HSB 257 (LSB 2786YC (14) 88)

HOUSE FILE _____ 

BY  (PROPOSED COMMITTEE ON WAYS AND MEANS BILL BY CHAIRPERSON HEIN)

A BILL FOR

An Act relating to the administration of the tax and related laws by the department of revenue, including the administration and modification of certain tax credits and refunds, the individual and corporate income taxes, franchise taxes, sales and use taxes, and automobile rental excise taxes, the assessment of property owned by certain long distance telephone companies, establishing a taxation and exemption of computers task force, and providing for other properly related matters, making penalties applicable, and including effective date and retroactive applicability provisions.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

DIVISION I
INCOME TAX

    Section 1.  Section 422.4, subsection 16, paragraph e, unnumbered paragraph 1, Code 2019, is amended to read as follows:
   Add back the following percentage of the qualified business income deduction deductions under section 199A sections 199A(a) and 199A(g) of the Internal Revenue Code taken and allowable in calculating federal taxable income for the applicable tax year:
    Sec. 2.  Section 422.9, subsection 2A, paragraph a, unnumbered paragraph 1, Code 2019, is amended to read as follows:
   The following percentage of the qualified business income deduction deductions under section 199A sections 199A(a) and 199A(g) of the Internal Revenue Code taken and allowable in calculating federal taxable income for the applicable tax year:
    Sec. 3.  Section 422.9, subsection 2A, paragraph b, Code 2019, is amended to read as follows:
   b.  Notwithstanding paragraph “a”, and section 422.4, subsection 16, paragraph “e”, for an entity electing or required to file a composite return under section 422.13, subsection 5, the deduction allowed under this subsection for purposes of the composite return shall be an amount equal to the applicable percentage described in paragraph “a” of the deduction deductions that would be allowable for federal income tax purposes under section 199A sections 199A(a) and 199A(g) of the Internal Revenue Code by an individual taxpayer reporting the same items of income and loss that are included in the composite return.
    Sec. 4.  Section 422.11S, subsection 7, paragraph b, Code 2019, is amended to read as follows:
   b.  The department shall authorize a school tuition organization to issue tax credit certificates for contributions made to the school tuition organization. The aggregate amount of tax credit certificates that the department shall authorize for a school tuition organization for a tax calendar year shall be determined for that organization pursuant to subsection 8. However, a school tuition organization shall not be authorized to issue tax credit certificates unless the organization is controlled by a board of directors consisting of at least seven members. The names and addresses of the members shall be provided to the department and shall be made available by the department to the public, notwithstanding any state confidentiality restrictions.
    Sec. 5.  Section 422.11S, subsection 8, paragraph a, subparagraph (2), Code 2019, is amended to read as follows:
   (2)  “Total approved tax credits” means for the tax year beginning in the 2006 calendar year, two million five hundred thousand dollars, for the tax year beginning in the 2007 calendar year, five million dollars, for tax calendar years beginning on or after January 1, 2008, but before January 1, 2012, seven million five hundred thousand dollars, for tax calendar years beginning on or after January 1, 2012, but before January 1, 2014, eight million seven hundred fifty thousand dollars, and for tax calendar years beginning on or after January 1, 2014, but before January 1, 2019, twelve million dollars, and for tax calendar years beginning on or after January 1, 2019, thirteen million dollars.
    Sec. 6.  Section 422.11S, subsection 8, paragraph b, unnumbered paragraph 1, Code 2019, is amended to read as follows:
   Each year by December 1, the department shall authorize school tuition organizations to issue tax credit certificates for the following tax calendar year. However, for the tax year beginning in the 2006 calendar year only, the department, by September 1, 2006, shall authorize school tuition organizations to issue tax credit certificates for the 2006 calendar tax year. For the tax year beginning in the 2006 calendar year only, each school served by a school tuition organization shall submit a participation form to the department by August 1, 2006, providing the certified enrollment as of the third Friday of September 2005, along with the school tuition organization that represents the school. Tax credit certificates available for issue by each school tuition organization shall be determined in the following manner:
    Sec. 7.  Section 422.11S, subsection 9, unnumbered paragraph 1, Code 2019, is amended to read as follows:
   A school tuition organization that receives a voluntary cash or noncash contribution pursuant to this section shall report to the department, on a form prescribed by the department, by January 12 of each tax calendar year all of the following information:
    Sec. 8.  Section 422.11S, subsection 9, paragraphs b and c, Code 2019, are amended to read as follows:
   b.  The total number and dollar value of contributions received and the total number and dollar value of the tax credits approved during the previous tax calendar year.
   c.  A list of the individual donors for the previous tax calendar year that includes the dollar value of each donation and the dollar value of each approved tax credit.
