Bill Text: IA HF606 | 2017-2018 | 87th General Assembly | Introduced
Bill Title: A bill for an act providing for the imposition by a county of a local option use tax.
Sponsorship: Partisan Bill (Republican 1)
Status: (Introduced - Dead) 2017-03-21 - Introduced, referred to Ways and Means. H.J. 706. [HF606 Detail]
Download: Iowa-2017-HF606-Introduced.html
House File 606 - Introduced HOUSE FILE BY DOLECHECK A BILL FOR 1 An Act providing for the imposition by a county of a local 2 option use tax. 3 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: TLSB 2285YH (2) 87 mm/rj PAG LIN 1 1 DIVISION I 1 2 LOCAL OPTION USE TAX 1 3 Section 1. Section 423B.1, subsections 3, 4, and 5, Code 1 4 2017, are amended to read as follows: 1 5 3. A local option tax shall be imposed only after an 1 6 election at which a majority of those voting on the question 1 7 favors imposition and shall then be imposed until repealed 1 8 as provided in subsection 6, paragraph "a". If the tax is a 1 9 local vehicle tax imposed by a county, it shall apply to all 1 10 incorporated and unincorporated areas of the county. If the 1 11 tax is a local sales and services tax imposed by a county, 1 12 it shall only apply to those incorporated areas and the 1 13 unincorporated area of that county in which a majority of those 1 14 voting in the area on the tax favors its imposition. If the 1 15 tax is a local use tax, it shall only be imposed by a county 1 16 if the county is also imposing a local sales and services 1 17 tax, and shall only apply to those incorporated areas and the 1 18 unincorporated area of that county in which a majority of those 1 19 voting in the area on the tax favors imposition, and in which 1 20 the local sales and services tax is also imposed. For purposes 1 21 of the local sales and services tax and the local use tax, all 1 22 cities contiguous to each other shall be treated as part of 1 23 one incorporated area and the tax would be imposed in each of 1 24 those contiguous cities only if the majority of those voting 1 25 in the total area covered by the contiguous cities favors its 1 26 imposition. In the case of a local sales and services tax or a 1 27 local use tax submitted to the registered voters of two or more 1 28 contiguous counties as provided in subsection 4, paragraph "c", 1 29 all cities contiguous to each other shall be treated as part of 1 30 one incorporated area, even if the corporate boundaries of one 1 31 or more of the cities include areas of more than one county, 1 32 and the tax shall be imposed in each of those contiguous cities 1 33 only if a majority of those voting on the tax in the total area 1 34 covered by the contiguous cities favored its imposition. For 1 35 purposes of the local sales and services tax and the local use 2 1 tax, a city is not contiguous to another city if the only road 2 2 access between the two cities is through another state. 2 3 4. a. A county board of supervisors shall direct within 2 4 thirty days the county commissioner of elections to submit the 2 5 question of imposition of a local vehicle tax,ora local sales 2 6 and services tax, or a local use tax to the registered voters 2 7 of the incorporated and unincorporated areas of the county 2 8 upon receipt of a petition, requesting imposition of a local 2 9 vehicle tax,ora local sales and services tax, or a local use 2 10 tax, signed by eligible electors of the whole county equal in 2 11 number to five percent of the persons in the whole county who 2 12 voted at the last preceding general election. In the case of 2 13 a local vehicle tax, the petition requesting imposition shall 2 14 specify the rate of tax and the classes, if any, that are to 2 15 be exempt. If more than one valid petition is received, the 2 16 earliest received petition shall be used. 2 17 b. The question of the imposition of a local sales and 2 18 services tax or a local use tax shall be submitted to the 2 19 registered voters of the incorporated and unincorporated 2 20 areas of the county upon receipt by the county commissioner 2 21 of elections of the motion or motions, requesting such 2 22 submission, adopted by the governing body or bodies of the 2 23 city or cities located within the county or of the county, for 2 24 the unincorporated areas of the county, representing at least 2 25 one half of the population of the county. Upon adoption of 2 26 such motion, the governing body of the city or county, for the 2 27 unincorporated areas, shall submit the motion to the county 2 28 commissioner of elections and in the case of the governing 2 29 body of the city shall notify the board of supervisors of the 2 30 adoption of the motion. The county commissioner of elections 2 31 shall keep a file on all the motions received and, upon 2 32 reaching the population requirements, shall publish notice of 2 33 the ballot proposition concerning the imposition of the local 2 34 sales and services tax or the local use tax. A motion ceases 2 35 to be valid at the time of the holding of the regular election 3 1 for the election of members of the governing body which 3 2 adopted the motion. The county commissioner of elections shall 3 3 eliminate from the file any motion that ceases to be valid. 