House File 2064 - Introduced HOUSE FILE 2064 BY WHEELER A BILL FOR An Act creating a money transfer service fee and related 1 income tax credit, providing for deposit of the fees in the 2 natural resources and outdoor recreation trust fund, making 3 penalties applicable, providing a contingency for repeal, 4 and including retroactive applicability provisions. 5 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 6 TLSB 5797YH (4) 87 gh/rn

H.F. 2064 Section 1. NEW SECTION . 422.10C Money transfer service fee 1 tax credit. 2 1. The taxes imposed under this division, less the credits 3 allowed under section 422.12, shall be reduced by a money 4 transfer service fee tax credit equal to the amount of money 5 transfer service fees under section 533C.104 paid by the 6 taxpayer during the tax year. 7 2. A credit shall not be allowed under this section to 8 an individual who does not include on the tax return for the 9 taxable year such individual’s valid taxpayer identification 10 number and, if the individual is married, the valid taxpayer 11 identification number of such individual’s spouse. For 12 purposes of this subsection, “taxpayer identification number” 13 means the same as defined in section 32 of the Internal Revenue 14 Code. 15 3. Any credit in excess of the tax liability is refundable. 16 In lieu of claiming a refund, the taxpayer may elect to have 17 the overpayment shown on the taxpayer’s final, completed return 18 credited to the tax liability for the following tax year. 19 Sec. 2. NEW SECTION . 533C.104 Money transfer service fee —— 20 licensee requirements —— enforcement. 21 1. For purposes of this section, unless the context 22 otherwise requires: 23 a. “Department” means the department of revenue. 24 b. “Director” means the director of revenue. 25 c. “Money transfer service” means the transmission of 26 money by any means including transmission within this country 27 or to or from locations abroad by payment instrument, wire, 28 facsimile, or electronic transfer, courier, or otherwise. 29 2. a. A licensee and the authorized delegates of a licensee 30 shall collect from customers a money transfer service fee of 31 five dollars for each money transfer service transaction and 32 in addition to such fee, if applicable, an amount equal to one 33 percent of the amount of the money transfer service transaction 34 in excess of five hundred dollars. 35 -1- LSB 5797YH (4) 87 gh/rn 1/ 5

H.F. 2064 b. Money transfer service fees shall be remitted to the 1 department by licensees and their authorized delegates who 2 furnish money transfer services. 3 c. The department, in consultation with the superintendent, 4 shall administer and enforce the money transfer service fee as 5 nearly as possible in conjunction with the administration and 6 enforcement of the state sales and use tax law, except that 7 portion of the law which implements the streamlined sales and 8 use tax agreement. 9 d. The director may require licensees and their authorized 10 delegates to register with the department for purposes of this 11 section. The director may also require a permit applicable 12 only to this section for any licensee or the authorized 13 delegate of a licensee not collecting taxes under chapter 423. 14 e. All powers and requirements of the director to administer 15 the state sales and use tax law are applicable to the 16 administration of the money transfer service fee, including but 17 not limited to the provisions of section 422.25, subsection 4, 18 sections 422.30, 422.67, and 422.68, section 422.69, subsection 19 1, sections 422.70 through 422.75, section 423.14, subsection 20 1 and subsection 2, paragraphs “b” through “e” , and sections 21 423.15, 423.23, 423.24, 423.25, 423.31 through 423.35, 423.37 22 through 423.42, 423.46, and 423.47. 23 f. Failure by licensees or their authorized delegates to 24 collect and remit money transfer service fees or to comply with 25 any other provision of this section shall subject the licensee 26 and the authorized delegates of a licensee to the enforcement 27 provisions of article 7 of this chapter. The director and 28 the department shall cooperate with the superintendent in 29 identifying violations of this section and in discharging the 30 superintendent’s enforcement responsibilities under article 7 31 of this chapter. 32 g. All money transfer service fees collected under this 33 section shall be deposited in a separate account in the natural 34 resources and outdoor recreation trust fund created in section 35 -2- LSB 5797YH (4) 87 gh/rn 2/ 5