    Sec. 9.  Section 422.12C, subsection 4, Code 2019, is amended to read as follows:
   4.  Married taxpayers who have filed joint federal returns electing to file separate returns or to file separately on a combined return form must determine the child and dependent care credit under subsection 1 or the early childhood development tax credit under subsection 2 based upon their combined net income and allocate the total credit amount to each spouse in the proportion that each spouse’s respective net income bears to the total combined net income. Nonresidents or part-year residents of Iowa must determine their Iowa child and dependent care credit under subsection 1 or the early childhood development tax credit under subsection 2 in the ratio of their Iowa source net income to their all source net income. Nonresidents or part-year residents who are married and elect to file separate returns or to file separately on a combined return form must allocate the Iowa child and dependent care credit under subsection 1 or the early childhood development tax credit under subsection 2 between the spouses in the ratio of each spouse’s Iowa source net income to the combined Iowa source net income of the taxpayers.
    Sec. 10.  Section 422.60, subsection 2, paragraph b, Code 2019, is amended by adding the following new subparagraph:
   NEW SUBPARAGRAPH.  (6)  For purposes of this paragraph, “Internal Revenue Code” means the Internal Revenue Code of 1954, prior to the date of its redesignation as the Internal Revenue Code of 1986 by the Tax Reform Act of 1986, or means the Internal Revenue Code of 1986 as amended and in effect on December 21, 2017. This definition shall not be construed to include any amendment to the Internal Revenue Code enacted after the date specified in the preceding sentence, including any amendment with retroactive applicability or effectiveness.
    Sec. 11.  LIKE-KIND EXCHANGES OF PERSONAL PROPERTY UNDER CORPORATE INCOME TAX AND FRANCHISE TAX FOR TAX YEAR 2019.  Notwithstanding any other provision of law to the contrary, all of the following shall apply when computing net income for purposes of the corporation income tax or franchise tax under section 422.35 for tax years beginning during the 2019 calendar year:
   1.  The rules for nonrecognition of gain or loss from exchanges of real property held for productive use or investment and not held primarily for sale, as provided in section 1031 of the Internal Revenue Code, as amended up to and including March 24, 2018, apply for state income tax purposes with regard to exchanges of real property.
   2.  The rules for nonrecognition of gain or loss from exchanges of property other than real property held for productive use or investment as provided in section 1031 of the Internal Revenue Code, as amended up to and including December 21, 2017, apply for state income tax purposes, notwithstanding any other provision of law to the contrary. If the taxpayer’s federal taxable income includes gain or loss from property, other than real property described in subsection 1, and the taxpayer elects to have this subsection apply, the following adjustments shall be made:
   a.  (1)  Subtract the total amount of gain related to the sale or exchange of the property as properly reported for federal tax purposes under the Internal Revenue Code.
   (2)  Add back any gain related to the sale or exchange of the property to the extent such gain does not qualify for deferral under section 1031 of the Internal Revenue Code, as amended up to and including December 21, 2017, which gain shall be calculated using the taxpayer’s adjusted basis in the property for state tax purposes. 
   b.  (1)  Add the total amount of loss related to the sale or exchange of the property as properly reported for federal tax purposes under the Internal Revenue Code.
   (2)  Subtract any loss related to the sale or exchange of the property to the extent such loss does not qualify for deferral under section 1031 of the Internal Revenue Code, as amended up to and including December 21, 2017, which loss shall be calculated using the taxpayer’s adjusted basis in the property for state tax purposes. 
   c.  Any other adjustments to gains, losses, deductions, or tax basis for the property given up or received in the sale or exchange pursuant to rules adopted by the director. 
    Sec. 12.  REFUNDS —— EARLY CHILDHOOD DEVELOPMENT TAX CREDIT.  Notwithstanding any provision of law to the contrary, for tax years beginning prior to January 1, 2019, refunds of the early childhood development tax credit provided in section 422.12C, subsection 2, requested on or after the effective date of the provision of this division of this Act amending section 422.12C, subsection 4, shall not exceed the amount allowed under section 422.12C, subsection 4, as amended by this division of this Act.
    Sec. 13.  LEGISLATIVE INTENT.  It is the intent of the general assembly that the provisions of this division of this Act amending section 422.11S are conforming amendments consistent with current state law, and that the amendments do not change the application of current law but instead reflect current law both before and after the enactment of this Act. 
    Sec. 14.  EFFECTIVE DATE.  The following, being deemed of immediate importance, take effect upon enactment:
   1.  The section of this division of this Act amending section 422.12C, subsection 4.
   2.  The section of this division of this Act relating to refunds for the early childhood development tax credit. 
   3.  The section of this division of this Act relating to like-kind exchanges of personal property under corporate income tax and franchise tax.
    Sec. 15.  RETROACTIVE APPLICABILITY.  The following apply retroactively to January 1, 2019, for tax years beginning on or after that date:
   1.  The section of this division of this Act amending section 422.4, subsection 16, paragraph “e”, unnumbered paragraph 1.
