Bill Text: IA HSB707 | 2019-2020 | 88th General Assembly | Introduced
Bill Title: A bill for an act exempting from the sales and use tax certain sales of computer peripherals, and rescinding related rules in the Iowa administrative code.
Spectrum: Committee Bill
Status: (N/A - Dead) 2020-03-04 - Subcommittee recommends passage. [HSB707 Detail]
Download: Iowa-2019-HSB707-Introduced.html
House
Study
Bill
707
-
Introduced
HOUSE
FILE
_____
BY
(PROPOSED
COMMITTEE
ON
WAYS
AND
MEANS
BILL
BY
CHAIRPERSON
HEIN)
A
BILL
FOR
An
Act
exempting
from
the
sales
and
use
tax
certain
sales
of
1
computer
peripherals,
and
rescinding
related
rules
in
the
2
Iowa
administrative
code.
3
BE
IT
ENACTED
BY
THE
GENERAL
ASSEMBLY
OF
THE
STATE
OF
IOWA:
4
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Section
1.
Section
423.1,
Code
2020,
is
amended
by
adding
1
the
following
new
subsection:
2
NEW
SUBSECTION
.
10A.
“Computer
peripheral”
means
an
3
ancillary
device
connected
to
the
computer
digitally,
by
4
cable,
or
by
other
medium,
used
to
put
information
into
or
get
5
information
out
of
a
computer.
6
Sec.
2.
Section
423.3,
subsection
47,
Code
2020,
is
amended
7
to
read
as
follows:
8
47.
a.
The
sales
price
from
the
sale
or
rental
of
9
computers,
computer
peripherals,
machinery,
equipment,
10
replacement
parts,
supplies,
and
materials
used
to
construct
11
or
self-construct
computers,
computer
peripherals,
machinery,
12
equipment,
replacement
parts,
and
supplies,
if
such
items
are
13
any
of
the
following:
14
(1)
Directly
and
primarily
used
in
processing
by
a
15
manufacturer.
16
(2)
Directly
and
primarily
used
to
maintain
the
integrity
17
of
the
product
or
to
maintain
unique
environmental
conditions
18
required
for
either
the
product
or
the
computers,
computer
19
peripherals,
machinery,
and
equipment
used
in
processing
by
a
20
manufacturer,
including
test
equipment
used
to
control
quality
21
and
specifications
of
the
product.
22
(3)
Directly
and
primarily
used
in
research
and
development
23
of
new
products
or
processes
of
processing.
24
(4)
Computers
and
computer
peripherals
used
in
processing
25
or
storage
of
data
or
information
by
an
insurance
company,
26
financial
institution,
or
commercial
enterprise.
27
(5)
Directly
and
primarily
used
in
recycling
or
28
reprocessing
of
waste
products.
29
(6)
Pollution-control
equipment
used
by
a
manufacturer,
30
including
but
not
limited
to
that
required
or
certified
by
an
31
agency
of
this
state
or
of
the
United
States
government.
32
b.
The
sales
price
from
the
sale
of
fuel
used
in
creating
33
heat,
power,
steam,
or
for
generating
electrical
current,
or
34
from
the
sale
of
electricity,
consumed
by
computers,
computer
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_____
peripherals,
machinery,
or
equipment
used
in
an
exempt
manner
1
described
in
paragraph
“a”
,
subparagraph
(1),
(2),
(3),
(5),
or
2
(6).
3
c.
The
sales
price
from
the
sale
or
rental
of
the
following
4
shall
not
be
exempt
from
the
tax
imposed
by
this
subchapter
:
5
(1)
Hand
tools.
6
(2)
Point-of-sale
equipment
,
and
computers
,
and
computer
7
peripherals
.
8
(3)
The
following
within
the
scope
of
section
427A.1,
9
subsection
1
,
paragraphs
“h”
and
“i”
:
10
(a)
Computers.
11
(b)
Computer
peripherals.
12
(b)
(c)
Machinery.
13
(c)
(d)
Equipment,
including
pollution
control
equipment.
14
(d)
(e)
Replacement
parts.
15
(e)
(f)
Supplies.
16
(f)
(g)
Materials
used
to
construct
or
self-construct
the
17
following:
18
(i)
Computers.
19
(ii)
Computer
peripherals.
20
(ii)
(iii)
Machinery.
21
(iii)
(iv)
Equipment,
including
pollution
control
22
equipment.
23
(iv)
(v)
Replacement
parts.
24
(v)
(vi)
Supplies.
25
(4)
Vehicles
subject
to
registration,
except
vehicles
26
subject
to
registration
which
are
directly
and
primarily
used
27
in
recycling
or
reprocessing
of
waste
products.