H.F. 2064 461.31. 1 3. A licensee and the authorized delegates of a licensee 2 furnishing money transfer services shall post a notice in the 3 form and manner prescribed by the superintendent that notifies 4 customers that upon filing an individual income tax return with 5 a valid taxpayer identification number, the customer shall be 6 entitled to an individual income tax credit equal to the amount 7 of money transfer service fees paid by the customer during the 8 tax year. 9 Sec. 3. CONTINGENT REPEAL. Section 533C.104, as enacted 10 by this Act, is repealed if the general assembly repeals the 11 personal net income tax in chapter 422, division II. 12 Sec. 4. RETROACTIVE APPLICABILITY. The following provision 13 or provisions of this Act apply retroactively to January 1, 14 2018, for tax years beginning on or after that date: 15 The section of this Act enacting section 422.10C. 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 establishes a money transfer service fee and 20 related income tax credit. 21 The bill requires a licensee under Code chapter 533C, the 22 uniform money services Act, to collect from customers a money 23 transfer service fee of $5 for each money transfer service 24 transaction and, if applicable, an amount equal to 1 percent of 25 the amount of a money transfer service transaction in excess 26 of $500. The bill defines “money transfer service” as the 27 transmission of money by any means, including transmission 28 within this country or to or from locations abroad by payment 29 instrument, wire, facsimile, or electronic transfer, courier, 30 or otherwise. 31 The bill requires licensees to remit the money transfer 32 service fees collected to the department of revenue. The 33 bill requires the department, in consultation with the 34 superintendent of banking, to administer and enforce the money 35 -3- LSB 5797YH (4) 87 gh/rn 3/ 5

H.F. 2064 transfer service fee as nearly as possible in conjunction with 1 the administration and enforcement of the state sales and use 2 tax law, except that portion of the law which implements the 3 streamlined sales and use tax agreement. 4 The bill permits the director of revenue to require 5 licensees to register with the department for purposes of 6 the bill. The bill permits the director to require a permit 7 applicable only to the collection of money transfer service 8 fees for any licensee not collecting sales and use taxes under 9 Code chapter 423. The bill provides that all powers and 10 requirements of the director to administer the state sales and 11 use tax law are applicable to the administration of the money 12 transfer service fee. 13 The bill provides that failure by licensees to collect and 14 remit money transfer service fees or to comply with any other 15 provision of the bill shall subject the licensee to specified 16 enforcement provisions of article 7 of Code chapter 533C. The 17 bill requires the director and the department to cooperate 18 with the superintendent in identifying violations of this 19 division and in discharging the superintendent’s enforcement 20 responsibilities under article 7 of Code chapter 533C. 21 Penalties provided for in article 7 of Code chapter 533C 22 include suspension and revocation of a license under Code 23 chapter 533C, civil penalties, and criminal penalties that 24 include class “C” and “D” felonies and aggravated and simple 25 misdemeanors. A class “C” felony is punishable by confinement 26 for no more than 10 years and a fine of at least $1,000 but 27 not more than $10,000. A class “D” felony is punishable by 28 confinement for no more than five years and a fine of at least 29 $750 but not more than $7,500. An aggravated misdemeanor 30 is punishable by confinement for no more than two years and 31 a fine of at least $625 but not more than $6,250. A simple 32 misdemeanor is punishable by confinement for no more than 30 33 days or a fine of at least $65 but not more than $625 or by 34 both. 35 -4- LSB 5797YH (4) 87 gh/rn 4/ 5

H.F. 2064 The bill provides that all money transfer service fees 1 collected shall be deposited in the natural resources and 2 outdoor recreation trust fund. 3 The bill requires a licensee furnishing money transfer 4 services to post a notice in the form and manner prescribed 5 by the superintendent that notifies customers that upon 6 filing an individual income tax return with a valid taxpayer 7 identification number, the customer shall be entitled to an 8 individual income tax credit equal to the amount of money 9 transfer service fees paid by the customer during the tax year. 10 The bill also applies to authorized delegates of a licensee 11 under Code chapter 533C. 12 The bill provides an individual income tax credit equal to 13 the amount of money transfer service fees paid by the taxpayer 14 during the tax year. The credit shall not be allowed to an 15 individual who does not include on the tax return for the 16 taxable year the individual’s valid taxpayer identification 17 number and that of the individual’s spouse if applicable. The 18 bill provides that the credit is refundable and may be credited 19 to the individual’s tax liability for the following tax year. 20 The provision enacting the tax credit applies retroactively to 21 January 1, 2018, for tax years beginning on or after that date. 22 The bill provides a contingency for the repeal of the money 23 transfer service fee if the general assembly repeals the 24 personal net income tax in Code chapter 422, division II. 25 -5- LSB 5797YH (4) 87 gh/rn 5/ 5