   2.  The sections of this division of this Act amending section 422.9, subsection 2A.
   3.  The section of this division of this Act amending section 422.12C, subsection 4. 
   4.  The section of this division of this Act amending section 422.60, subsection 2, paragraph “b”.
    Sec. 16.  RETROACTIVE APPLICABILITY —— LIKE-KIND EXCHANGES OF PERSONAL PROPERTY.  The section of this division of this Act relating to like-kind exchanges of personal property under corporate income tax and franchise tax applies retroactively to January 1, 2019, for tax years beginning on or after that date, but before January 1, 2020. 
DIVISION II
ADMINISTRATIVE PROVISIONS

    Sec. 17.  Section 422.20, Code 2019, is amended by adding the following new subsection:
   NEW SUBSECTION.  5.  The department may permit, by rule, the disclosure of state tax information to a person a taxpayer has authorized to receive such state tax information, in the manner prescribed by the department.
    Sec. 18.  Section 422.72, Code 2019, is amended by adding the following new subsection:
   NEW SUBSECTION.  8.  The department may permit, by rule, the disclosure of state tax information to a person a taxpayer has authorized to receive such state tax information, in the manner prescribed by the department.
DIVISION III
SALES AND USE TAX

    Sec. 19.  Section 423.2, subsection 1, paragraph a, subparagraph (5), subparagraph division (a), Code 2019, is amended to read as follows:
   (a)  If a service or warranty contract does not specify a fee amount for nontaxable services or taxable personal property, the tax imposed pursuant to this section shall be imposed upon an amount equal to one-half of the sales price of the contract.
    Sec. 20.  Section 423.2, subsection 6, paragraph k, Code 2019, is amended to read as follows:
   k.  Carpentry repair and installation.
    Sec. 21.  Section 423.3, Code 2019, is amended by adding the following new subsection:
   NEW SUBSECTION.  16A.  a.  The sales price from the sale of a grain bin, including material or replacement parts used to construct or repair a grain bin.
   b.  For purposes of this subsection, “grain bin” means property that is vented and covered with corrugated metal or similar material, and that is primarily used to hold loose grain for drying or storage.
    Sec. 22.  Section 423.3, subsection 47, paragraph c, subparagraph (3), Code 2019, is amended by striking the subparagraph and inserting in lieu thereof the following:
   (3)  The following within the scope of section 427A.1, subsection 1, paragraphs “h” and “i”:
   (a)  Computers.
   (b)  Machinery.
   (c)  Equipment, including pollution control equipment.
   (d)  Replacement parts.
   (e)  Supplies.
   (f)  Materials used to construct or self-construct the following:
   (i)  Computers.
   (ii)  Machinery.
   (iii)  Equipment, including pollution control equipment.
   (iv)  Replacement parts.
   (v)  Supplies.
    Sec. 23.  Section 423.3, subsection 104, paragraph a, Code 2019, is amended to read as follows:
   a.  The sales price of specified digital products and of prewritten computer software sold, and of enumerated services described in section 423.2, subsection 1, paragraph “a”, subparagraph (5), or section 423.2, subsection 6, paragraphs “bq”, “br”, “bs”, and “bu” furnished, to a commercial enterprise for use exclusively by the commercial enterprise. The use of prewritten computer software, a specified digital product, or service fails to qualify as a use exclusively by the commercial enterprise if its use for noncommercial purposes is more than de minimis.
    Sec. 24.  Section 423.14A, subsection 3, paragraph b, Code 2019, is amended by striking the paragraph.
    Sec. 25.  Section 423.14A, subsection 3, paragraph d, subparagraph (1), Code 2019, is amended to read as follows:
   (1)  A marketplace facilitator that makes or facilitates Iowa sales on its own behalf or for one or more marketplace sellers equal to or exceeding one hundred thousand dollars, or in two hundred or more separate transactions, for an immediately preceding calendar year or a current calendar year.
    Sec. 26.  Section 423.14A, subsection 3, paragraph e, subparagraph (1), unnumbered paragraph 1, Code 2019, is amended to read as follows:
   A referrer if, for any immediately preceding calendar year or a current calendar year, one hundred thousand dollars or more in Iowa sales or two hundred or more separate Iowa sales transactions result from referrals from a platform of the referrer. A referrer is not required to collect and remit sales and use tax pursuant to this paragraph if the referrer does all of the following:
    Sec. 27.  Section 423.14A, subsection 3, paragraph e, subparagraph (1), subparagraph division (c), unnumbered paragraph 1, Code 2019, is amended to read as follows:
   The referrer provides the department with monthly annual reports in an electronic format and in the manner prescribed by the department, which monthly annual reports contain all of the following:
    Sec. 28.  Section 423.14A, subsection 3, paragraph e, Code 2019, is amended by adding the following new subparagraph:
   NEW SUBPARAGRAPH.  (5)  This paragraph is subject to implementation by the department by rule and shall not require a referrer to collect tax or comply with the notice and reporting requirements and other provisions of this paragraph unless and until such administrative rules take effect. 