3 4 The manner provided under this paragraph for the submission of 3 5 the question of imposition of a local sales and services tax 3 6 or a local use tax is an alternative to the manner provided in 3 7 paragraph "a". 3 8 c. Upon receipt of petitions or motions calling for the 3 9 submission of the question of the imposition of a local sales 3 10 and services tax or a local use tax as described in paragraph 3 11 "a" or "b", the boards of supervisors of two or more contiguous 3 12 counties in which the question is to be submitted may enter 3 13 into a joint agreement providing that for purposes of this 3 14 chapter, a city whose corporate boundaries include areas of 3 15 more than one county shall be treated as part of the county 3 16 in which a majority of the residents of the city reside. In 3 17 such event, the county commissioners of elections from each 3 18 such county shall cooperate in the selection of a single date 3 19 upon which the election shall be held, and for all purposes of 3 20 this chapter relating to the imposition, repeal, change of use, 3 21 or collection of the tax, such a city shall be deemed to be 3 22 part of the county in which a majority of the residents of the 3 23 city reside. A copy of the joint agreement shall be provided 3 24 promptly to the director of revenue. 3 25 5. The county commissioner of elections shall submit the 3 26 question of imposition of a local option tax at an election 3 27 held on a date specified in section 39.2, subsection 4, 3 28 paragraph "a". The election shall not be held sooner than sixty 3 29 days after publication of notice of the ballot proposition. 3 30 The ballot proposition shall specify the type and rate of tax 3 31 and in the case of a vehicle tax the classes that will be 3 32 exempt and in the case of a local sales and services tax or 3 33 a local use tax the date it will be imposed which date shall 3 34 not be earlier than ninety days following the election. The 3 35 ballot proposition shall also specify the approximate amount 4 1 of local option tax revenues that will be used for property 4 2 tax relief and shall contain a statement as to the specific 4 3 purpose or purposes for which the revenues shall otherwise be 4 4 expended. If the county board of supervisors decides under 4 5 subsection 6 to specify a date on which the local option sales 4 6 and services tax or a local use tax shall automatically be 4 7 repealed, the date of the repeal shall also be specified on the 4 8 ballot. The rate of the vehicle tax shall be in increments of 4 9 one dollar per vehicle as set by the petition seeking to impose 4 10 the tax. The rate of a local sales and services tax shall not 4 11 be more than one percent as set by the governing body. The rate 4 12 of a local use tax shall be the same as the local sales and 4 13 services tax rate set by the same governing body. The state 4 14 commissioner of elections shall establish by rule the form for 4 15 the ballot proposition which form shall be uniform throughout 4 16 the state. 4 17 Sec. 2. Section 423B.1, subsection 6, paragraph a, Code 4 18 2017, is amended to read as follows: 4 19 a. (1) If a majority of those voting on the question of 4 20 imposition of a local option tax favors imposition of a local 4 21 option tax, the governing body of that county shall impose the 4 22 tax at the rate specified for an unlimited period. However, 4 23 in the case of a local sales and services tax or a local use 4 24 tax, the county shall not impose the tax in any incorporated 4 25 area or the unincorporated area if the majority of those voting 4 26 on the tax in that area did not favor its imposition and, in 4 27 the case of a local use tax, shall not impose the tax in any 4 28 incorporated area or the unincorporated area in which the 4 29 local sales and services tax is not imposed. For purposes of 4 30 the local sales and services tax and the local use tax, all 4 31 cities contiguous to each other shall be treated as part of one 4 32 incorporated area and the tax shall be imposed in each of those 4 33 contiguous cities only if the majority of those voting on the 4 34 tax in the total area covered by the contiguous cities favored 4 35 its imposition. In the case of a local sales and services 5 1 tax or a local use tax submitted to the registered voters of 5 2 two or more contiguous counties as provided in subsection 4, 5 3 paragraph "c", all cities contiguous to each other shall be 5 4 treated as part of one incorporated area, even if the corporate 5 5 boundaries of one or more of the cities include areas of more 5 6 than one county, and the tax shall be imposed in each of those 5 7 contiguous cities only if a majority of those voting on the tax 5 8 in the total area covered by the contiguous cities favored its 5 9 imposition. 