28
d.
As
used
in
this
subsection
:
29
(1)
“Commercial
enterprise”
means
businesses
and
30
manufacturers
conducted
for
profit,
for-profit
and
nonprofit
31
insurance
companies,
and
for-profit
and
nonprofit
financial
32
institutions,
but
excludes
other
nonprofits
and
professions
and
33
occupations.
34
(2)
“Financial
institution”
means
as
defined
in
section
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527.2
.
1
(3)
“Insurance
company”
means
an
insurer
organized
or
2
operating
under
chapter
508
,
514
,
515
,
518
,
518A
,
519
,
or
3
520
,
or
authorized
to
do
business
in
Iowa
as
an
insurer
or
an
4
insurance
producer
under
chapter
522B
.
5
(4)
(a)
“Manufacturer”
means
a
business
that
primarily
6
purchases,
receives,
or
holds
personal
property
of
any
7
description
for
the
purpose
of
adding
to
its
value
by
a
process
8
of
manufacturing
with
a
view
to
selling
the
property
for
gain
9
or
profit.
10
(b)
“Manufacturer”
includes
contract
manufacturers.
A
11
contract
manufacturer
is
a
manufacturer
that
otherwise
falls
12
within
the
definition
of
manufacturer,
except
that
a
contract
13
manufacturer
does
not
sell
the
tangible
personal
property
14
the
contract
manufacturer
processes
on
behalf
of
other
15
manufacturers.
16
(c)
“Manufacturer”
does
not
include
persons
who
are
not
17
commonly
understood
as
manufacturers,
including
but
not
18
limited
to
persons
primarily
engaged
in
any
of
the
following
19
activities:
20
(i)
Construction
contracting.
21
(ii)
Repairing
tangible
personal
property
or
real
property.
22
(iii)
Providing
health
care.
23
(iv)
Farming,
including
cultivating
agricultural
products
24
and
raising
livestock.
25
(v)
Transporting
for
hire.
26
(d)
For
purposes
of
this
subparagraph:
27
(i)
“Business”
means
those
businesses
conducted
for
28
profit,
but
excludes
professions
and
occupations
and
nonprofit
29
organizations.
30
(ii)
“Manufacturing”
means
those
activities
commonly
31
understood
within
the
ordinary
meaning
of
the
term,
and
shall
32
include:
33
(A)
Refining.
34
(B)
Purifying.
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(C)
Combining
of
different
materials.
1
(D)
Packing
of
meats.
2
(E)
Activities
subsequent
to
the
extractive
process
of
3
quarrying
or
mining,
such
as
crushing,
washing,
sizing,
or
4
blending
of
aggregate
materials.
5
(iii)
“Manufacturing”
does
not
include
activities
occurring
6
on
premises
primarily
used
to
make
retail
sales.
7
(5)
“Processing”
means
a
series
of
operations
in
which
8
materials
are
manufactured,
refined,
purified,
created,
9
combined,
or
transformed
by
a
manufacturer,
ultimately
10
into
tangible
personal
property.
Processing
encompasses
11
all
activities
commencing
with
the
receipt
or
producing
of
12
raw
materials
by
the
manufacturer
and
ending
at
the
point
13
products
are
delivered
for
shipment
or
transferred
from
the
14
manufacturer.
Processing
includes
but
is
not
limited
to
15
refinement
or
purification
of
materials;
treatment
of
materials
16
to
change
their
form,
context,
or
condition;
maintenance
17
of
the
quality
or
integrity
of
materials,
components,
or
18
products;
maintenance
of
environmental
conditions
necessary
for
19
materials,
components,
or
products;
quality
control
activities;
20
and
construction
of
packaging
and
shipping
devices,
placement
21
into
shipping
containers
or
any
type
of
shipping
devices
or
22
medium,
and
the
movement
of
materials,
components,
or
products
23
until
shipment
from
the
processor.
24
(6)
“Receipt
or
producing
of
raw
materials”
means
activities
25
performed
upon
tangible
personal
property
only.
With
respect
26
to
raw
materials
produced
from
or
upon
real
estate,
the
receipt
27
or
producing
of
raw
materials
is
deemed
to
occur
immediately
28
following
the
severance
of
the
raw
materials
from
the
real
29
estate.
