Text: SSB00134 Text: SSB00136 Text: SSB00100 - SSB00199 Text: SSB Index Bills and Amendments: General Index Bill History: General Index
PAG LIN 1 1 Section 1. Section 421.10, Code 1995, is amended to read 1 2 as follows: 1 3 421.10 APPEAL PERIOD &endash; DENIAL OF TAXPAYER'S CLAIM. 1 4 The appeal period for revision of assessment of tax, 1 5 interest, and penalties set out under section 422.28, 422.54, 1 6 452A.64, 453A.29, or 453A.46 applies to appeals to notices 1 7 from the department denying changes in filing methods, denying 1 8 refund claims, and denying portions of refund claims for the 1 9 tax covered by that section, and notices of any department 1 10 action directed to a specific taxpayer, other than licensing, 1 11 which involves a calculation. 1 12 Sec. 2. Section 421.60, Code 1995, is amended by adding 1 13 the following new subsection: 1 14 NEW SUBSECTION. 10. ILLEGAL TAX. A tax shall not be 1 15 collected by the department if it is prohibited under the 1 16 Constitution of the United States or laws of the United 1 17 States, or under the Constitution of the State of Iowa. 1 18 Sec. 3. Section 422.25, Code 1995, is amended by adding 1 19 the following new subsection: 1 20 NEW SUBSECTION. 11. If a taxpayer files an amended return 1 21 within sixty days prior to the expiration of the applicable 1 22 period of limitations described in subsection 1, the 1 23 department has sixty days from the date of receipt of the 1 24 amended return to issue an assessment for any applicable tax, 1 25 interest, or penalty. 1 26 Sec. 4. Section 422.33, subsection 1, unnumbered paragraph 1 27 2, Code 1995, is amended to read as follows: 1 28 "Income from sources within this state" means income from 1 29 real,ortangible, or intangible property located or having a 1 30 situs in this state. 1 31 Sec. 5. Section 422.43, subsection 11, unnumbered 1 32 paragraph 1, Code 1995, is amended to read as follows: 1 33 The following enumerated services are subject to the tax 1 34 imposed on gross taxable services: alteration and garment 1 35 repair; armored car; vehicle repair; battery, tire and allied; 2 1 investment counseling; service charges of all financial 2 2 institutions; barber and beauty; boat repair; vehicle wash and 2 3 wax; carpentry; roof, shingle, and glass repair; dance schools 2 4 and dance studios; dating services; dry cleaning, pressing, 2 5 dyeing, and laundering; electrical and electronic repair and 2 6 installation; rental of tangible personal property, except 2 7 mobile homes which are tangible personal property; excavating 2 8 and grading; farm implement repair of all kinds; flying 2 9 service; furniture, rug, upholstery repair and cleaning; fur 2 10 storage and repair; golf and country clubs and all commercial 2 11 recreation; house and building moving; household appliance, 2 12 television, and radio repair; jewelry and watch repair; 2 13 limousine service, including driver; machine operator; machine 2 14 repair of all kinds; motor repair; motorcycle, scooter, and 2 15 bicycle repair; oilers and lubricators; office and business 2 16 machine repair; painting, papering, and interior decorating; 2 17 parking facilities; pipe fitting and plumbing; wood 2 18 preparation; licensed executive search agencies; private 2 19 employment agencies, excluding services for placing a person 2 20 in employment where the principal place of employment of that 2 21 person is to be located outside of the state; sewage services 2 22 for nonresidential commercial operations; sewing and 2 23 stitching; shoe repair and shoeshine; sign construction and 2 24 installation; storage of household goods, mini-storage, and 2 25 warehousing of raw agricultural products; swimming pool 2 26 cleaning and maintenance; taxidermy services; telephone 2 27 answering service; test laboratories,exceptincluding mobile 2 28 testing laboratories and field testing by testing 2 29 laboratories, and excluding tests on humans or animals; 2 30 termite, bug, roach, and pest eradicators; tin and sheet metal 2 31 repair; turkish baths, massage, and reducing salons; weighing; 2 32 welding; well drilling; wrapping, packing, and packaging of 2 33 merchandise other than processed meat, fish, fowl and 2 34 vegetables; wrecking service; wrecker and towing; pay 2 35 television; campgrounds; carpet and upholstery cleaning; gun 3 1 and camera repair; janitorial and building maintenance or 3 2 cleaning; lawn care, landscaping and tree trimming and 3 3 removal; pet grooming; reflexology; security and detective 3 4 services; tanning beds or salons; and water conditioning and 3 5 softening. 