    Sec. 29.  Section 423.48, subsection 2, paragraph c, Code 2019, is amended by striking the paragraph.
    Sec. 30.  TAXATION AND EXEMPTION OF COMPUTERS TASK FORCE.  A taxation and exemption of computers task force is created. The department of revenue shall initiate and coordinate the task force and provide staff assistance. It is the intent of the general assembly that the task force include representatives of appropriate stakeholders identified by the director of the department of revenue. The director of revenue or the director’s designee shall serve as chairperson of the task force.
   The task force shall be charged with reviewing the definition of “computer” as used throughout the portions of the Iowa Code and the Iowa Administrative Code administered by the department of revenue including the exemption for computers provided in section 423.3, subsection 47, paragraph “a”, subparagraph (4). If the task force recommends modifications to the current definition of “computer” including the exemption for computers provided in section 423.3, subsection 47, paragraph “a”, subparagraph (4), the department of revenue shall provide any recommendations to the general assembly by January 1, 2020. 
    Sec. 31.  EFFECTIVE DATE.  The following, being deemed of immediate importance, take effect upon enactment:
   The section of this division of this Act amending section 423.3, subsection 47, paragraph “c”, subparagraph (3).
    Sec. 32.  RETROACTIVE APPLICABILITY.  The following applies retroactively to January 1, 2016, for tax years beginning on or after that date:
   The section of this division of this Act amending section 423.3, subsection 47, paragraph “c”, subparagraph (3).
DIVISION IV
AUTOMOBILE RENTAL EXCISE TAX

    Sec. 33.  Section 423.14A, subsection 1, paragraph b, subparagraph (3), Code 2019, is amended to read as follows:
   (3)  A “rental platform”, as defined in section 423C.2, that meets the requirements described in person who is not required to collect and remit automobile rental excise tax pursuant to section 423C.3, subsection 3, paragraph “c”, subparagraph (2), shall not be considered a “marketplace facilitator” with respect to any sale of a transportation service under section 423.2, subsection 6, paragraph “bf”, or section 423.5, subsection 1, paragraph “e”, consisting of the rental of vehicles subject to registration which are registered for a gross weight of thirteen tons or less for a period of sixty days or less.
    Sec. 34.  Section 423C.2, subsection 3, paragraphs a and b, Code 2019, are amended to read as follows:
   a.  A person or any affiliate of a person that owns or controls an automobile and makes the automobile available for rent through the person or any affiliate, or through a rental platform or rental facilitator any other person required to collect sales or use tax under chapter 423.
   b.  A person or any affiliate of a person who possesses or acquires a right or interest in any automobile with an intent to rent the automobile to another person, or through the person or any affiliate, or through a rental platform or a rental facilitator any other person required to collect sales or use tax under chapter 423.
    Sec. 35.  Section 423C.2, subsection 6, Code 2019, is amended to read as follows:
   6.  “Facilitation fee” means any consideration, by whatever name called, that a rental facilitator or a rental platform person charges to a user for facilitating the user’s rental of an automobile. “Facilitation fee” does not include any commission an automobile provider pays to a rental facilitator or a rental platform person for facilitating the rental of an automobile.
    Sec. 36.  Section 423C.2, subsections 9 and 10, Code 2019, are amended by striking the subsections.
    Sec. 37.  Section 423C.2, subsection 11, Code 2019, is amended to read as follows:
   11.  “Rental price” means all consideration charged for the renting and facilitation of renting of an automobile before taxes, including but not limited to facilitation fees, reservation fees, services fees, nonrefundable deposits, and any other direct or indirect charge made or consideration provided in connection with the renting or facilitation of renting of an automobile the same as “sales price” as defined in section 423.1, which term includes but is not limited to facilitation fees, reservation fees, services fees, nonrefundable deposits, and any other direct or indirect charge made or consideration provided in connection with the renting or facilitation of renting an automobile.
    Sec. 38.  Section 423C.3, Code 2019, is amended to read as follows:
   423C.3  Tax on rental of automobiles —— collection and remittance of tax.
   1.  For purposes of this section:
   a.  “Discount rental charge” means the amount an automobile provider charges to a rental facilitator for the rental of an automobile, excluding any applicable tax.
   b.  “Travel package” means an automobile rental bundled with one or more separate components such as lodging, air transportation, or similar items and charged for a single retail price.
