Bill Text: IA SF2328 | 2011-2012 | 84th General Assembly | Enrolled

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Bill Title: A bill for an act relating to the technical administration of the tax and related laws by the department of revenue, including the administration of income taxes, sales and use taxes, franchise fees, notification of annexation or severance by cities, and cigarette and tobacco taxes, and including retroactive applicability provisions. (Formerly SSB 3131.) Effective 7-1-12.

Sponsorship: Committee Bill

Status: (Passed) 2012-05-02 - Signed by Governor. S.J. 885. [SF2328 Detail]

Download: Iowa-2011-SF2328-Enrolled.html

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Senate File 2328
AN ACT
RELATING TO THE TECHNICAL ADMINISTRATION OF THE TAX AND
RELATED LAWS BY THE DEPARTMENT OF REVENUE, INCLUDING
THE ADMINISTRATION OF INCOME TAXES, SALES AND USE TAXES,
FRANCHISE FEES, NOTIFICATION OF ANNEXATION OR SEVERANCE
BY CITIES, AND CIGARETTE AND TOBACCO TAXES, AND INCLUDING
RETROACTIVE APPLICABILITY PROVISIONS.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
DIVISION I
INCOME TAXES
Section 1. Section 2.48, subsection 3, paragraph a,
subparagraph (2), Code 2011, is amended to read as follows:
(2) The tax credits for increasing research activities
available under sections 15.335 , 15A.9 , 422.10 , and 422.33 .
Sec. 2. Section 15.119, subsection 2, paragraph c, Code
Supplement 2011, is amended by striking the paragraph.
Sec. 3. Section 15.293A, subsection 2, paragraph b,
subparagraph (6), Code Supplement 2011, is amended to read as
follows:
(6) A tax credit shall not be claimed by a transferee
under this section until a replacement tax credit certificate
identifying the transferee as the proper holder has been
issued. The transferee may use the amount of the tax credit
transferred against the taxes imposed in chapter 422, divisions
II , III , and V , and in chapter 432 , and against the moneys and
credits tax imposed in section 533.329 , for any tax year the
original transferor could have claimed the tax credit. Any
consideration received for the transfer of the tax credit shall
not be included as income under chapter 422, divisions II , III ,
and V , under chapter 432 , or against the moneys and credits tax

Senate File 2328, p. 2
imposed in section 533.329 . Any consideration paid for the
transfer of the tax credit shall not be deducted from income
under chapter 422, divisions II , III , and V , under chapter
432 , or against the moneys and credits tax imposed in section
533.329 .
Sec. 4. Section 15.329, subsection 3, Code Supplement 2011,
is amended by striking the subsection.
Sec. 5. Section 15.393, subsection 2, paragraph a,
subparagraph (3), Code Supplement 2011, is amended to read as
follows:
(3) After verifying the eligibility for a tax credit
under this paragraph “a” , the economic development authority
shall issue a film, television, and video project promotion
program tax credit certificate to be attached to the person’s
tax return. The tax credit certificate shall contain the
taxpayer’s name, address, tax identification number, the date
of project completion, the amount of credit, other information
required by the department of revenue, and a place for the name
and tax identification number of a transferee and the amount
of the tax credit being transferred. Tax credit certificates
issued under this paragraph “a” may be transferred to any person
or entity. Within ninety days of transfer, the transferee
shall submit the transferred tax credit certificate to the
department of revenue along with a statement containing the
transferee’s name, tax identification number, and address,
and the denomination that each replacement tax credit
certificate is to carry and any other information required by
the department of revenue. Within thirty days of receiving
the transferred tax credit certificate and the transferee’s
statement, the department of revenue shall issue one or more
replacement tax credit certificates to the transferee. Each
replacement tax credit certificate must contain the information
required for the original tax credit certificate and must have
the same expiration date that appeared in the transferred tax
credit certificate. Tax credit certificate amounts of less
than the minimum amount established by rule of the economic
development authority shall not be transferable. A tax credit
shall not be claimed by a transferee under this paragraph
“a” until a replacement tax credit certificate identifying
the transferee as the proper holder has been issued. The
transferee may use the amount of the tax credit transferred
against the taxes imposed in chapter 422, divisions II ,
III , and V , and in chapter 432 , and against the moneys and

