsection
12 is imposed upon the sales price of all sales of tickets
or admissions to places of amusement, fairs, and athletic
events except those of elementary and secondary educational
institutions. A tax of six percent at a rate specified in
subsection 12 is imposed on the sales price of an entry fee or
like charge imposed solely for the privilege of participating
in an activity at a place of amusement, fair, or athletic event
unless the sales price of tickets or admissions charges for
observing the same activity are taxable under this subchapter .
A tax of six percent at a rate specified in subsection 12
is imposed upon that part of private club membership fees or
charges paid for the privilege of participating in any athletic
sports provided club members.
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Sec. 3. Section 423.2, subsection 4, paragraph a, Code 2021,
is amended to read as follows:
a. A tax of six percent at a rate specified in subsection
12 is imposed upon the sales price derived from the operation
of all forms of amusement devices and games of skill, games of
chance, raffles, and bingo games as defined in chapter 99B , and
card game tournaments conducted under section 99B.27 , that are
operated or conducted within the state, the tax to be collected
from the operator in the same manner as for the collection of
taxes upon the sales price of tickets or admission as provided
in this section . Nothing in this subsection shall legalize any
games of skill or chance or slot-operated devices which are now
prohibited by law.
Sec. 4. Section 423.2, subsection 5, Code 2021, is amended
to read as follows:
5. There is imposed a tax of six percent at a rate specified
in subsection 12 upon the sales price from the furnishing of
services as defined in section 423.1 .
Sec. 5. Section 423.2, subsection 7, paragraph a,
unnumbered paragraph 1, Code 2021, is amended to read as
follows:
A tax of six percent at a rate specified in subsection 12
is imposed upon the sales price from the sales, furnishing, or
service of solid waste collection and disposal service.
Sec. 6. Section 423.2, subsection 8, paragraph a, Code 2021,
is amended to read as follows:
a. A tax of six percent at a rate specified in subsection
12 is imposed on the sales price from sales of bundled
transactions. For the purposes of this subsection , a “bundled
transaction” is the retail sale of two or more distinct and
identifiable products, except real property and services to
real property, which are sold for one nonitemized price. A
“bundled transaction” does not include the sale of any products
in which the sales price varies, or is negotiable, based on
the selection by the purchaser of the products included in the
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transaction.
Sec. 7. Section 423.2, subsection 9, Code 2021, is amended
to read as follows:
9. A tax of six percent at a rate specified in subsection
12 is imposed upon the sales price from any mobile
telecommunications service, including all paging services,
that this state is allowed to tax pursuant to the provisions
of the federal Mobile Telecommunications Sourcing Act, Pub.
L. No. 106-252, 4 U.S.C. §116 et seq. For purposes of this
subsection , taxes on mobile telecommunications service, as
defined under the federal Mobile Telecommunications Sourcing
Act that are deemed to be provided by the customer’s home
service provider, shall be paid to the taxing jurisdiction
whose territorial limits encompass the customer’s place of
primary use, regardless of where the mobile telecommunications
service originates, terminates, or passes through and
shall in all other respects be taxed in conformity with
the federal Mobile Telecommunications Sourcing Act. All
other provisions of the federal Mobile Telecommunications
Sourcing Act are adopted by the state of Iowa and incorporated
into this subsection by reference. With respect to mobile
telecommunications service under the federal Mobile
Telecommunications Sourcing Act, the director shall, if
requested, enter into agreements consistent with the provisions
of the federal Act.
Sec. 8. Section 423.2, subsection 10, paragraph a, Code
2021, is amended to read as follows:
a. A tax of six percent at a rate specified in subsection
12 is imposed on the sales price of specified digital products
sold at retail in the state. The tax applies whether the
purchaser obtains permanent use or less than permanent use of
the specified digital product, whether the sale is conditioned
or not conditioned upon continued payment from the purchaser,
and whether the sale is on a subscription basis or is not on a
subscription basis.
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H.F. 544
Sec. 9. Section 423.2, subsection 12, Code 2021, is amended
by striking the subsection and inserting in lieu thereof the
following:
12. a. For the period beginning January 1, 2022, and ending
December 31, 2050, the sales tax rate is seven percent.
b. Beginning January 1, 2051, the sales tax rate is six
percent.