5 10 (2) The local option tax may be repealed or the rate 5 11 increased or decreased or the use thereof changed after an 5 12 election at which a majority of those voting on the question of 5 13 repeal or rate or use change favored the repeal or rate or use 5 14 change. However, if a local sales and services tax is repealed 5 15 or the rate decreased, the local use tax imposed within that 5 16 county, if any, shall be deemed to be repealed or reduced 5 17 by the same action repealing or reducing the local sales and 5 18 services tax. The date on which the repeal, rate, or use 5 19 change is to take effect shall not be earlier than ninety days 5 20 following the election. The election at which the question 5 21 of repeal or rate or use change is offered shall be called 5 22 and held in the same manner and under the same conditions 5 23 as provided in subsections 4 and 5 for the election on the 5 24 imposition of the local option tax. However, in the case of 5 25 a local sales and services tax and a local use tax where the 5 26 tax has not been imposed countywide, the question of repeal or 5 27 imposition or rate or use change shall be voted on only by the 5 28 registered voters of the areas of the county where the tax has 5 29 been imposed or has not been imposed, as appropriate. However, 5 30 the governing body of the incorporated area or unincorporated 5 31 area where the local sales and services tax and the local 5 32 use tax is imposed may, upon its own motion, request the 5 33 county commissioner of elections to hold an election in the 5 34 incorporated or unincorporated area, as appropriate, on the 5 35 question of the change in use of local sales and services tax 6 1 or the local use tax revenues. The election may be held at 6 2 any time but not sooner than sixty days following publication 6 3 of the ballot proposition. If a majority of those voting 6 4 in the incorporated or unincorporated area on the change in 6 5 use favors the change, the governing body of that area shall 6 6 change the use to which the revenues shall be used. The ballot 6 7 proposition shall list the present use of the revenues, the 6 8 proposed use, and the date after which revenues received will 6 9 be used for the new use. 6 10 (3) When submitting the question of the imposition of a 6 11 local sales and services tax or a local use tax, the county 6 12 board of supervisors may direct that the question contain a 6 13 provision for the repeal, without election, of the local sales 6 14 and services tax or the local use tax on a specific date, which 6 15 date shall be as provided in section 423B.6, subsection 1. 6 16 Sec. 3. Section 423B.1, subsections 8, 9, and 10, Code 2017, 6 17 are amended to read as follows: 6 18 8. Local option taxes authorized to be imposed as provided 6 19 in this chapter are a local sales and services tax,anda local 6 20 vehicle tax, and a local use tax. The rate of the tax shall 6 21 be in increments of one dollar per vehicle for a vehicle tax 6 22 as set on the petition seeking to impose the vehicle tax. The 6 23 rate of a local sales and services tax shall not be more than 6 24 one percent as set by the governing body. The rate of a local 6 25 use tax shall be the same as the local sales and services tax 6 26 rate set by the same governing body. 6 27 9. In a county that has imposed a local option sales 6 28 and services tax or a local option use tax, the board of 6 29 supervisors shall, notwithstanding any contrary provision of 6 30 this chapter, repeal the local option sales and services tax or 6 31 the local option use tax in the unincorporated areas or in an 6 32 incorporated city area in which the tax has been imposed upon 6 33 adoption of its own motion for repeal in the unincorporated 6 34 areas or upon receipt of a motion adopted by the governing 6 35 body of that incorporated city area requesting repeal. If a 7 1 local sales and services tax is repealed pursuant to such a 7 2 motion, the local use tax imposed within the same incorporated 7 3 city area or the unincorporated area, if any, shall be deemed 7 4 to be repealed by the same motion repealing the local sales 7 5 and services tax. The board of supervisors shall repeal the 7 6 local option sales and services tax or the local option use 7 7 tax effective on the later of the date of the adoption of the 7 8 repeal motion or the earliest date specified in section 423B.6, 7 9 subsection 1. For purposes of this subsection, incorporated 7 10 city area includes an incorporated city which is contiguous to 7 11 another incorporated city. 7 12 10. Notwithstanding subsection 9 or any other contrary 7 13 provision of this chapter, a local option sales and services 7 14 tax and a local use tax shall not be repealed or reduced in rate 7 15 if obligations are outstanding which are payable as provided in 7 16 section 423B.9, unless funds sufficient to pay the principal, 7 17 interest, and premium, if any, on the outstanding obligations 7 18 at and prior to maturity have been properly set aside and 7 19 pledged for that purpose. 7 20 Sec. 4. NEW SECTION. 423B.5A Local use tax. 7 21 1. A county that is imposing a local sales and services tax 7 22 under section 423B.5 may impose a local use tax at the same 7 23 rate on the purchase price or installed purchase price taxed by 7 24 the state under chapter 423, subchapter III. A local use tax 7 25 shall be imposed on the same basis as the state use tax except 7 26 it shall not be imposed on any of the following: 7 27 a. The purchase price on the use of natural gas, natural gas 7 28 service, electricity, or electric service. 