HF 615 (LSB 2265HZ (2) 87)

HOUSE FILE 615

BY  COMMITTEE ON WAYS AND MEANS

(SUCCESSOR TO HF 494)
(SUCCESSOR TO HSB 150)

A BILL FOR

An Act relating to financial crime enforcement by assessing a drug paraphernalia surcharge, creating a money transfer service fee and related fund and income tax credit, and including retroactive applicability provisions.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

    Section 1.  NEW SECTION.  80.32  Financial crime and wire transmitter fund.
   1.  A financial crime and wire transmitter fund is established in the office of the treasurer of state under the control of the department. Any moneys annually appropriated, granted, or credited to the fund, including any federal moneys, are appropriated to the department for investigating indictable criminal offenses committed for financial gain.
   2.  Notwithstanding section 12C.7, subsection 2, interest and earnings on moneys deposited in the fund shall be credited to the fund. Notwithstanding section 8.33, moneys remaining in the fund at the end of the fiscal year shall not revert to any other fund but shall remain available to be used for the purposes specified in this section.
   3.  For the fiscal year beginning July 1, 2017, and for each fiscal year thereafter, the department shall transfer from the fund to the general fund of the state, the lesser of the amount of fees credited to the fund for the fiscal year pursuant to section 533C.104 or an amount of money equal to the money transfer service tax credits claimed pursuant to section 422.10C in that fiscal year, if any. The moneys transferred to the general fund of the state in accordance with this subsection shall not be considered new revenues for purposes of the state general fund expenditure limitation under section 8.54 but instead as replacement of a like amount included in the expenditure limitation for the fiscal year in which the transfer is made.
    Sec. 2.  NEW SECTION.  422.10C  Money transfer service fee tax credit.
   1.  The taxes imposed under this division, less the credits allowed under section 422.12, shall be reduced by a money transfer service fee tax credit equal to the amount of money transfer service fees under section 533C.104 paid by the taxpayer during the tax year.
   2.  A credit shall not be allowed under this section to an individual who does not include on the tax return for the taxable year such individual’s valid taxpayer identification number and, if the individual is married, the valid taxpayer identification number of such individual’s spouse. For purposes of this subsection, “taxpayer identification number” means the same as defined in section 32 of the Internal Revenue Code.
   3.  Any credit in excess of the tax liability is refundable. In lieu of claiming a refund, the taxpayer may elect to have the overpayment shown on the taxpayer’s final, completed return credited to the tax liability for the following tax year.
    Sec. 3.  NEW SECTION.  533C.104  Money transfer service fee —— licensee requirements —— enforcement.
   1.  For purposes of this section, unless the context otherwise requires:
   a.  “Department” means the department of revenue.
   b.  “Director” means the director of revenue.
   c.  “Money transfer service” means the transmission of money by any means including transmission within this country or to or from locations abroad by payment instrument, wire, facsimile, or electronic transfer, courier, or otherwise.
   2.  a.  A licensee and the authorized delegates of a licensee shall collect from customers a money transfer service fee equal to one percent of the amount of each money transfer service transaction.
   b.  Money transfer service fees shall be paid over to the department by licensees and their authorized delegates who furnish money transfer services.
   c.  The department, in consultation with the superintendent, shall administer and enforce the money transfer service fee as nearly as possible in conjunction with the administration and enforcement of the state sales and use tax law, except that portion of the law which implements the streamlined sales and use tax agreement.
   d.  The director may require licensees and their authorized delegates to register with the department for purposes of this section. The director may also require a permit applicable only to this section for any licensee or the authorized delegate of a licensee not collecting taxes under chapter 423.
   e.  All powers and requirements of the director to administer the state sales and use tax law are applicable to the administration of the money transfer service fee, including but not limited to the provisions of section 422.25, subsection 4, sections 422.30, 422.67, and 422.68, section 422.69, subsection 1, sections 422.70 through 422.75, section 423.14, subsection 1 and subsection 2, paragraphs “b” through “e”, and sections 423.15, 423.23, 423.24, 423.25, 423.31 through 423.35, 423.37 through 423.42, 423.46, and 423.47.
   f.  Failure by a licensee or a licensee’s authorized delegate to collect and remit money transfer service fees or to comply with any other provision of this section shall subject the licensee and the authorized delegates of a licensee to the enforcement provisions of article 7 of this chapter. The director and the department shall cooperate with the superintendent in identifying violations of this section and in discharging the superintendent’s enforcement responsibilities under article 7 of this chapter.
   g.  All money transfer service fees collected under this section shall be deposited in a separate account in the financial crime and wire transmitter fund established by section 80.32.