Senate File 2328, p. 3
credits tax imposed in section 533.329 , for any tax year the
original transferor could have claimed the tax credit. Any
consideration received for the transfer of the tax credit shall
not be included as income under chapter 422, divisions II , III ,
and V , under chapter 432 , or against the moneys and credits tax
imposed in section 533.329 . Any consideration paid for the
transfer of the tax credit shall not be deducted from income
under chapter 422, divisions II , III , and V , under chapter
432 , or against the moneys and credits tax imposed in section
533.329 .
Sec. 6. Section 15.393, subsection 2, paragraph b,
subparagraph (2), Code Supplement 2011, is amended to read as
follows:
(2) After verifying the eligibility for a tax credit
under this paragraph “b” , the economic development authority
shall issue a film, television, and video project promotion
program tax credit certificate to be attached to the person’s
tax return. The tax credit certificate shall contain the
taxpayer’s name, address, tax identification number, the date
of project completion, the amount of credit, other information
required by the department of revenue, and a place for the name
and tax identification number of a transferee and the amount
of the tax credit being transferred. Tax credit certificates
issued under this paragraph “b” may be transferred to any person
or entity. Within ninety days of transfer, the transferee
shall submit the transferred tax credit certificate to the
department of revenue along with a statement containing the
transferee’s name, tax identification number, and address,
and the denomination that each replacement tax credit
certificate is to carry and any other information required by
the department of revenue. Within thirty days of receiving
the transferred tax credit certificate and the transferee’s
statement, the department of revenue shall issue one or more
replacement tax credit certificates to the transferee. Each
replacement tax credit certificate must contain the information
required for the original tax credit certificate and must have
the same expiration date that appeared in the transferred tax
credit certificate. Tax credit certificate amounts of less
than the minimum amount established by rule of the economic
development authority shall not be transferable. A tax credit
shall not be claimed by a transferee under this paragraph
“b” until a replacement tax credit certificate identifying
the transferee as the proper holder has been issued. The

Senate File 2328, p. 4
transferee may use the amount of the tax credit transferred
against the taxes imposed in chapter 422, divisions II ,
III , and V , and in chapter 432 , and against the moneys and
credits tax imposed in section 533.329 , for any tax year the
original transferor could have claimed the tax credit. Any
consideration received for the transfer of the tax credit shall
not be included as income under chapter 422, divisions II , III ,
and V , under chapter 432 , or against the moneys and credits tax
imposed in section 533.329 . Any consideration paid for the
transfer of the tax credit shall not be deducted from income
under chapter 422, divisions II , III , and V , under chapter
432 , or against the moneys and credits tax imposed in section
533.329 .
Sec. 7. Section 422.7, subsection 9, Code Supplement 2011,
is amended to read as follows:
9. Subtract the amount of the alcohol fuel and cellulosic
biofuel fuels credit allowable for the tax year under section
40 of the Internal Revenue Code to the extent that the credit
increased federal adjusted gross income.
Sec. 8. Section 422.13, subsection 1, paragraph a, Code
2011, is amended to read as follows:
a. The individual has net income of more than nine thousand
dollars or more for the tax year from sources taxable under
this division .
Sec. 9. Section 422.28, Code 2011, is amended to read as
follows:
422.28 Revision of tax.
A taxpayer may appeal to the director for revision of
the tax, interest, or penalties assessed at any time within
sixty days from the date of the notice of the assessment of
tax, additional tax, interest, or penalties. The director
shall grant a hearing and if, upon the hearing, the director
determines that the tax, interest, or penalties are excessive
or incorrect, the director shall revise them according to
the law and the facts and adjust the computation of the tax,
interest, or penalties accordingly. The director shall notify
the taxpayer by mail of the result of the hearing and shall
refund to the taxpayer the amount, if any, paid in excess of
the tax, interest, or penalties found by the director to be
due, with interest after sixty days accruing from the date of
first day of the second calendar month following the date of
payment by the taxpayer at the rate in effect under section
421.7 for each month or a fraction of a month.