3 6 Sec. 6. Section 422.43, subsection 12, Code 1995, is 3 7 amended by striking the subsection. 3 8 Sec. 7. Section 422.45, subsection 7, paragraph b, Code 3 9 1995, is amended by adding the following new unnumbered 3 10 paragraph: 3 11 NEW UNNUMBERED PARAGRAPH. Refunds authorized under this 3 12 subsection shall accrue interest at the rate in effect under 3 13 section 421.7 from the first day of the second calendar month 3 14 following the date the refund claim is received by the 3 15 department. 3 16 Sec. 8. Section 422.45, subsection 27, unnumbered 3 17 paragraph 1, Code 1995, is amended to read as follows: 3 18 The gross receipts from the sale or rental, on or after 3 19 July 1, 1987 or on or after July 1, 1985, in the case of an 3 20 industry which has entered into an agreement under chapter 3 21 260E prior to the sale or lease, of industrial machinery, 3 22 equipment and computers, including replacement parts which are 3 23depreciabledepreciated forstate andfederal income tax 3 24 purposes, if the following conditions are met: 3 25 Sec. 9. Section 422.53, subsection 2, Code 1995, is 3 26 amended to read as follows: 3 27 2. The applicant must have a permit for each place of 3 28 business. The department may deny a permit to an applicant 3 29 who is substantially delinquent in paying a tax due, or the 3 30 interest or penalty on the tax, administered by the department 3 31 at the time of application. If the applicant is a 3 32 partnership, a permit may be denied if the partner is 3 33 substantially delinquent in paying any delinquent tax, penalty 3 34 or interest. If the applicant is a corporation, a permit may 3 35 be denied if any officer having a substantial legal or 4 1 equitable interest in the ownership of the corporation owes 4 2 any delinquent tax, penalty, or interestof the applicant4 3corporation. 4 4 Sec. 10. Section 422.55, subsection 2, Code 1995, is 4 5 amended by striking the subsection and inserting in lieu 4 6 thereof the following: 4 7 2. For cause and upon a showing by the director that 4 8 collection of the tax in dispute is in doubt, the court may 4 9 order the petitioner to file with the clerk a bond for the use 4 10 of the respondent, with sureties approved by the clerk, in the 4 11 amount of tax appealed from, conditioned that the petitioner 4 12 shall perform the orders of the court. 4 13 Sec. 11. Section 422.70, subsection 2, Code 1995, is 4 14 amended to read as follows: 4 15 2. Where the director finds the taxpayer has made a 4 16 fraudulent return, the costs ofsaidany hearing, including a 4 17 contested case hearing, shall be taxed to the taxpayer. In 4 18 all other cases the costs shall be paid by the state. 4 19 Sec. 12. Section 422.88, subsections 2 and 3, Code 1995, 4 20 are amended to read as follows: 4 21 2. The amount of the underpayment shall be the excess of 4 22 the amount of the installment which would be required to be 4 23 paid if the estimated tax was equal toeightyninety percent 4 24 of the tax shown on the return of the taxpayer for the taxable 4 25 year overanythe amount of installments paid on or before the 4 26 date prescribed for payment. 4 27 3. If the taxpayer did not file a return during the 4 28 taxable year, the amount of the underpayment shall be equal to 4 29eightyninety percent of the taxpayer's tax liability for the 4 30 taxable year overanythe amount of installments paid on or 4 31 before the date prescribed for payment. 