Sec. 10. Section 423.2A, subsection 2, Code 2021, is amended
by adding the following new paragraph:
NEW PARAGRAPH . 0b. Transfer one-seventh of the remaining
revenues to the secure an advanced vision for education fund
created in section 423F.2. This paragraph “0b” is repealed
January 1, 2051.
Sec. 11. Section 423.2A, subsection 2, paragraph b, Code
2021, is amended to read as follows:
b. Transfer from the remaining revenues the amounts required
under Article VII, section 10, of the Constitution of the State
of Iowa to the natural resources and outdoor recreation trust
fund created in section 461.31 , if applicable .
Sec. 12. Section 423.2A, subsection 2, paragraph c, Code
2021, is amended by striking the paragraph and inserting in
lieu thereof the following:
c. Each fiscal year transfer from the remaining revenues to
the baby bond fund established in section 12.101 an equivalent
amount of revenue necessary to fund active savings accounts as
required pursuant to section 12.101, subsection 2, paragraph
“b” .
Sec. 13. Section 423.2A, subsection 2, paragraph d, Code
2021, is amended to read as follows:
d. Transfer to the baseball and softball complex sales tax
rebate fund that portion of the sales tax receipts described
in subsection 1 , paragraph “b” , remaining after the transfers
required under paragraphs “a” , “0b” , “b” , and “c” of this
subsection 2 . This paragraph is repealed thirty days following
the date on which five million dollars in total rebates have
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been provided under section 423.4, subsection 10 .
Sec. 14. Section 423.5, subsection 1, unnumbered paragraph
1, Code 2021, is amended to read as follows:
Except as provided in paragraph “b” , an excise tax at the
rate of six percent specified in subsection 4 of the purchase
price or installed purchase price is imposed on the following:
Sec. 15. Section 423.5, subsection 4, Code 2021, is amended
by striking the subsection and inserting in lieu thereof the
following:
4. a. For the period beginning January 1, 2022, and ending
December 31, 2050, the use tax rate is seven percent.
b. Beginning January 1, 2051, the use tax rate is six
percent.
Sec. 16. Section 423.43, subsection 1, paragraph b, Code
2021, is amended to read as follows:
b. (1) Subsequent to the deposit into the general fund of
the state and after the transfer of such revenues collected
under chapter 423B , the department shall transfer one-sixth
one-seventh of such remaining revenues to the secure an
advanced vision for education fund created in section 423F.2 .
This paragraph subparagraph is repealed January 1, 2051.
(2) Subsequent to the deposit into the general fund of the
state and the transfers in subparagraph (1), each fiscal year
the department shall transfer from the remaining revenues to
the baby bond fund established in section 12.101 an equivalent
amount of revenue necessary to fund active savings accounts as
required pursuant to section 12.101, subsection 2, paragraph
“b” .
DIVISION II
BABY BOND PROGRAM AND FUND
Sec. 17. NEW SECTION . 12.101 Baby bond program and fund.
1. As used in this section unless the context otherwise
requires:
a. “Active savings account” means an account associated with
a child under eighteen years of age.
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b. “Child” means a person under eighteen years of age.
c. “Enrollee” means a person eligible to receive funds who
is eighteen years of age or older.
d. “First home” means the first-time purchase of a residence
by an enrollee who is a resident of this state and who does
not own, either individually or jointly, a single-family or
multifamily residence, and who has not owned or purchased,
either individually or jointly, a single-family or multifamily
residence.
e. “Fund” means the baby bond fund.
f. “Program” means the baby bond program.
2. a. The program is created by establishing an
interest-bearing savings account for children in this state.
The treasurer of state shall act as custodian of the savings
accounts and disburse moneys contained in the savings accounts.
The purpose of the program is to offer a fairer chance at
economic stability and mobility by funding a savings account
for children in this state.
b. (1) Commencing with the fiscal year beginning July 1,
2022, and every fiscal year thereafter, there is transferred
pursuant to section 423.2A, subsection 2, paragraph “c” , and
section 423.43, subsection 1, paragraph “b” , subparagraph (2),
an amount necessary to fund each active savings account in
existence on October 1 with five hundred dollars until the
child attains eighteen years of age.
