H.F. 2510 Section 1. Section 423.1, Code 2009, is amended by adding 1 the following new subsection: 2 NEW SUBSECTION . 0A. “Affiliate” means any entity to which 3 any of the following applies: 4 a. Directly, indirectly, or constructively controls another 5 entity. 6 b. Is directly, indirectly, or constructively controlled by 7 another entity. 8 c. Is subject to the control of a common entity. A common 9 entity is one which owns directly or individually more than ten 10 percent of the voting securities of the entity. 11 Sec. 2. Section 423.1, subsection 43, Code 2009, is amended 12 by striking the subsection and inserting in lieu thereof the 13 following: 14 43. “Retailer maintaining a place of business in this state” 15 or any similar term includes all of the following: 16 a. A retailer having or maintaining within this state, 17 directly or indirectly by a subsidiary, an office, distribution 18 house, sales house, warehouse, or other such place of business. 19 b. A retailer’s representative operating within this 20 state under the authority of the retailer or the retailer’s 21 subsidiary. 22 c. A solicitor operating in the state with the consent or 23 at the direction of a retailer. 24 d. This subsection applies irrespective of whether a 25 place of business, representative, or solicitor is located 26 or operates here permanently or temporarily or whether the 27 retailer or the retailer’s subsidiary is admitted to do 28 business within this state pursuant to chapter 490. 29 Sec. 3. Section 423.1, Code 2009, is amended by adding the 30 following new subsections: 31 NEW SUBSECTION . 51A. “Solicitor” means a person, including 32 an independent contractor, who directly or indirectly solicits 33 business for a retailer, refers potential customers to a 34 retailer, or otherwise regularly engages in activity which 35 -1- LSB 5763HH (5) 83 tw/sc 1/ 6

H.F. 2510 is significantly associated with the retailer’s ability to 1 establish or maintain a market in the state or which effects a 2 substantial amount of sales by the retailer in the state. 3 NEW SUBSECTION . 52A. “State agency” means an authority, 4 board, commission, department, instrumentality, or other 5 administrative office or unit of this state, or any other state 6 entity reported in the Iowa comprehensive annual financial 7 report, including public institutions of higher education. 8 NEW SUBSECTION . 62. “Voting security” means a security to 9 which any of the following applies: 10 a. Confers upon the holder the right to vote for the 11 election of members of the board of directors or similar 12 governing body of the entity. 13 b. Is convertible into, or entitles the holder to receive 14 upon its exercise, a security that confers such a right to 15 vote. 16 c. Is a general partnership interest. 17 Sec. 4. NEW SECTION . 423.1A Presumption of solicitation. 18 1. A person shall be presumed to be a solicitor for purposes 19 of this chapter if all of the following conditions are met: 20 a. The person has entered into an agreement with a retailer 21 whereby a commission or other consideration is paid by the 22 retailer to the person for directly or indirectly referring 23 potential customers to the retailer by digital or electronic 24 means. For purposes of this section, “digital or electronic 25 means” includes a link on an internet site or any substantially 26 similar mechanism designed for use on a personal computer or 27 other personal digital device that provides the ability to 28 direct potential customers from the person to the retailer for 29 the purpose of making a sale at retail. 30 b. The retailer has total gross receipts attributable to 31 agreements such as those described in paragraph “a” in excess of 32 ten thousand dollars for the twelve-month period ending on the 33 last day of the most recent calendar quarter. 34 2. The presumption created in subsection 1 may be rebutted 35 -2- LSB 5763HH (5) 83 tw/sc 2/ 6

H.F. 2510 by a showing of proof that a person with whom the retailer 1 has an agreement did not directly or indirectly engage in 2 referrals in the state or that the activities of the person on 3 behalf of the retailer were de minimis. Maintaining a digital 4 or electronic means of referral shall not be considered de 5 minimis. 6 3. This section shall not be interpreted or construed in any 7 way to limit the definition of “solicitor” or other definitions 8 provided in section 423.1. 9 Sec. 5. Section 423.2, subsection 10, Code 2009, is amended 10 to read as follows: 11 10. a. Any person or that person’s affiliate, which is 12 a retailer in this state or a retailer maintaining a place 13 of business in this state under this chapter, that enters into 14 a contract with an agency of this state must register, collect, 15 and remit Iowa sales tax under this chapter on all sales of 16 tangible personal property and enumerated services. 17 b. Every bid submitted and each contract executed by a 18 state agency shall contain a certification by the bidder or 19 contractor stating that the bidder or contractor is registered 20 with the department and will collect and remit Iowa sales tax 21 due under this chapter. In the certification, the bidder or 22 contractor shall also acknowledge that the state agency may 23 declare the contract or bid void if the certification is false. 24 Fraudulent certification, by act or omission, may result in 25 the state agency or its representative filing for damages for 26 breach of contract. 27 For the purposes of this subsection , the following 28 definitions apply: 29 a. “Affiliate” means any entity to which any of the 30 following applies: 31 (1) Directly, indirectly, or constructively controls 32 another entity. 33 (2) Is directly, indirectly, or constructively controlled 34 by another entity. 35 -3- LSB 5763HH (5) 83 tw/sc 3/ 6