   2.  1.  A tax of five percent is imposed upon the rental price of an automobile if the rental transaction is subject to the sales and services tax under chapter 423, subchapter II, or the use tax under chapter 423, subchapter III. The tax shall not be imposed on any rental transaction not taxable under the state sales and services tax, as provided in section 423.3, or the state use tax, as provided in section 423.6, on automobile rental receipts.
   3.  2.  This subsection shall govern the collection and remittance of the tax imposed under subsection 2 The tax imposed under subsection 1 shall be collected and remitted to the department by all persons required to collect state sales and use tax on the rental transaction under chapter 423.
   a.  Unless otherwise provided in this subsection, the automobile provider shall collect the tax by adding the tax to the rental price of the automobile and the tax, when collected, shall be stated as a distinct item separate and apart from the rental price of the automobile and the sales and services tax imposed under chapter 423, subchapter II, or the use tax imposed under chapter 423, subchapter III.
   b.  If a transaction for the rental of an automobile involves a rental facilitator, all of the following shall occur in the order prescribed:
   (1)  The rental facilitator shall collect the tax on any rental price that the user pays to the rental facilitator in the same manner as an automobile provider under paragraph “a”.
   (2)  (a)  Unless otherwise required by rule or order of the department, the rental facilitator shall remit to the automobile provider that portion of the tax collected on the rental price that represents the discount rental charge.
   (b)  No assessment shall be made against a rental facilitator for tax due on a discount rental charge if the rental facilitator collected the tax and remitted it to an automobile provider that has a valid tax permit required under this chapter or under chapter 423. This subparagraph division shall not apply if the rental facilitator and automobile provider are affiliates, or if the department requires the rental facilitator to remit taxes collected on that portion of the sales price that represents the discount rental charge directly to the department.
   (3)  The rental facilitator shall remit any remaining tax it collected to the department.
   (4)  (a)  The automobile provider shall collect and remit to the department any taxes the rental facilitator remitted to the automobile provider, and shall collect and remit to the department any taxes due on any amount of rental price the user paid to the automobile provider.
   (b)  No assessment shall be made against an automobile provider for any tax due on a discount rental charge that was not remitted to the automobile provider by a rental facilitator. This subparagraph division shall not apply if the automobile provider and the rental facilitator are affiliates.
   (5)  Notwithstanding any other provision of this paragraph to the contrary, if a rental facilitator and its affiliates facilitate total rentals under this chapter and chapter 423A that are equal to or less than an aggregate amount of rental price and sales price of ten thousand dollars for an immediately preceding calendar year or a current calendar year, or in ten or fewer separate transactions for an immediately preceding calendar year or a current calendar year, the rental facilitator shall not be required to collect tax on the amount of sales price that represents the rental facilitator’s facilitation fee.
   c.  (1)  If a transaction for the rental of an automobile involves a rental platform, other than a rental platform described in subparagraph (2), the rental platform shall collect and remit the tax imposed under this chapter in the same manner as an automobile provider under paragraph “a”.
   (2)  3.  A rental platform person is not required to collect and remit the tax imposed under this chapter in the same manner as an automobile provider under paragraph “a” if the rental platform person meets all of the following requirements:
   a.  The person or any affiliate of the person is not an automobile provider.
   b.  The person or any affiliate of the person facilitates the renting of an automobile by doing all of the following:
   (1)  The person owns, operates, or controls an automobile rental marketplace that allows an automobile provider who is not an affiliate of the person to offer or list an automobile for rent on the marketplace. For purposes of this paragraph, it is immaterial whether or not the automobile provider has a tax permit under this chapter or chapter 423 or whether the automobile is owned by a natural person or by a business entity.
   (2)  The person or affiliate of the person collects or processes the rental price charged to the user.
   (a)  c.  The only sales the rental platform person and its affiliates of the person facilitate that are subject to tax under chapter 423 are sales of a transportation service under section 423.2, subsection 6, paragraph “bf”, or section 423.5, subsection 1, paragraph “e”, consisting of the rental of vehicles subject to registration which are registered for a gross weight of thirteen tons or less for a period of sixty days or less.
   (b)  d.  The rental platform person operates a peer-to-peer automobile sharing marketplace.
   (3)  4.  For any rental transaction for which the rental platform a person is required to or elects to collect and remit the tax under this chapter, the rental platform person shall also be liable for the collection and remittance of any sales or use tax due on that transaction under section 423.2, subsection 6, paragraph “bf”, or section 423.5, subsection 1, paragraph “e”, notwithstanding any other provision to the contrary in chapter 423.
   (4)  5.  For any rental transaction for which the rental platform person is not required to collect and remit the tax under this chapter as provided under subparagraph (2) subsection 3, the automobile provider shall be solely liable for any amount of uncollected or unremitted tax under this chapter and chapter 423.