4 32 Sec. 13. Section 422.89, subsection 3, unnumbered 4 33 paragraph 1, Code 1995, is amended to read as follows: 4 34 An amount equal toeightyninety percent of the tax for the 4 35 taxable year computed by placing on an annualized basis the 5 1 taxable income: 5 2 Sec. 14. Section 422B.8, unnumbered paragraph 1, Code 5 3 1995, is amended to read as follows: 5 4 A local sales and services tax at the rate of not more than 5 5 one percent may be imposed by a county on the gross receipts 5 6 taxed by the state under chapter 422, division IV. A local 5 7 sales and services tax shall be imposed on the same basis as 5 8 the state sales and services tax and may not be imposed on the 5 9 sale of any property or on any service not taxed by the state, 5 10 except the tax shall not be imposed on the gross receipts from 5 11 the sale of motor fuel or special fuel as defined in chapter 5 12 452A, on the gross receipts from the rental of rooms, 5 13 apartments, or sleeping quarters which are taxed under chapter 5 14 422A during the period the hotel and motel tax is imposed, on 5 15 the gross receipts from the sale of natural gas or electric 5 16 energy in a city or county where the gross receipts are 5 17 subject to a franchise fee or user fee during the period the 5 18 franchise or user fee is imposed,on the gross receipts upon5 19which sales tax is imposed only under section 422.43,5 20subsection 12,on the gross receipts from the sale of 5 21 equipment by the state department of transportation, and on 5 22 the gross receipts from the sale of a lottery ticket or share 5 23 in a lottery game conducted pursuant to chapter 99E. A local 5 24 sales and services tax is applicable to transactions within 5 25 those incorporated and unincorporated areas of the county 5 26 where it is imposed and shall be collected by all persons 5 27 required to collect state gross receipts taxes. All cities 5 28 contiguous to each other shall be treated as part of one 5 29 incorporated area and the tax would be imposed in each of 5 30 those contiguous cities only if the majority of those voting 5 31 in the total area covered by the contiguous cities favor its 5 32 imposition. 5 33 Sec. 15. Section 423.1, subsection 7, Code 1995, is 5 34 amended to read as follows: 5 35 7. "Retailer" means and includes every person engaged in 6 1 the business of selling tangible personal property or services 6 2 enumerated in section 422.43 for use within the meaning of 6 3 this chapter; provided, however, that. However, when in the 6 4 opinion of the director it is necessary for the efficient 6 5 administration of this chapter to regard any salespersons, 6 6 representatives, truckers, peddlers, or canvassers as the 6 7 agents of the dealers, distributors, supervisors, employers, 6 8 or persons under whom they operate or from whom they obtain 6 9 the tangible personal property sold by them, irrespective of 6 10 whether they are making sales on their own behalf or on behalf 6 11 ofsuchthose dealers, distributors, supervisors, employers, 6 12 or persons, the director maysoregard them andmay regardthe 6 13 dealers, distributors, supervisors, employers, or persons as 6 14 retailers for purposes of this chapter. 6 15 Sec. 16. Section 423.18, subsections 2 and 3, Code 1995, 6 16 are amended to read as follows: 6 17 2. A person who willfully attempts in any manner to evade 6 18 a tax imposed by this chapter or the paymentof ninety percent6 19 of the tax, or a person who makes or causes to be made any 6 20 false or fraudulent monthly deposit form or return with intent 6 21 to evade the tax imposed by this chapter or the paymentof6 22ninety percentof the tax is guilty of a class "D" felony. 6 23 3. A person required to pay tax, or to make, sign or file 6 24 a monthly deposit form or return, who willfully makes a false 6 25 or fraudulent monthly deposit form or return, or who willfully 6 26 fails at the time required by law to pay at least ninety 6 27 percent of the tax or fails to make, sign or file the monthly 6 28 deposit form or return, is guilty of a fraudulent practice. 6 29 Sec. 17. Section 423.21, Code 1995, is amended to read as 6 30 follows: 6 31 423.21 BOOKS &endash; EXAMINATION. 