7 29 b. The purchase price on the use of any property or on the 7 30 use of any service not taxed by the state. 7 31 c. The purchase price from the use of motor fuel or special 7 32 fuel as defined in chapter 452A which is consumed for highway 7 33 use or in watercraft or aircraft if the fuel tax is paid on the 7 34 transaction and a refund has not or will not be allowed. 7 35 d. The purchase price from the use of equipment by the state 8 1 department of transportation. 8 2 2. A local use tax is applicable to uses of property or 8 3 services within those incorporated and unincorporated areas 8 4 of the county where it is imposed and shall be collected by 8 5 all persons required to collect state use taxes, and if not 8 6 collected by such persons shall be paid by the person using 8 7 the property or service. All cities contiguous to each other 8 8 shall be treated as part of one incorporated area and the tax 8 9 is imposed in each of those contiguous cities only if the 8 10 majority of those voting in the total area covered by the 8 11 contiguous cities favors its imposition. In the case of a 8 12 local use tax submitted to the registered voters of two or more 8 13 contiguous counties as provided in section 423B.1, subsection 8 14 4, paragraph "c", all cities contiguous to each other shall be 8 15 treated as part of one incorporated area, even if the corporate 8 16 boundaries of one or more of the cities include areas of more 8 17 than one county, and the tax shall be imposed in each of those 8 18 contiguous cities only if a majority of those voting on the tax 8 19 in the total area covered by the contiguous cities favor its 8 20 imposition. 8 21 3. For purposes of the proper administration of the local 8 22 use tax and to prevent its evasion, evidence that tangible 8 23 personal property was sold by any person for delivery to a 8 24 location in this state shall be prima facie evidence that such 8 25 tangible personal property was sold for use at that location 8 26 in this state. 8 27 4. The amount of the purchase price, for purposes of 8 28 determining the amount of the local use tax, does not include 8 29 the amount of any state use tax. 8 30 5. A tax permit other than the state use tax permit 8 31 required under section 423.36 shall not be required by local 8 32 authorities. 8 33 Sec. 5. Section 423B.6, Code 2017, is amended to read as 8 34 follows: 8 35 423B.6 Administration. 9 1 1. a. A local sales and services tax or a local use tax 9 2 shall be imposed either January 1 or July 1 following the 9 3 notification of the director of revenue but not sooner than 9 4 ninety days following the favorable election and not sooner 9 5 than sixty days following notice to sellers, as defined in 9 6 section 423.1. However, a jurisdiction which has voted to 9 7 continue imposition of the tax may impose that tax without 9 8 repeal of the prior tax. 9 9 b. A local sales and services tax or a local use tax shall 9 10 be repealed only on June 30 or December 31 but not sooner than 9 11 ninety days following the favorable election if one is held. 9 12 However, a local sales and services tax shall not be repealed 9 13 before the tax has been in effect for one year. At least forty 9 14 days before the imposition or repeal of the tax, a county shall 9 15 provide notice of the action by certified mail to the director 9 16 of revenue. 9 17 c. The imposition of or a rate change for a local sales 9 18 and services tax or a local use tax shall not be applied to 9 19 purchases from a printed catalog wherein a purchaser computes 9 20 the local tax based on rates published in the catalog unless a 9 21 minimum of one hundred twenty days' notice of the imposition or 9 22 rate change has been given to the seller from the catalog and 9 23 the first day of a calendar quarter has occurred on or after 9 24 the one hundred twentieth day. 9 25 d. If a local sales and services tax has been imposed 9 26 prior to April 1, 2000, and at the time of the election a date 9 27 for repeal was specified on the ballot, the local sales and 9 28 services tax may be repealed on that date, notwithstanding 9 29 paragraph "b". 9 30 2. a. The director of revenue shall administer a local 9 31 sales and services tax and a local use tax as nearly as 9 32 possible in conjunction with the administration of state sales 9 33 and use tax laws. The director shall provide appropriate forms 9 34 or provide on the regular state tax forms for reporting local 9 35 sales and services tax liability and local use tax liability. 