DIVISION V
TELEPHONE COMPANY PROPERTY

    Sec. 39.  Section 476.1D, Code 2019, is amended by adding the following new subsection:
   NEW SUBSECTION.  10.  a.  The board, at the request of a long distance telephone company, shall classify such company as a competitive long distance telephone company if more than half of the company’s revenues from its Iowa intrastate telecommunications services and facilities are received from services and facilities that the board has determined to be subject to effective competition, or if more than half of the company’s revenues from its Iowa intrastate telecommunications services and facilities are received from intralata interexchange services and facilities. For purposes of this subsection, “intralata interexchange services” means those interexchange services that originate and terminate within the same local access transport area.
   b.  The board shall promptly notify the director of revenue that a long distance telephone company has been classified as a competitive long distance telephone company. Upon such notification by the board, the director of revenue shall assess the property of such competitive long distance telephone company, which property is first assessed for taxation in this state on or after January 1, 1996, in the same manner as all other property assessed as commercial property by the local assessor under chapters 427, 427A, 427B, 428, and 441. As used in this section, “long distance telephone company” means an entity that provides telephone service and facilities between local exchanges, but does not include a cellular service provider or a local exchange utility holding a certificate issued under section 476.29, subsection 12.
    Sec. 40.  Section 476.1D, subsection 10, as enacted in this division of this Act, is amended by striking the subsection.
    Sec. 41.  EFFECTIVE DATE.  The following, being deemed of immediate importance, takes effect upon enactment:
   The section of this division of this Act enacting section 476.1D, subsection 10.
    Sec. 42.  RETROACTIVE APPLICABILITY.  The following applies retroactively to July 1, 2018, for assessment years beginning on or after that date:
   The section of this division of this Act enacting section 476.1D, subsection 10.
    Sec. 43.  EFFECTIVE DATE.  The following takes effect July 1, 2021:
   The section of this division of this Act striking section 476.1D, subsection 10.
    Sec. 44.  APPLICABILITY.  The following applies to assessment years beginning on or after January 1, 2022:
   The section of this division of this Act striking section 476.1D, subsection 10.
DIVISION VI
TARGETED JOBS WITHHOLDING CREDIT

    Sec. 45.  Section 403.19A, subsection 3, paragraph c, subparagraph (2), Code 2019, is amended to read as follows:
   (2)  The pilot project city and the economic development authority shall not enter into a withholding agreement after June 30, 2019 2020.
DIVISION VII
SCHOOL TUITION ORGANIZATION TAX CREDITS

    Sec. 46.  Section 422.11S, subsection 8, paragraph a, subparagraph (2), Code 2019, is amended to read as follows:
   (2)  “Total approved tax credits” means for the tax year beginning in the 2006 calendar year, two million five hundred thousand dollars, for the tax year beginning in the 2007 calendar year, five million dollars, for tax years beginning on or after January 1, 2008, but before January 1, 2012, seven million five hundred thousand dollars, for tax years beginning on or after January 1, 2012, but before January 1, 2014, eight million seven hundred fifty thousand dollars, and for tax years beginning on or after January 1, 2014, but before January 1, 2019, twelve million dollars, and for tax years beginning on or after January 1, 2019, but before January 1, 2020, thirteen million dollars, and for tax years beginning on or after January 1, 2020, fourteen million dollars.
    Sec. 47.  CONTINGENT CODE EDITOR DIRECTIVE.  The Code editor is directed to harmonize the section of this division of this Act amending section 422.11S with the other division of this Act amending section 422.11S, if enacted, by changing tax year to calendar year where appropriate and to make other related changes, if necessary, to effectuate such changes. 
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 the administration of the tax and related laws by the department of revenue, including the administration and modification of certain taxes, tax credits, and refunds.
   DIVISION I —— INCOME TAX. The amendments to Code sections 422.4(16) and 422.9 modify Internal Revenue Code references relating to the qualified business income deduction. The amendments to Code sections 422.4(16) and 422.9 apply retroactively for tax years beginning on or after January 1, 2019. 
   The amendments to Code section 422.11S specify that school tuition organization tax credits shall be authorized by the department of revenue on a calendar year basis rather than a tax year basis. The amendments to Code section 422.11S also specify that a school tuition organization shall be controlled by a board of directors consisting of at least seven members. Under current law, the board of directors shall be seven members. The bill provides that it is the intent of the general assembly that the amendments to Code section 422.11S are conforming amendments consistent with current law, and that the amendments do not change the application of current law. The bill also amends Code section 422.11S in division VII of the bill.
   The amendment to Code section 422.12C specifies that a nonresident or part-year resident shall determine their early childhood development tax credit in the ratio of the taxpayer’s Iowa source net income to their all source net income. The amendment to Code section 422.12C takes effect upon enactment and applies retroactively for tax years beginning on or after January 1, 2019. The bill specifies that for tax years beginning prior to January 1, 2019, refunds of the early childhood development tax credit requested on or after July 1, 2019, shall not exceed the amount allowed under Code section 422.12C(4), as amended by the bill. 