Senate File 2328, p. 5
Sec. 10. Section 422.33, subsection 5, paragraph f, Code
Supplement 2011, is amended by striking the paragraph.
Sec. 11. Section 422.33, subsection 12, paragraph b, Code
Supplement 2011, is amended to read as follows:
b. The taxes imposed under this division shall be reduced by
investment tax credits authorized pursuant to sections section
15.333 , 15A.9, subsection 4 , and section 15E.193B, subsection
6 .
Sec. 12. Section 422.35, subsection 7, Code Supplement
2011, is amended to read as follows:
7. Subtract the amount of the alcohol fuel and cellulosic
biofuel fuels credit allowable for the tax year under section
40 of the Internal Revenue Code to the extent that the credit
increased federal taxable income.
Sec. 13. Section 422.36, subsection 4, Code 2011, is amended
to read as follows:
4. Foreign and domestic corporations shall file a copy of
their federal income tax return for the current tax year with
the return required by this section .
Sec. 14. Section 422.73, subsection 2, Code Supplement
2011, is amended by striking the subsection.
Sec. 15. Section 422.89, subsection 3, paragraph a,
unnumbered paragraph 1, Code Supplement 2011, is amended to
read as follows:
An amount equal to ninety one hundred percent of the tax for
the taxable year computed by placing on an annualized basis the
taxable income:
Sec. 16. REPEAL. Section 15A.9, Code Supplement 2011, is
repealed.
Sec. 17. RETROACTIVE APPLICABILITY. The following
provision or provisions of this division of this Act apply
retroactively to January 1, 2012, for tax years beginning on
or after that date:
1. The section of this Act amending section 422.89.
DIVISION II
SALES TAXES
Sec. 18. Section 423.3, subsection 40, Code Supplement
2011, is amended to read as follows:
40. The sales price from the sale of automotive fluids
to a retailer to be used either in providing a service which
includes the installation or application of the fluids in
or on a motor vehicle, which service is subject to section
423.2, subsection 6 , or to be installed in or applied to a

Senate File 2328, p. 6
motor vehicle which the retailer intends to sell, which sale
is subject to section 423.26 321.105A . For purposes of this
subsection , automotive fluids are all those which are refined,
manufactured, or otherwise processed and packaged for sale
prior to their installation in or application to a motor
vehicle. They include but are not limited to motor oil and
other lubricants, hydraulic fluids, brake fluid, transmission
fluid, sealants, undercoatings, antifreeze, and gasoline
additives.
Sec. 19. Section 423.3, Code Supplement 2011, is amended by
adding the following new subsection:
NEW SUBSECTION . 96. The sale price of fees charged for the
release of medical records as described in section 622.10.
Sec. 20. Section 423.36, subsection 3, paragraph a, Code
2011, is amended to read as follows:
a. The department shall grant and issue to each applicant
a permit for each place of business in this state where sales
or use tax is collected. A permit is not assignable and is
valid only for the person in whose name it is issued and for the
transaction of business at the place designated or at a place
of relocation within the state same county if the ownership
remains the same.
Sec. 21. Section 423.57, Code 2011, is amended to read as
follows:
423.57 Statutes applicable.
The director shall administer this subchapter as it relates
to the taxes imposed in this chapter in the same manner and
subject to all the provisions of, and all of the powers,
duties, authority, and restrictions contained in sections
423.14 , 423.15 , 423.16 , 423.17 , 423.19 , 423.20 , 423.21 , 423.22 ,
423.23 , 423.24 , 423.25 , 423.28 , 423.29 , 423.31 , 423.32 , 423.33 ,
423.34 , 423.34A , 423.35 , 423.37 , 423.38 , 423.39 , 423.40 ,
423.41 , and 423.42 , section 423.43, subsection 1 , and sections
423.45 , 423.46 , and 423.47 .
Sec. 22. Section 622.10, subsection 6, paragraph c, Code
Supplement 2011, is amended to read as follows:
c. Fees charged pursuant to this subsection are not subject
to a sales or use tax exempt from the sales tax pursuant
to section 423.3, subsection 96 . A provider providing the
records or images may require payment in advance if an itemized
statement demanding such is provided to the requesting party
within fifteen days of the request. Upon a timely request
for payment in advance, the time for providing the records or