   3.  A licensee and the authorized delegates of a licensee furnishing money transfer services shall post a notice in the form and manner prescribed by the superintendent that notifies customers that upon filing an individual income tax return with a valid taxpayer identification number, the customer shall be entitled to an individual income tax credit equal to the amount of money transfer service fees paid by the customer during the tax year.
   4.  A money transfer service fee shall not be applied to any of the following:
   a.  A transaction between an individual and a business registered with the secretary of state of Iowa or another state in the United States, or between an individual and a utility company authorized to do business in this state, which is conducted through a bill payment system and for which the money being transferred is for a good or service not otherwise prohibited by state or federal law for a traceable debt.
   b.  An internet or telephone transfer conducted through a debit card or credit card, or transfer by automated clearing house.
   c.  The sale or servicing of a prepaid debit card or a stored-value card.
   d.  The sale of a money order.
   e.  A check cashing transaction or a delayed deposit transaction.
   f.  Any of the following:
   (1)  The United States or a department, agency, or instrumentality thereof.
   (2)  A money transmission by the United States postal service or by a contractor on behalf of the United States postal service.
   (3)  A state, county, city, or any other governmental agency or governmental subdivision of a state.
   (4)  The following entities whether chartered or organized under the laws of a state or of the United States: a bank, bank holding company, savings and loan association, savings bank, credit union, office of an international banking corporation, branch of a foreign bank, corporation organized pursuant to the federal Bank Service Company Act, 12 U.S.C. §1861 – 1867, or corporation organized under the federal Edge Act, 12 U.S.C. §611 — 633.
   (5)  An electronic funds transfer of governmental benefits for a federal, state, county, or governmental agency by a contractor on behalf of the United States or a department, agency, or instrumentality thereof, or a state or governmental subdivision, agency, or instrumentality thereof.
   (6)  A board of trade designated as a contract market under the federal Commodity Exchange Act, 7 U.S.C. §1 – 25, or a person who, in the ordinary course of business, provides clearance and settlement services for a board of trade to the extent of its operation as or for such a board.
   (7)  A registered futures commission merchant under the federal commodities laws to the extent of its operation as such a merchant.
   (8)  A person who provides clearance or settlement services pursuant to a registration as a clearing agency or an exemption from such registration granted under the federal securities laws to the extent of its operation as such a provider.
   (9)  An operator of a payment system to the extent that the operator provides processing, clearing, or settlement services, between or among persons excluded by this subsection, in connection with wire transfers, credit card transactions, debit card transactions, stored-value transactions, automated clearing house transfers, or similar funds transfers.
   (10)  A person registered as a securities broker-dealer under federal or state securities laws to the extent of the person’s operation as such a broker-dealer.
    Sec. 4.  Section 602.8102, subsection 135A, Code 2017, is amended to read as follows:
   135A.  Assess the surcharges provided by sections 911.1, 911.2, 911.2A, 911.2B, 911.2C, 911.3, and 911.4, and 911.5.
    Sec. 5.  Section 602.8108, Code 2017, is amended by adding the following new subsection:
   NEW SUBSECTION.  13.  The clerk of the district court shall remit all moneys collected from the assessment of the drug paraphernalia surcharge provided in section 911.5 to the state court administrator for deposit in the financial crime and wire transmitter fund established in section 80.32.
    Sec. 6.  NEW SECTION.  911.5  Drug paraphernalia surcharge.
   1.  In addition to any other surcharge, the clerk of the district court shall assess a drug paraphernalia surcharge of five dollars if an adjudication of guilt or a deferred judgment has been entered for a criminal violation of section 124.414 or a similar city or county ordinance.
   2.  The surcharge shall be remitted by the clerk of court as provided in section 602.8108, subsection 13.
    Sec. 7.  RETROACTIVE APPLICABILITY.  The following provision or provisions of this Act apply retroactively to January 1, 2017, for tax years beginning on or after that date:
   1.  The section of this division enacting section 422.10C.
EXPLANATION
The inclusion of this explanation does not constitute agreement with
the explanation’s substance by the members of the general assembly.
   This bill relates to financial crime enforcement by assessing a drug paraphernalia surcharge and creating a money transfer service fee and related fund and income tax credit.
   DRUG PARAPHERNALIA SURCHARGE. The bill provides that the clerk of the district court shall assess a drug paraphernalia surcharge of five dollars if an adjudication of guilt or a deferred judgment has been entered for possessing drug paraphernalia in violation of Code section 124.414 or a similar city or county ordinance. The bill specifies that the clerk of the district court shall remit all moneys collected from the assessment of the surcharge to the state court administrator for deposit in the financial crime and wire transmitter fund established by the bill.
   MONEY TRANSFER SERVICE FEE AND RELATED FUND AND TAX CREDIT. 