   The amendment to Code section 422.60 aligns the definition of “Internal Revenue Code” for franchise alternative minimum tax purposes with the definition of “Internal Revenue Code” for corporate alternative minimum tax purposes. The amendment to Code section 422.60 applies retroactively for tax years beginning on or after January 1, 2019. 
   The bill provides for a deferral of a gain or loss resulting from exchanging of property (1031 exchange) that meet certain conditions. The federal Tax Cuts and Jobs Act of 2017 repealed 1031 exchanges with respect to exchanges of personal property. The Iowa tax bill enacted last year (2018 Iowa Acts, chapter 1161) decouples, for Iowa individual tax purposes, from the federal repeal of 1031 exchanges relating to personal property, and permits individuals to defer gain or loss on qualifying personal property for tax year 2019 to the extent such deferral would have been permitted under federal law prior to its amendment by the federal Tax Cuts and Jobs Act of 2017. The bill permits a corporation or financial institution, for Iowa corporate income tax or franchise income tax purposes, the same deferral of gain or loss as individuals on qualifying personal property for tax year 2019 to the extent such deferral would have been permitted under federal law prior to its amendment by the federal Tax Cuts and Jobs Act of 2017. The 1031 exchange provision takes effect upon enactment, and applies retroactively for tax years beginning January 1, 2019, but before January 1, 2020. 
   DIVISION II —— ADMINISTRATIVE PROVISIONS. The amendments to Code sections 422.20 and 422.72 permit the department of revenue, by rule, to disclose state tax information to a person a taxpayer has identified to receive such information in the manner prescribed by the department of revenue.
   DIVISION III —— SALES AND USE TAX. The amendment to Code section 423.2(1) provides that if a service or warranty contract does not specify a fee amount for nontaxable services or taxable personal property, the sales tax shall be imposed upon an amount equal to the sales price of the contract. Currently, the sales tax is imposed upon an amount equal to one-half of the sales price of such a contract. 
   The amendment to Code section 432.2(6) specifies that the sales price from the furnishing of carpentry repair and installation services are subject to the sales tax. Currently, carpentry services are subject to sales tax. 
   The bill enacts new Code section 423.3(16A), exempting from the state sales and use tax the purchase price of a grain bin, including material or replacement parts used to construct or repair a grain bin. “Grain bin” is defined to mean property that is vented and covered with corrugated metal or similar material, and that is primarily used to hold loose grain for drying or storage.
   The amendment to Code section 423.3(47) changes the exclusions from the sales tax exemptions in that subsection by aligning the exclusions with the changes made to the exemptions enacted in 2016 Iowa Acts, chapter 1007. This provision takes effect upon enactment and applies retroactively to tax years beginning January 1, 2016, for tax years beginning on or after that date. 
   The amendment to Code section 423.3(104) exempts from the sales tax the sales of optional service or warranty contracts for computer software maintenance or support services furnished to a commercial enterprise used exclusively by the commercial enterprise. “Commercial enterprise” is defined in 423.3(104).
   Currently, a retailer making Iowa sales, as defined in Code section 423.14A(1)(a), shall collect and remit sales, use, and local option taxes, if the retailer has gross revenue from Iowa sales equal to or exceeding $100,000 for an immediately preceding calendar year or a current calendar year, or has 200 or more separate transactions for an immediately preceding calendar year or a current calendar year. The bill amends Code section 423.14A(3)(b) by striking the requirement that retailers making Iowa sales collect such taxes if the retailer has 200 or more separate transactions for an immediately preceding calendar year or a current calendar year. 
   The bill amends Code section 423.14A(3)(d) by striking the requirement that a marketplace facilitator, as defined in Code section 423.14A(1)(b), making Iowa sales, as defined in Code section 423.14A(1)(a), collect sales, use, and local option taxes if the marketplace facilitator has 200 or more separate transactions for an immediately preceding calendar year or a current calendar year. The bill does not strike the requirement that a marketplace facilitator collect such taxes if the marketplace facilitator makes or facilitates Iowa sales on its own behalf or for one or more marketplace sellers equal to or exceeding $100,000. 
   The bill amends Code section 423.14A(3)(e) by striking the requirement that a referrer, as defined in Code section 423.14A(3)(e)(3), making Iowa sales, as defined in Code section 423.14A(1)(a), collect sales, use, and local option taxes if the referrer has 200 or more separate transactions for an immediately preceding calendar year or a current calendar year. The bill does not strike the requirement that a referrer collect such taxes if the referrer has Iowa sales equal to or exceeding $100,000.