30
(7)
“Replacement
part”
means
tangible
personal
property
31
other
than
computers,
computer
peripherals,
machinery,
32
equipment,
or
supplies,
regardless
of
the
cost
or
useful
life
33
of
the
tangible
personal
property,
that
meets
all
of
the
34
following
conditions:
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(a)
The
tangible
personal
property
replaces
a
component
of
1
a
computer,
computer
peripheral,
machinery,
or
equipment,
which
2
component
is
capable
of
being
separated
from
the
computer,
3
computer
peripheral,
machinery,
or
equipment.
4
(b)
The
tangible
personal
property
performs
the
same
or
5
similar
function
as
the
component
it
replaced.
6
(c)
The
tangible
personal
property
restores
the
computer,
7
computer
peripheral,
machinery,
or
equipment
to
an
operational
8
condition,
or
upgrades
or
improves
the
efficiency
of
the
9
computer,
computer
peripheral,
machinery,
or
equipment.
10
(8)
“Supplies”
means
tangible
personal
property,
other
11
than
computers,
computer
peripherals,
machinery,
equipment,
or
12
replacement
parts,
that
meets
one
of
the
following
conditions:
13
(a)
The
tangible
personal
property
is
to
be
connected
to
14
a
computer,
computer
peripheral,
machinery,
or
equipment
and
15
requires
regular
replacement
because
the
property
is
consumed
16
or
deteriorates
during
use,
including
but
not
limited
to
saw
17
blades,
drill
bits,
filters,
and
other
similar
items
with
a
18
short
useful
life.
19
(b)
The
tangible
personal
property
is
used
in
conjunction
20
with
a
computer,
computer
peripheral,
machinery,
or
equipment
21
and
is
specially
designed
for
use
in
manufacturing
specific
22
products
and
may
be
used
interchangeably
and
intermittently
on
23
a
particular
computer,
computer
peripheral,
machine,
or
piece
24
of
equipment,
including
but
not
limited
to
jigs,
dies,
tools,
25
and
other
similar
items.
26
(c)
The
tangible
personal
property
comes
into
physical
27
contact
with
other
tangible
personal
property
used
in
28
processing
and
is
used
to
assist
with
or
maintain
conditions
29
necessary
for
processing,
including
but
not
limited
to
cutting
30
fluids,
oils,
coolants,
lubricants,
and
other
similar
items
31
with
a
short
useful
life.
32
(d)
The
tangible
personal
property
is
directly
and
33
primarily
used
in
an
activity
described
in
paragraph
“a”
,
34
subparagraphs
(1)
through
(6),
including
but
not
limited
to
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prototype
materials
and
testing
materials.
1
Sec.
3.
RESCISSION
OF
ADMINISTRATIVE
RULES.
2
1.
The
following
Iowa
administrative
rules
are
rescinded
as
3
of
July
1,
2020:
4
a.
701
Iowa
administrative
code,
rule
18.34,
subrule
1,
5
paragraph
“b”,
subparagraph
(1).
6
b.
701
Iowa
administrative
code,
rule
18.45,
subrule
1,
7
definition
of
“computer”.
8
c.
701
Iowa
administrative
code,
rule
18.58,
subrule
1,
9
definition
of
“computer”.
10
d.
701
Iowa
administrative
code,
rule
230.14,
subrule
2,
11
paragraph
“a”.
12
2.
As
soon
as
practicable
after
July
1,
2020,
the
Iowa
13
administrative
code
editor
shall
remove
the
language
of
the
14
Iowa
administrative
rules
referenced
in
subsection
1
of
this
15
section
from
the
Iowa
administrative
code.
16
EXPLANATION
17
The
inclusion
of
this
explanation
does
not
constitute
agreement
with
18
the
explanation’s
substance
by
the
members
of
the
general
assembly.
19
This
bill
exempts
from
the
sales
and
use
tax
certain
sales
of
20
computer
peripherals.
The
bill
exempts
computer
peripherals
21
in
the
same
manner
as
computers
are
exempted
from
the
sales
22
and
use
tax,
and
excludes
from
the
exemption
certain
computer
23
peripheral
sales
in
the
same
manner
as
computers
are
excluded
24
from
the
exemption.
25
The
bill
defines
“computer
peripheral”
to
mean
an
ancillary
26
device
connected
to
the
computer
digitally,
by
cable,
or
by
27
other
medium,
used
to
put
information
into
or
get
information
28
out
of
a
computer.
29
The
bill
also
makes
changes
to
Code
section
423.3(47)
to
30
enhance
the
readability
of
the
subsection.
31
By
operation
of
Code
section
423.6,
an
item
exempt
from
the
32
imposition
of
the
sales
tax
is
also
exempt
from
the
use
tax
33
imposed
in
Code
section
423.5.
34
The
bill
also
rescinds
rules
of
the
department
of
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