6 32 Every retailer required or authorized to collect taxes 6 33 imposed by this chapter and every person using in this state 6 34 tangible personal property, services, or the product of 6 35 services shall keepsuchthose records, receipts, invoices, 7 1 and other pertinent papers as the director shall require, in 7 2suchthe formasthat the director shall require. The 7 3 director or any duly authorized agent of the department may 7 4 examine the books, papers, records, and equipment of any 7 5 person either selling tangible personal property or services 7 6 or liable for the tax imposed by this chapter, and investigate 7 7 the character of the business of anysuchperson in order to 7 8 verify the accuracy of any return made, or ifnoa return was 7 9 not made bysuchthe person, ascertain and determine the 7 10 amount due underthe provisions ofthis chapter.Any such7 11 These books, papers, and records shall be made available 7 12 within this state forsuchexamination upon reasonable notice 7 13 when the director shall deem it advisable and shall so order. 7 14 The preceding requirements shall likewise apply to users and 7 15 persons rendering, furnishing, or performing service 7 16 enumerated in section 422.43. 7 17 Sec. 18. Section 423.25, Code 1995, is amended to read as 7 18 follows: 7 19 423.25 TAXATION IN ANOTHER STATE. 7 20 If any person who causes tangible personal property to be 7 21 brought into this state or who uses in this state services 7 22 enumerated in section 422.43 has already paid a tax in another 7 23 state in respect to the sale or use of the property or the 7 24 performance of the service, or an occupation tax in respect to 7 25 the property, in an amount less than the tax imposed by this 7 26 title, the provisions of this title shall apply, but at a rate 7 27 measured by the difference only between the rate fixed in this 7 28 title and the rate by which the previous tax on the sale or 7 29 use, or the occupation tax, was computed. If the tax imposed 7 30 and paid in the other state is equal to or more than the tax 7 31 imposed by this title, thennoa tax is not due in this state 7 32 on the personal property or service. 7 33 Sec. 19. Section 423A.2, Code 1995, is amended by adding 7 34 the following new subsection: 7 35 NEW SUBSECTION. 5. Requested by an auditor or other 8 1 equivalent representative of a governmental agency having 8 2 responsibility for tax collection. 8 3 Sec. 20. Section 424.13, subsection 2, Code 1995, is 8 4 amended by striking the subsection and inserting in lieu 8 5 thereof the following: 8 6 2. For cause and upon a showing by the director that 8 7 collection of the tax in dispute is in doubt, the court may 8 8 order the petitioner to file with the clerk a bond for the use 8 9 of the respondent, with sureties approved by the clerk, in the 8 10 amount of tax appealed from, conditioned that the petitioner 8 11 shall perform the orders of the court. 8 12 Sec. 21. Section 427.1, subsections 5, 14, 18, 19, and 22, 8 13 Code 1995, are amended by striking the subsections. 8 14 Sec. 22. Section 428.1, unnumbered paragraph 1, Code 1995, 8 15 is amended to read as follows: 8 16 Everyinhabitant of this state, of full age and sound mind,8 17 person shall list for the assessor all property subject to 8 18 taxation in the state, of which theinhabitantperson is the 8 19 owner, or has the control or management, in the following 8 20 mannerherein directed: 8 21 Sec. 23. Section 428.23, Code 1995, is amended to read as 8 22 follows: 8 23 428.23 MANUFACTURER TO LIST. 8 24 Corporations organizedunder the laws of this statefor 8 25 pecuniary profit and engaged in manufacturing as defined in 8 26 section 428.20 shall list their real property in the same 8 27 manner as is required of individuals. 8 28 Sec. 24. Section 428.37, subsection 2, unnumbered 8 29 paragraph 1, Code 1995, is amended to read as follows: 8 30 Notwithstandingsectionssection 428.25and 428.27, the 8 31 taxable value of an electric power generating plant placed in 8 32 commercial service after December 31, 1972, shall be 8 33 apportioned by the director of revenue and finance, commencing 8 34 with the year 1973, as follows: 8 35 Sec. 25. Section 433.4, Code 1995, is amended to read as 9 1 follows: 9 2 433.4 ASSESSMENT. 