   Currently, a referrer is required to provide the department of revenue, on a monthly basis, a list of marketplace sellers who collect and remit Iowa sales and use tax on the platform of the referrer. Otherwise, the referrer is required to collect and remit Iowa sales and use tax. The amendment to Code section 423A.14A(3)(e)(1)(c) provides that a referrer may provide the department of revenue such a report on an annual basis, and avoid collecting the sales and use tax if other conditions in Code section 423.14(3)(e)(1) are met.
   The bill enacts new Code section 423.14A(3)(e)(5) specifying that the paragraph relating to “referrers” is subject to implementation by the department of revenue by rule, and shall not require a referrer to collect tax or comply with the notice and reporting requirements unless such administrative rules take effect. 
   The bill amends Code section 423.48(2)(c) by striking the paragraph specifying that registering under the streamlined sales and use tax agreement in another member state shall be considered to be registered in this state for purposes of the streamlined sales and use tax agreement. 
   The bill establishes a taxation and exemption computers task force to be initiated, coordinated, and staffed by the department of revenue. The task force shall review the definition of “computer” as used throughout the portions of the Iowa Code and the Iowa Administrative Code administered by the department of revenue including the exemption for computers provided in Code section 423.3(47)(a)(4). If the task force recommends modifications to the current definition of “computer” including the exemption for computers provided in Code section 423.3(47)(a)(4), the department of revenue shall provide any recommendations to the general assembly by January 1, 2020. 
   DIVISION IV —— AUTOMOBILE RENTAL EXCISE TAX. The amendment to Code section 423.14A provides that a person who is not required to collect and remit automobile rental excise tax shall not be considered a “marketplace facilitator” with respect to the sale of certain transportation services. 
   The amendment to Code section 423C.2 substitutes a person required to collect sales or use tax under Code chapter 423 for “rental facilitator” and “rental platform” and strikes the definitions of “rental facilitator” and “rental platform” from Code section 423C.2. 
   The amendment to Code section 423C.2(11) modifies the definition of “rental price” to mean the same as “sales price” defined in Code section 423.1, which includes facilitation fees, reservation fees, service fees, nonrefundable deposits, and any other direct or indirect charge made or consideration provided in connection with the renting or facilitation of renting automobiles. 
   The amendment to Code section 423C.3 strikes the definitions of “discount rental charge” and “travel package”. 
   The amendment to Code section 423C.3 specifies that the automobile rental excise tax shall be imposed upon the rental price of an automobile if the rental is subject to the state sales or use tax. 
   The bill strikes numerous provisions in Code section 423C.3 relating to the collection of the automobile rental excise tax by a “rental facilitator” and “rental platform” due to these definitions being stricken by another part of this division of the bill. 
   The amendment to Code section 423C.3 requires that any person required to collect state sales and use tax on the rental transaction under Code chapter 423 shall collect the automobile rental excise tax as applicable. The amendment to Code section 423C.3 provides that a person is not required to collect and remit the automobile rental excise tax if the person meets certain circumstances. For any rental transaction for which the person is not required to collect and remit the automobile rental excise tax, the amendment to Code section 423C.3 requires an automobile provider to be solely liable for any amount of uncollected or unremitted automobile rental excise tax and sales and use tax under Code chapter 423. 
   DIVISION V —— TELEPHONE COMPANY PROPERTY. Division V of the bill authorizes the Iowa utilities board to classify a long distance telephone company as a competitive long distance telephone company if certain revenue source criteria are met. In the event of such a classification, the board is required to promptly notify the director of revenue. Upon such notification by the board, the director of revenue is required to assess the property of such competitive long distance telephone company, which property is first assessed for taxation in this state on or after January 1, 1996, in the same manner as all other property assessed as commercial property by the local assessor. The provisions established in the bill are the same as provisions repealed on July 1, 2018, by 2018 Iowa Acts, chapter 1160. 
   The section of Division V of the bill enacting Code section 476.1D, subsection 10, takes effect upon enactment and applies retroactively to July 1, 2018, for assessment years beginning on or after that date.
   Division V also strikes Code section 476.1D, subsection 10, as enacted in the bill, effective July 1, 2021. The future strike of Code section 476.1D, subsection 10, applies to assessment years beginning on or after January 1, 2022. 
   DIVISION VI —— TARGETED JOBS WITHHOLDING CREDIT. The amendment to Code section 403.19A extends by one year the deadline for entering into withholding agreements under the targeted jobs withholding credit pilot project from June 30, 2019, to June 30, 2020.
   DIVISION VII —— SCHOOL TUITION ORGANIZATION TAX CREDITS.  The amendment to Code section 422.11S increases the total amount of school tuition organization tax credits that may be issued per tax year to $14 million from $13 million for tax years beginning on or after January 1, 2020.
   The bill also directs the Code editor to harmonize the amendments to Code section 422.11S in division I with the amendment to Code section 422.11S in division VII, if enacted.