(2) Each active savings account shall be funded with five
hundred dollars on the enrollment date and five hundred dollars
on each subsequent enrollment anniversary date until the child
attains eighteen years of age.
c. The moneys in the fund shall be accessible to the child
upon turning eighteen years of age to fund educational expenses
or for the purchase of a first home located in this state.
The moneys in the account shall remain accessible for these
purposes until the enrollee attains thirty-five years of age,
and at such time any remaining moneys in the savings account
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shall revert to the general fund of the state.
d. Direct contributions shall not be made to the savings
account established on behalf of the child, and the child or
the parent or guardian of the child shall not be able to affect
the account, except as provided in subsection 4.
e. An enrollee who is not a resident of this state on or
after the eighteenth birthday of the enrollee is not eligible
to receive funds from the savings account on or after the
enrollee’s eighteenth birthday.
f. Beginning with births in this state on or after July 1,
2022, and on a form or in a manner prescribed by the treasurer
of state, a parent or guardian of a child born in this state
may notify the treasurer of state of the birth of the child to
begin the enrollment process in the program. Upon receiving
proper notification of the birth of the child in this state,
the child shall be considered enrolled in the program.
g. For a child born in this state prior to July 1, 2022,
and who remains a resident of this state, or for a child who
has been a resident of this state for at least two years prior
to, on, or after July 1, 2022, a parent or guardian of such a
child may notify the treasurer of state to begin the enrollment
process in the program. The notification shall be on a form or
in the manner prescribed by the treasurer of state, and upon
receiving proper notification the child shall be considered
enrolled in the program.
h. The treasurer of state shall make account balances within
the program available through a secured internet site to each
parent or guardian of a child enrolled in the program, or to an
enrollee.
3. a. The fund is established in the state treasury under
the control of the treasurer of state consisting of funds
transferred to the fund pursuant to subsection 2.
b. Notwithstanding section 12C.7, subsection 2, interest or
earnings on moneys deposited in the fund shall be credited to
the fund. Notwithstanding section 8.33, moneys credited to the
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fund shall not revert at the close of a fiscal year.
c. The treasurer of state shall invest the moneys in the
fund in accordance with the provisions of this section and
in accordance with the public funds investment standards in
section 12B.10.
d. The treasurer of state shall use the moneys in the fund
to provide moneys to an enrollee for the purpose of paying
educational expenses or for the purchase of a first home
located in this state and to pay for the costs associated with
the plan.
4. To receive money under the program, an enrollee must
apply for the moneys with the treasurer of state on a form or in
a manner prescribed by the treasurer. Approved payments by the
treasurer of state may be in the form of a one-time payment or
in the form of multiple payments over a period of time.
5. a. No property rights in the fund shall exist in favor
of the child or enrollee.
b. A payment pursuant to this section is not guaranteed and
is subject to future modifications and investment gain or loss.
6. The treasurer of state shall adopt rules pursuant to
chapter 17A to administer this section, including establishing
eligibility for the program based upon family income.
DIVISION III
EFFECTIVE DATE
Sec. 18. EFFECTIVE DATE. This Act takes effect January 1,
2022.
EXPLANATION
The inclusion of this explanation does not constitute agreement with
the explanation’s substance by the members of the general assembly.
This bill relates to the state sales and use tax by funding
the natural resources and outdoor recreation trust fund through
the sales tax, and using sales and use taxes to create a baby
bond program and fund, and includes effective date provisions.