H.F. 2510 (3) Is subject to the control of a common entity. A common 1 entity is one which owns directly or individually more than ten 2 percent of the voting securities of the entity. 3 b. “State agency” means an authority, board, commission, 4 department, instrumentality, or other administrative office or 5 unit of this state, or any other state entity reported in the 6 Iowa comprehensive annual financial report, including public 7 institutions of higher education. 8 c. “Voting security” means a security to which any of the 9 following applies: 10 (1) Confers upon the holder the right to vote for the 11 election of members of the board of directors or similar 12 governing body of the entity. 13 (2) Is convertible into, or entitles the holder to receive 14 upon its exercise, a security that confers such a right to 15 vote. 16 (3) Is a general partnership interest. 17 Sec. 6. Section 423.5, subsection 8, Code 2009, is amended 18 to read as follows: 19 8. Any person or that person’s affiliate, which is a 20 retailer in this state or a retailer maintaining a place 21 of business in this state under this chapter, that enters 22 into a contract with an agency of this state must register, 23 collect, and remit Iowa use tax under this chapter on all sales 24 of tangible personal property and enumerated services. Every 25 bid submitted and each contract executed by a state agency 26 shall contain a certification by the bidder or contractor 27 stating that the bidder or contractor is registered with the 28 department and will collect and remit Iowa use tax due under 29 this chapter. In the certification, the bidder or contractor 30 shall also acknowledge that the state agency may declare the 31 contract or bid void if the certification is false. Fraudulent 32 certification, by act or omission, may result in the state 33 agency or its representative filing for damages for breach of 34 contract. 35 -4- LSB 5763HH (5) 83 tw/sc 4/ 6

H.F. 2510 For the purposes of this subsection , “affiliate” , “state 1 agency” , and “voting security” mean the same as defined in 2 section 423.2, subsection 10 . 3 Sec. 7. Section 321.105A, subsection 2, paragraph a, 4 unnumbered paragraph 1, Code Supplement 2009, is amended to 5 read as follows: 6 For purposes of this subsection, “purchase price” applies to 7 the measure subject to the fee for new registration. “Purchase 8 price” shall be determined in the same manner as “sales price” 9 is determined for purposes of computing the tax imposed upon 10 the sales price of tangible personal property under chapter 11 423, pursuant to the definition of “sales price” in section 12 423.1, subsection 47 , subject to the following exemptions: 13 EXPLANATION 14 This bill relates to the collection of sales and use taxes by 15 retailers maintaining a place of business in this state. 16 A retailer located in this state, or maintaining a place 17 of business in this state, must collect and remit sales taxes 18 to the department of revenue. Currently, as defined in Code 19 section 423.1, the term “retailer maintaining a place of 20 business in the state” includes certain places of business, 21 subsidiary arrangements, and representatives operating on a 22 retailer’s behalf. The bill adds the term “solicitor” to that 23 definition. A solicitor is defined as a person, including an 24 independent contractor, who directly or indirectly solicits 25 business for a retailer, refers potential customers to a 26 retailer, or otherwise regularly engages in activity which 27 is significantly associated with the retailer’s ability to 28 establish or maintain a market in the state or which effects a 29 substantial amount of sales by the retailer in the state. 30 The bill provides that a person is presumed to be a solicitor 31 if that person enters into an agreement with a retailer whereby 32 a commission or other consideration is paid by the retailer 33 to the person for directly or indirectly referring potential 34 customers to the retailer by digital or electronic means and 35 -5- LSB 5763HH (5) 83 tw/sc 5/ 6

H.F. 2510 has gross receipts for the year in excess of $10,000. Digital 1 or electronic means includes links on internet sites or similar 2 mechanisms on other devices with the capability of directing 3 customers to the retailer for purposes of making sales. The 4 presumption is rebuttable by proof that a person with whom the 5 retailer has an agreement did not engage in referrals in the 6 state or that the activities of the person were de minimis. 7 By operation of law, the changes to the definition of 8 “retailer maintaining a place of business in the state” also 9 apply to the use tax imposed in Code section 423.5. 10 The bill makes conforming amendments to the definitions in 11 Code section 423.1. 12 -6- LSB 5763HH (5) 83 tw/sc 6/ 6