10 1 b. The ordinance of a county board of supervisors imposing 10 2 a local sales and services tax or a local use tax shall adopt 10 3 by reference the applicable provisions of the appropriate 10 4 sections of chapter 423. All powers and requirements of the 10 5 director to administer the state sales tax law and use tax 10 6 law are applicable to the administration of a local sales and 10 7 services tax law,andthe local excise tax, and the local use 10 8 tax, including but not limited to the provisions of section 10 9 422.25, subsection 4, sections 422.30, 422.67, and 422.68, 10 10 section 422.69, subsection 1, sections 422.70 through 422.75, 10 11sectionand sections 423.14,subsection 1 and subsection 2, 10 12 paragraphs "b" through "e", and sections423.15, 423.23, 423.24, 10 13 423.25, 423.31 through 423.35, 423.37 through 423.42, 423.46, 10 14 and 423.47. Local officials shall confer with the director of 10 15 revenue for assistance in drafting the ordinance imposing a 10 16 local sales and services tax or a local use tax. A certified 10 17 copy of the ordinance shall be filed with the director as soon 10 18 as possible after passage. 10 19 c. Frequency of deposits and quarterly reportsofwith the 10 20 department of revenue are governed by the tax provisions in 10 21 section 423.31 for a local sales and services taxwith the 10 22 department of revenueand are governed by the tax provisions 10 23 in section423.31423.32 for a local use tax. Local tax 10 24 collections shall not be included in computation of the total 10 25 tax to determine frequency of filing under section 423.31 or 10 26 432.32. 10 27 d. The director shall apply a boundary change of a county or 10 28 city imposing or collecting the local sales and services tax 10 29 or the local use tax to the imposition or collection of that 10 30 tax only on the first day of a calendar quarter which occurs 10 31 sixty days or more after the director has given notice of the 10 32 boundary change to sellers. 10 33 3. a. The director, in consultation with local officials, 10 34 shall collect and account for a local sales and services tax 10 35 and a local use tax. The director shall certify each quarter 11 1 the amount of local sales and services tax receipts and any 11 2 interest and penalties to be credited to the "local sales and 11 3 services tax fund" established in the office of the treasurer 11 4 of state. The director shall certify each quarter the amount 11 5 of local use tax receipts and any interest and penalties to 11 6 be credited to the "local use tax fund" established in the 11 7 office of the treasurer of state. All taxes collected under 11 8 this chapter by a retailer or any individual are deemed to be 11 9 held in trust for the state of Iowa and the local jurisdictions 11 10 imposing the taxes. 11 11 b. All local tax moneys and interest and penalties received 11 12 or refunded one hundred eighty days or more after the date on 11 13 which the county repeals its local sales and services tax or 11 14 local use tax shall be deposited in or withdrawn from the state 11 15 general fund. 11 16 Sec. 6. Section 423B.7, subsection 1, paragraph a, Code 11 17 2017, is amended to read as follows: 11 18 a. Except as provided in paragraph "b", the director shall 11 19 credit the local sales and services tax receipts and interest 11 20 and penalties from a county=imposed tax to the county's 11 21 account in the local sales and services tax fund and from a 11 22 city=imposed tax under section 423B.1, subsection 2, to the 11 23 city's account in the local sales and services tax fund. The 11 24 director shall credit the local use tax receipts and interest 11 25 and penalties from a county=imposed tax to the county's account 11 26 in the local use tax fund. If the director is unable to 11 27 determine from which county any of the receipts were collected, 11 28 those receipts shall be allocated among the possible counties 11 29 based on allocation rules adopted by the director. 11 30 Sec. 7. Section 423B.7, subsection 7, Code 2017, is amended 11 31 to read as follows: 11 32 7. Local sales and services tax moneys and local use tax 11 33 moneys received by a city or county may be expended for any 11 34 lawful purpose of the city or county. 11 35 Sec. 8. Section 423B.8, Code 2017, is amended to read as 12 1 follows: 12 2 423B.8 Construction contractor refunds. 12 3 1. Construction contractors may make application to the 12 4 department for a refund of the additional local sales and 12 5 services tax or local use tax paid under this chapter by 12 6 reason of taxes paid on goods, wares, or merchandise under the 12 7 following conditions: 12 8 a. The goods, wares, or merchandise are incorporated into an 12 9 improvement to real estate in fulfillment of a written contract 12 10 fully executed prior to the date of the imposition or increase 12 11 in rate of a local sales and services tax or a local use tax 12 12 under this chapter. The refund shall not apply to equipment 12 13 transferred in fulfillment of a mixed construction contract. 