DIVISION I —— SALES AND USE TAX. An amendment to the Iowa
Constitution was ratified on November 2, 2010, which created
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a natural resources and outdoor recreation trust fund (fund)
and dedicated a portion of state revenues to the fund for
the purposes of protecting and enhancing water quality and
natural areas in the state including parks, trails, and fish
and wildlife habitat, and conserving agricultural soils in
the state (article VII, section 10). The fund is codified in
Code section 461.31. Pursuant to the amendment, the amount
credited to the fund will be equal to the amount generated
by an increase in the state sales tax rate occurring after
the effective date of the constitutional amendment, but shall
not exceed the amount that a state sales tax rate of 0.375
percent would generate. The state sales tax rate has not
been increased since the effective date of the constitutional
amendment, so no amounts have been credited to the fund. The
bill increases the sales tax rate and the use tax rate from 6
percent to 7 percent January 1, 2022. As a result, moneys will
be credited to the fund. The bill also amends the transfer of
sales and use tax revenues to the secure an advanced vision for
education fund (SAVE) in Code sections 423.2A(2) and 423.43 to
ensure that SAVE receives the same amount of sales and use tax
revenues as it did prior to the sales and use tax increases
provided in the bill.
DIVISION II —— BABY BONDS PROGRAM AND FUND. The bill
creates a baby bond program (program) by establishing an
interest-bearing savings account for children in this state.
The treasurer of state shall act as custodian of the savings
accounts and disburse moneys contained in the savings accounts.
The purpose of the program is to offer children in this state a
fairer chance at economic stability and mobility.
Commencing with the fiscal year beginning July 1, 2022, and
every fiscal year thereafter, the bill transfers from sales and
use tax revenues an amount equal to fund each active savings
account in existence in the program on October 1 with $500
until the child attains 18 years of age. The bill defines
“active savings account” to mean an account associated with a
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child under 18 years of age.
The bill requires each active savings account to be funded
with $500 on the enrollment date and $500 on each subsequent
enrollment anniversary date until the child attains 18 years
of age.
The bill specifies the moneys in the fund shall be accessible
to the child upon turning 18 years of age to fund educational
expenses or for the purchase of a first home located in this
state. The bill further specifies that moneys in the account
remain accessible for these purposes until 35 years of age,
and at such time any remaining moneys in the account revert
to the general fund of the state. The bill defines “first
home” to mean the first-time purchase of a residence by a
resident, and who does not own, either individually or jointly,
a single-family or multifamily residence, and who has not owned
or purchased, either individually or jointly, a single-family
or multifamily residence.
The bill prohibits direct contributions to the account by
the child or the child’s family.
The bill requires the savings account of the child to be
funded on the enrollment date and subsequently funded on the
enrollment anniversary date until the child attains 18 years
of age.
The bill prohibits a child who is not a resident of this
state on or after their 18th birthday from receiving funds from
the savings account.
Beginning with births in this state on or after July 1, 2022,
and on a form or in a manner prescribed by the treasurer of
state, the parent or guardian of the child born in this state
may notify the treasurer of state of the birth of the child to
begin the enrollment process in the program. Upon receiving
proper notification of the birth of the child in this state,
the bill specifies the child shall be considered enrolled in
the program.
For a child born in this state prior to July 1, 2022, and who
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remains a resident of this state, or for a child who has been a
resident of this state for at least two years prior to, on, or
after July 1, 2022, a parent or guardian of a child may notify
the treasurer of state to begin the enrollment process in the
program. The bill requires the notification to be on a form or
in the manner prescribed by the treasurer of state, and upon
receiving proper notification the child shall be considered
enrolled in the program.
The bill requires the treasurer of state to make account
balances within the program available through a secured
internet site to each parent or guardian of a child enrolled in
the program, or to a child who has attained 18 years of age.
The bill establishes a baby bond fund (fund) in the state
treasury under the control of the treasurer of state consisting
of sales and use tax revenues transferred to the fund for
purposes of establishing the program.
In order to receive moneys under the program established in
the bill, a child who has attained 18 years of age must apply
for the moneys with the treasurer of state on a form or in a
manner prescribed by the treasurer. Approved payments by the
treasurer of state may be in the form of a one-time payment or
in the form of multiple payments over a period of time.
The bill specifies no property rights exist in the fund in
favor of the child after the child has attained 18 years of
age.
The bill requires the treasurer of state to adopt rules to
administer the program, including establishing eligibility for
the program based upon family income.
DIVISION II —— EFFECTIVE DATE. The bill takes effect January
1, 2022.
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