Senate File 2328, p. 7
images shall be extended until the greater of thirty days from
the date of the original request or ten days from the receipt
of payment.
Sec. 23. REPEAL. Section 423.28, Code 2011, is repealed.
DIVISION III
MISCELLANEOUS
Sec. 24. Section 364.2, subsection 4, paragraph f, Code
2011, is amended to read as follows:
f. (1) A franchise fee assessed by a city may be based
upon a percentage of gross revenues generated from sales of the
franchisee within the city not to exceed five percent, without
regard to the city’s cost of inspecting, supervising, and
otherwise regulating the franchise. Franchise fees collected
pursuant to an ordinance in effect on May 26, 2009, shall be
deposited in the city’s general fund and such fees collected
in excess of the amounts necessary to inspect, supervise, and
otherwise regulate the franchise may be used by the city for
any other purpose authorized by law. Franchise fees collected
pursuant to an ordinance that is adopted or amended on or
after May 26, 2009, to increase the percentage rate at which
franchise fees are assessed shall be credited to the franchise
fee account within the city’s general fund and used pursuant
to section 384.3A . If a city franchise fee is assessed to
customers of a franchise, the fee shall not be assessed to the
city as a customer. Before a city adopts or amends a franchise
fee rate ordinance or franchise ordinance to increase the
percentage rate at which franchise fees are assessed, a revenue
purpose statement shall be prepared specifying the purpose or
purposes for which the revenue collected from the increased
rate will be expended. If property tax relief is listed as
a purpose, the revenue purpose statement shall also include
information regarding the amount of the property tax relief to
be provided with revenue collected from the increased rate.
The revenue purpose statement shall be published as provided
in section 362.3 .
(2) If a city adopts, amends, or repeals an ordinance
imposing a franchise fee, the city shall promptly notify the
director of revenue of such action.
Sec. 25. Section 368.24, Code 2011, is amended to read as
follows:
368.24 Notification to public utilities and to the department
of revenue .
Notwithstanding any other provision of law to the contrary,

Senate File 2328, p. 8
any city that annexes territory or any city from which
territory is severed shall provide written notification
consisting of a legal description and map of the annexed or
severed territory, each street address within the annexed
or severed area, where possible, a statement containing the
effective date of the annexation or severance and a copy of
the order, resolution, or ordinance proclaiming the annexation
or severance to all public utilities operating in the annexed
or severed area and to the department of revenue . If the
notification of the an annexation is provided to a public
utility less than sixty days prior to the effective date of the
annexation, the public utility shall have sixty days from the
date of notification to adjust its tax and accounting records
to reflect the annexation for any tax purpose.
DIVISION IV
CIGARETTE AND TOBACCO TAXES
Sec. 26. Section 453A.1, subsections 4 and 14, Code 2011,
are amended to read as follows:
4. “Cigarette vending machine” means any self-service device
offered for public use which, upon insertion of a coin, coins,
paper currency, or by other means payment or insertion of
loose tobacco product , dispenses , or assembles and dispenses,
cigarettes or tobacco products without the necessity of
replenishing the device between each vending operation .
14. “Individual packages of cigarettes” shall mean and
include every package of cigarettes or quantity of cigarettes
assembled and ordinarily sold at retail.
Sec. 27. Section 453A.6, subsection 7, Code 2011, is amended
to read as follows:
7. Cigarettes shall be sold or dispensed only in packages or
quantities of twenty or more cigarettes.
8. Any permit holder owning, renting, leasing, or otherwise
operating a cigarette vending machine into which loose tobacco
products are inserted and from which assembled cigarettes are
dispensed shall do all the following:
a. Pay directly to the department, in lieu of the tax under
subsection 1, a tax equal to three and six hundredths cents on
each cigarette dispensed from such machine.
b. Allow to be inserted into such machine only loose tobacco
products whose manufacturer and brand family are then currently
listed on the directory maintained by the director under
chapter 453D.
c. On or after January 1, 2014, allow to be dispensed from

Senate File 2328, p. 9
such machine only cigarettes which are in compliance with the
requirements of chapter 101B.
d. Maintain in good working order on such machine a secure
meter that counts the number of cigarettes dispensed by the
machine, which meter cannot be accessed except for the sole
purpose of taking meter readings, and cannot be reset or
otherwise altered by the permit holder.
Sec. 28. 2005 Iowa Acts, chapter 77, section 1, unnumbered
paragraph 4, is amended to read as follows:
The committee shall annually report to the general assembly
by January 1 of each year through January 1, 2013 2016 .
______________________________
JOHN P. KIBBIE
President of the Senate
______________________________
KRAIG PAULSEN
Speaker of the House
I hereby certify that this bill originated in the Senate and
is known as Senate File 2328, Eighty-fourth General Assembly.
______________________________
MICHAEL E. MARSHALL
Secretary of the Senate
Approved _______________, 2012
______________________________
TERRY E. BRANSTAD
Governor