12 14 b. The contractor has paid to the department or to a 12 15 retailer the full amount of the state and local tax. 12 16 c. The claim is filed on forms provided by the department 12 17 and is filed within one year of the date the tax is paid. 12 18 2. The department shall pay the refund from the appropriate 12 19 city's or county's account in the local sales and services tax 12 20 fund or the local use tax fund. 12 21 3. A contractor who makes an erroneous application for 12 22 refund shall be liable for payment of the excess refund paid 12 23 plus interest at the rate in effect under section 421.7. In 12 24 addition, a contractor who willfully makes a false application 12 25 for refund is guilty of a simple misdemeanor and is liable 12 26 for a penalty equal to fifty percent of the excess refund 12 27 claimed. Excess refunds, penalties, and interest due under 12 28 this subsection may be enforced and collected in the same 12 29 manner as the local sales and services tax and the local use 12 30 tax imposed under this chapter. 12 31 Sec. 9. Section 423B.9, subsections 1, 2, and 3, Code 2017, 12 32 are amended to read as follows: 12 33 1. For purposes of this section unless the context otherwise 12 34 requires: 12 35 a. "Bond issuer" or "issuer" means a city, a county, or a 13 1 secondary recipient. 13 2 b. "Designated portion" means the portion of the local 13 3 option sales and services tax revenues or the local option use 13 4 tax revenues which is authorized to be expended for one or a 13 5 combination of purposes under an adopted public measure. 13 6 c. "Secondary recipient" means a political subdivision of 13 7 the state which is to receive revenues from a local option 13 8 sales and services tax or a local use tax over a period of years 13 9 pursuant to the terms of a chapter 28E agreement with one or 13 10 more cities or counties. 13 11 2. An issuer of public bonds which is a recipient of 13 12 revenues from a local option sales and services tax or a local 13 13 use tax imposed pursuant to this chapter may issue bonds in 13 14 anticipation of the collection of one or more designated 13 15 portions of the local option sales and services tax or the 13 16 local option use tax and may pledge irrevocably an amount of 13 17 the revenue derived from the designated portions for each of 13 18 the years the bonds remain outstanding to the payment of the 13 19 bonds. Bonds may be issued only for one or more of the purposes 13 20 set forth on the ballot proposition concerning the imposition 13 21 of the local option sales and services tax or the local option 13 22 use tax, except bonds shall not be issued which are payable 13 23 from that portion of tax revenues designated for property 13 24 tax relief. The bonds may be issued in accordance with the 13 25 procedures set forth in either subsection 3 or 4. 13 26 3. The governing body of an issuer may authorize the 13 27 issuance of bonds which are payable from the designated portion 13 28 of the revenues of the local option sales and services tax 13 29 or the local option use tax, and not from property tax, by 13 30 following the authorization procedures set forth for cities 13 31 in section 384.83. Bonds may be issued for the purpose of 13 32 refunding outstanding and previously issued bonds under this 13 33 subsection without otherwise complying with the provisions of 13 34 this subsection. 13 35 Sec. 10. Section 423B.9, subsection 4, paragraph b, Code 14 1 2017, is amended to read as follows: 14 2 b. The provisions of chapter 76 apply to the bonds payable 14 3 as provided in this subsection, except that the mandatory levy 14 4 to be assessed pursuant to section 76.2 shall be at a rate 14 5 to generate an amount which together with the receipts from 14 6 the pledged designated portion of the local option sales and 14 7 services tax or the local option use tax is sufficient to pay 14 8 the interest and principal on the bonds. All amounts collected 14 9 as a result of the levy assessed pursuant to section 76.2 and 14 10 paid out in the first instance for bond principal and interest 14 11 shall be repaid to the bond issuer which levied the tax from 14 12 the first available designated portion of local option sales 14 13 and services tax or local option use tax collections received 14 14 in excess of the requirement for the payment of the principal 14 15 and interest of the bonds and when repaid shall be applied in 14 16 reduction of property taxes. The amount of bonds which may be 14 17 issued under section 76.3 shall be the amount which could be 14 18 retired from the actual collections of the designated portions 14 19 of the local option sales and services tax or the local option 14 20 use tax for the last four calendar quarters, as certified by 14 21 the director of revenue. The amount of tax revenues pledged 14 22 jointly by other cities or counties may be considered for the 14 23 purpose of determining the amount of bonds which may be issued. 