The bill requires a licensee under Code chapter 533C, the uniform money services Act, to collect from customers a money transfer service fee equal to 1 percent of the amount of each money transfer service transaction. The bill defines “money transfer service” as the transmission of money by any means including transmission within this country or to or from locations abroad by payment instrument, wire, facsimile, or electronic transfer, courier, or otherwise.
   The bill requires such licensees to pay such fees over to the department of revenue. The bill requires the department, in consultation with the superintendent of banking, to administer and enforce the money transfer service fee as nearly as possible in conjunction with the administration and enforcement of the state sales and use tax law, except that portion of the law which implements the streamlined sales and use tax agreement. 
   The bill permits the director of revenue to require licensees to register with the department for purposes of the bill. The bill permits the director to require a permit applicable only to the bill for any licensee not collecting taxes under Code chapter 423. The bill provides that all powers and requirements of the director to administer the state sales and use tax law are applicable to the administration of the money transfer service fee.
   Failure by a licensee to collect and remit money transfer service fees or to comply with any other provision of the bill shall subject the licensee to the enforcement provisions of article 7 of Code chapter 533C. The bill requires the director and the department to cooperate with the superintendent in identifying violations of the bill and in discharging the superintendent’s enforcement responsibilities under article 7 of Code chapter 533C. 
   Penalties provided for in article 7 of Code chapter 533C include suspension and revocation of a license under Code chapter 533C, civil penalties, and criminal penalties that include class “C” and “D” felonies and aggravated and simple misdemeanors. A class “C” felony is punishable by confinement for no more than 10 years and a fine of at least $1,000 but not more than $10,000. A class “D” felony is punishable by confinement for no more than five years and a fine of at least $750 but not more than $7,500. An aggravated misdemeanor is punishable by confinement for no more than two years and a fine of at least $625 but not more than $6,250. A simple misdemeanor is punishable by confinement for no more than 30 days or a fine of at least $65 but not more than $625 or by both.
   The bill provides that all money transfer service fees collected under the bill shall be deposited in the financial crime and wire transmitter fund established by the bill.
   The money transfer service fee does not apply to numerous types of transactions including but not limited to a sale between an individual and any business registered in the United States, an internet or telephone transfer, the sale of a prepaid debit card or stored-value card, or a check cashing or delayed deposit transaction.
   The money transfer service fee also does not apply to numerous types of entities including but not limited to the United States government, any state or local government, a money transmission by the United States postal service, an operator of a credit or debit payment system, or a commodity or security trader.
   The bill requires a licensee furnishing money transfer services to post a notice in the form and manner prescribed by the superintendent that notifies customers that upon filing an individual income tax return with a valid taxpayer identification number, the customer shall be entitled to an individual income tax credit equal to the amount of money transfer service fees paid by the customer during the tax year.
   The bill also applies to authorized delegates of a licensee under Code chapter 533C.
   The bill provides an individual income tax credit equal to the amount of money transfer service fees paid by the taxpayer during the tax year. The bill provides that the credit shall not be allowed to an individual who does not include on the tax return for the taxable year the individual’s valid taxpayer identification number and that of the individual’s spouse if applicable. The bill provides that the credit is refundable and may be credited to the individual’s tax liability for the following tax year. The provision enacting the tax credit applies retroactively to January 1, 2017, for tax years beginning on or after that date.
   The bill establishes a financial crime and wire transmitter fund in the office of the treasurer of state under the control of the department of public safety. Any moneys annually appropriated, granted, or credited to the fund, including any federal moneys, are appropriated to the department of public safety for the purpose of investigating indictable criminal offenses committed for financial gain. Interest and earnings on moneys deposited in the fund shall be credited to the fund and moneys remaining in the fund at the end of the fiscal year shall not revert.
   The bill requires the department of public safety, for the fiscal year beginning July 1, 2017, and for each fiscal year thereafter, to transfer from the fund to the general fund of the state, the lesser of the amount of money transfer service fees collected or an amount of money equal to the money transfer service tax credits claimed in that fiscal year, if any. The bill provides that the moneys transferred to the general fund of the state in accordance with the bill shall not be considered new revenues for purposes of the state general fund expenditure limitation under Code section 8.54 but instead as replacement of a like amount included in the expenditure limitation for the fiscal year in which the transfer is made.