SF 2159 (LSB 5984XS (4) 88)

SENATE FILE 2159

BY  BROWN

A BILL FOR

An Act relating to the sales and use tax by modifying the sales and use tax exemption for materials and certain machinery and equipment used in agricultural production.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

    Section 1.  Section 423.1, subsection 5, Code 2020, is amended to read as follows:
   5.  “Agricultural production” includes means the production of flowering, ornamental, or vegetable plants in commercial greenhouses or otherwise, and production from aquaculture, and production from silvicultural activities agricultural products for intended sale or livestock consumption and related land management practices. “Agricultural products” includes but is not limited to corn, eggs, fruit, hay, honey, livestock, milk, oats, soybeans, vegetables, wheat, and includes flowering, ornamental, or vegetable plants and those products of aquaculture and silviculture.
    Sec. 2.  Section 423.3, subsection 6, Code 2020, is amended to read as follows:
   6.  a.  The sales price of tangible personal property which will be consumed as fuel in creating heat, power, or steam for grain drying, or for providing heat or cooling for livestock or livestock buildings or for greenhouses or buildings or parts of buildings dedicated to the production of flowering, ornamental, or vegetable plants intended for sale in the ordinary course of business, or for use in cultivation of agricultural products by aquaculture, or in implements of husbandry engaged in agricultural production.
   b.  (1)  The sales price of tangible personal property that is designed to hold propane which will be consumed as fuel in creating heat, power, or steam for grain drying, or for providing heat or cooling for livestock or livestock buildings.
   (2)  Exempt property in subparagraph (1) includes attached valves, regulators, and piping.
    Sec. 3.  Section 423.3, subsection 8, paragraph a, subparagraph (1), Code 2020, is amended to read as follows:
   (1)  The farm machinery and equipment shall be directly and primarily used in production of agricultural products.
    Sec. 4.  Section 423.3, subsection 11, paragraph a, Code 2020, is amended to read as follows:
   a.  The implement, machinery, or equipment is directly and primarily used in livestock or dairy production, aquaculture production, or the production of flowering, ornamental, or vegetable plants.
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 sales and use tax by modifying the sales and use tax exemption for materials used in agricultural production, and for certain machinery and equipment used in such production.
   The bill modifies the definition of “agricultural production” in Code section 423.3(5) to include the production of agricultural products for intended sale or livestock consumption and related land management practices. “Agricultural products” is modified to include corn, eggs, fruit, hay, honey, livestock, milk, oats, soybeans, vegetables, and wheat.
   The amendment to the definition of “agricultural production” in Code section 423.1(5) affects the application of the following provisions: Code sections 423.1(19) (definition of farm machinery and equipment), 423.2(6)(ax) (services related to the storage of agricultural products), 423.3(5) (exempt agricultural products), 423.3(6) (exempt sales price of fuel used in agricultural production), 423.3(8) (exempt specialized machinery used in agricultural production), 423.3(10) (exempt gas, electricity, water, or heat used in agricultural production), 423.3(47) (machinery and equipment), and 423.45(5) (refunds of taxed fuel used in agricultural production).
   The amendment to Code section 423.3(6) exempts from the sales and use tax the sales price of fuel for providing heat or cooling for livestock. Currently, the sales price of such fuel is exempt from the sales and use tax if the fuel heats or cools a livestock building.
   The amendment to Code section 423.3(6) exempts from the sales and use tax the sales price of tangible personal property that is designed to hold propane which will be consumed as fuel in creating heat, power, or steam for grain drying, livestock, or livestock buildings. The exemption also includes valves, regulators, and piping attached to the property designed to hold propane. 
   The amendment to Code section 423.3(8)(a)(1) exempts from the sales and use tax the sales price of farm machinery and equipment used primarily in the production of agricultural products. Currently, the sales price of farm machinery and equipment must be used directly and primarily in production of agricultural products in order to be exempt from the sales and use tax.
   The amendment to Code section 423.3(11) requires that the sales price of an implement, machinery, or equipment be primarily used in livestock or dairy production, aquaculture production, or the production of flowering, ornamental, or vegetable plants in order for the sales of such items to be exempt from the sales and use tax. Current law requires such items to be directly and primarily used for such purposes.