14 24 If the local option sales and services tax or the local 14 25 option use tax has been in effect for less than four calendar 14 26 quarters, the tax collected within the shorter period may be 14 27 adjusted to project the collections of the designated portion 14 28 for the full year for the purpose of determining the amount of 14 29 the bonds which may be issued. The provisions of this section 14 30 constitute separate authorization for the issuance of bonds and 14 31 shall prevail in the event of conflict with any other provision 14 32 of the Code limiting the amount of bonds which may be issued or 14 33 the source of payment of the bonds. Bonds issued under this 14 34 section shall not limit or restrict the authority of the bond 14 35 issuer to issue bonds under other provisions of the Code. 15 1 Sec. 11. Section 423B.9, subsection 5, Code 2017, is amended 15 2 to read as follows: 15 3 5. A city or county, jointly with one or more other 15 4 political subdivisions as provided in chapter 28E, may pledge 15 5 irrevocably any amount derived from the designated portions of 15 6 the revenues of the local option sales and services tax or the 15 7 local option use tax to the support or payment of bonds of an 15 8 issuer, issued for one or more purposes set forth on the ballot 15 9 proposition concerning the imposition of the local option sales 15 10 and services tax or the local option use tax or a political 15 11 subdivision may apply the proceeds of its bonds to the support 15 12 of any such purpose. 15 13 DIVISION II 15 14 CORRESPONDING AMENDMENTS 15 15 Sec. 12. Section 15J.7, subsection 2, Code 2017, is amended 15 16 to read as follows: 15 17 2. In addition to the moneys received pursuant to section 15 18 15J.6, a municipality may deposit in the reinvestment project 15 19 fund any other moneys lawfully at the municipality's disposal, 15 20 including but not limited to local sales and services tax or 15 21 local use tax receipts collected under chapter 423B if such 15 22 use is a purpose authorized for the municipality under chapter 15 23 423B. 15 24 Sec. 13. Section 49.73, subsection 1, paragraph b, Code 15 25 2017, is amended to read as follows: 15 26 b. Any election conducted for a city, including a local 15 27 option sales and services tax or a local use tax election 15 28 conducted pursuant to section 423B.1. At elections conducted 15 29 pursuant to chapter 423B, all polling places shall have the 15 30 same voting hours. 15 31 Sec. 14. Section 76.4, Code 2017, is amended to read as 15 32 follows: 15 33 76.4 Permissive application of funds. 15 34 Whenever the governing authority of such political 15 35 subdivision shall have on hand funds derived from any other 16 1 source than taxation which may be appropriated to the payment 16 2 either of interest or principal, or both principal and interest 16 3 of such bonds, such funds may be so appropriated and used and 16 4 the levy for the payment of the bonds correspondingly reduced. 16 5 This section shall not restrict the authority of a political 16 6 subdivision to apply local sales and services tax or local 16 7 use tax receipts collected pursuant to chapter 423B for such 16 8 purpose. Notwithstanding section 423F.3, a school district may 16 9 apply tax receipts received pursuant to chapter 423F for the 16 10 purposes of this section. 16 11 Sec. 15. Section 279.63, subsection 2, paragraph a, Code 16 12 2017, is amended to read as follows: 16 13 a. All property tax levies, income surtaxes, and 16 14 local option sales and use taxes in place in the school 16 15 district, listed by type of levy, rate, amount, duration, 16 16 and notification of the maximum rate and amount limitations 16 17 permitted by statute. 16 18 Sec. 16. Section 418.13, subsection 2, Code 2017, is amended 16 19 to read as follows: 16 20 2. In addition to the moneys received pursuant to section 16 21 418.10 or 418.12, a governmental entity may deposit in the 16 22 flood project fund any other moneys lawfully received by the 16 23 governmental entity, including but not limited to local sales 16 24 and services tax or local use tax receipts collected under 16 25 chapter 423B. 16 26 Sec. 17. Section 423.4, subsection 7, paragraph f, Code 16 27 2017, is amended to read as follows: 16 28 f. The refund in this subsection applies only to state sales 16 29 and use tax paid and does not apply to local option sales and 16 30 services taxes or local option use taxes imposed pursuant to 16 31 chapter 423B. Notwithstanding the state sales tax imposed 16 32 in section 423.2, a refund issued pursuant to this section 16 33 shall not exceed an amount equal to five percent of the sales 16 34 price of the fuel used to create heat, power, and steam for 16 35 processing or generating electrical current or from the sale 17 1 price of electricity consumed by computers, machinery, or other 17 2 equipment for operation of the data center business facility. 17 3 Sec. 18. Section 423.4, subsection 8, paragraph g, Code 17 4 2017, is amended to read as follows: 17 5 g. The refund in this subsection applies only to state sales 17 6 and use tax paid and does not apply to local option sales and 17 7 services taxes or local option use taxes imposed pursuant to 17 8 chapter 423B. Notwithstanding the state sales tax imposed in 17 9 section 423.2, a refund issued pursuant to this section shall 17 10 not exceed an amount equal to five percent of the sales price 17 11 of the items listed in paragraph "a", subparagraphs (1), (2), 17 12 and (3). 17 13 Sec. 19. Section 423.34A, unnumbered paragraph 1, Code 17 14 2017, is amended to read as follows: 17 15 A purchaser is relieved of liability for payment of state 17 16 sales or use tax, for payment of any local option sales or use 17 17 tax, for payment of interest, or for payment of any penalty for 17 18 nonpayment of tax which nonpayment is not fraudulent, willful, 17 19 or intentional, under the following circumstances: 17 20 EXPLANATION 17 21 The inclusion of this explanation does not constitute agreement with 17 22 the explanation's substance by the members of the general assembly. 17 23 BACKGROUND. Iowa law currently imposes a state sales tax and 17 24 a state use tax. The state sales tax applies to retail sales of 17 25 property and certain services within Iowa. The state use tax 17 26 is complementary to the state sales tax and generally applies 17 27 to the purchase of property or a service that would be subject 17 28 to the state sales tax if the transaction was consummated in 17 29 Iowa, but that is instead consummated outside of Iowa but 17 30 purchased for use in Iowa and used in Iowa. 17 31 Iowa law also currently allows Iowa counties to impose a 17 32 local sales and services tax that, with a few exceptions, 17 33 applies to the same sales of property and services as are 17 34 subject to the state sales tax. The local option sales and 17 35 services tax generally applies to sales occurring, and services 18 1 performed, within the area imposing the tax. Iowa law does not 18 2 permit counties to impose a local use tax. 18 3 BILL CHANGES. This bill creates a local option use tax that 18 4 may be imposed by a county that is also imposing a local option 18 5 sales and services tax. If imposed, the local use tax rate 18 6 must be the same as the county's local sales and services tax 18 7 rate, which under current law cannot exceed 1 percent. 18 8 The local option use tax is authorized, imposed, and 18 9 repealed by a county in the same manner as a local option 18 10 sales and services tax and is administered by the department 18 11 of revenue (department) in the same manner as the state sales 18 12 and use tax laws. A county may impose the local option use 18 13 tax upon a petition of the voters or motions of city councils 18 14 or the board of supervisors and after an election at which a 18 15 majority of those voting favors imposition. When imposed, a 18 16 local option use tax only applies in those incorporated areas 18 17 and the unincorporated area of a county in which a majority of 18 18 those voting in the area favored imposition, and if the area 18 19 is also imposing the local sales and services tax. The local 18 20 option use tax may be repealed by a majority vote or by motion 18 21 of the governing body of the area imposing the tax. However, 18 22 if the county's local option sales and services tax is repealed 18 23 or the rate decreased, the bill provides that the local option 18 24 use tax imposed in that county, if any, shall be deemed to 18 25 be repealed or reduced by the same election or motion of the 18 26 governing body. 18 27 The local option use tax is imposed on the same basis as the 18 28 state use tax and is applicable to uses of taxable property 18 29 or services within those incorporated and unincorporated 18 30 areas of the county where it is imposed. The bill provides 18 31 that evidence that tangible personal property was sold by any 18 32 person for delivery to a location in Iowa shall be prima facie 18 33 evidence that such tangible personal property was sold for use 18 34 at that location in Iowa. The bill also provides that the 18 35 local option use tax will not apply to the use of natural gas, 19 1 natural gas service, electricity, or electric service, certain 19 2 uses of motor or special fuel, the use of equipment by the 19 3 state department of transportation, and the use of any property 19 4 or service not taxed by the state. 19 5 The local option use tax is required to be collected by 19 6 persons required to collect state use taxes, and if not 19 7 collected by such persons is required to be paid by the person 19 8 using the property or service. 19 9 Local option use taxes are remitted to the department of 19 10 revenue to be deposited in the appropriate county's account 19 11 within the local use tax fund created in the bill, and are then 19 12 distributed back to local governments according to a statutory 19 13 formula involving population and property tax revenues in the 19 14 same manner as local sales and services tax revenues are under 19 15 current law. Local option use taxes received by a city or 19 16 county may be expended for any lawful purposes of the city or 19 17 county. 19 18 The bill provides that local option use taxes may be refunded 19 19 to certain construction contractors, and pledged towards the 19 20 repayment of bonds of a city or county, in the same manner as 19 21 local option sales and services taxes may be under current law. 19 22 The bill does not allow local use tax revenues to be used to 19 23 fund urban renewal projects, which is a permitted use of local 19 24 sales and services tax revenues under current law. 19 25 Finally, the bill makes several corresponding changes 19 26 to provisions of the Iowa Code that reference local option 19 27 taxes or the local option sales and services tax to include 19 28 references to the local option use tax created in the bill. LSB 2285YH (2) 87 mm/rj