9 3 The director of revenue and finance shall on the second 9 4 Monday in July of each year, proceed to find the actual value 9 5 of the property ofsuchthese companies in this state, taking 9 6 into consideration the information obtained from the 9 7 statementsaboverequired, and any further information the 9 8 director can obtain, using the same as a means for determining 9 9 the actual cash value of the property ofsuchthese companies 9 10 within this state;. The director shall alsotakingtake into 9 11 consideration the valuation of all property ofsuchthese 9 12 companies, including franchises and the use of the property in 9 13 connection with lines outside the state, and makingsuchthese 9 14 deductions as may be necessary on account of extra value of 9 15 property outside the state as compared with the value of 9 16 property in the state, in order that the actual cash value of 9 17 the property of the company within this state may be 9 18 ascertained.SaidThe assessment shall include all property 9 19 of every kind and character whatsoever, real, personal, or 9 20 mixed, used bysaidthe companies in the transaction of 9 21 telegraph and telephone business; and the property so included 9 22 insaidthe assessment shall not be taxed in any other manner 9 23 than as provided in this chapterand section 427.1, subsection9 2419. 9 25 Sec. 26. Section 433.12, Code 1995, is amended to read as 9 26 follows: 9 27 433.12 "COMPANY" DEFINED. 9 28The word "company""Company" as used in this chapterand9 29section 427.1, subsection 19, shall be deemed and construed to9 30mean and includemeans any person, copartnership, association, 9 31 corporation, or syndicate thatshall ownowns oroperate9 32 operates, orbeis engaged in operating, any telegraph or 9 33 telephone line, whether formed or organized under the laws of 9 34 this state or elsewhere. 9 35 Sec. 27. Section 437.1, Code 1995, is amended to read as 10 1 follows: 10 2 437.1 "COMPANY" DEFINED. 10 3The word "company""Company" as used in this chapterand10 4section 427.1, subsection 19, shall be deemed and considered10 5to mean and includemeans any person, copartnership, 10 6 association, corporation, or syndicate,(except co-operative 10 7 corporations or associations which are not organized or 10 8 operated for profit), thatshall ownowns oroperateoperates 10 9 a transmission line or lines for the conducting of electric 10 10 energy located within the state and wholly or partly outside 10 11 cities, whether formed or organized under the laws of this 10 12 state or elsewhere. 10 13 Sec. 28. Section 437.12, Code 1995, is amended to read as 10 14 follows: 10 15 437.12 ASSESSMENT EXCLUSIVE. 10 16 Every transmission line or partthereofof a transmission 10 17 line, of which the director of revenue and finance is required 10 18 by this chapter to find the value, shall be exempt from other 10 19 assessment or taxation either under sections 428.24 to428.2710 20 428.26, or under any other law of this state except as 10 21 provided in this chapter. 10 22 Sec. 29. Section 437.13, Code 1995, is amended to read as 10 23 follows: 10 24 437.13 LOCAL ASSESSMENT. 10 25 All lands, buildings, machinery, poles, towers, wires, 10 26 station and substation equipment, and other construction owned 10 27 or operated by any company referred to in section 437.2, and 10 28 wheresuchthis property is located within any city within 10 29 this state, shall be listed and assessed for taxation in the 10 30 same manner as provided in sections 428.24, 428.25, and 10 31 428.29, for the listing and assessment of that part of the 10 32 lands, buildings, machinery, tracks, poles, and wires within 10 33 the limits of any city belonging to individuals or 10 34 corporations furnishing electric light or power, and where 10 35suchthis property, except the capital stock, is situated 11 1 partly within and partly without the limits of a city. All 11 2 personal property of every company owning or operating any 11 3suchtransmission line referred to in section 437.2, used or 11 4 purchased by it for the purpose ofsuchthe transmission line, 11 5 shall be listed and assessed in the assessment district where 11 6 usually kept and housed and under sections 428.26, 428.27,and 11 7 428.29. 11 8 Sec. 30. Section 441.21, subsection 9, paragraph b, Code 11 9 1995, is amended to read as follows: 11 10 b. Notwithstanding paragraph "a"of this subsection, any11 11construction or installation of gas production systems using11 12waste or manure to produce gas completed on property11 13classified as agricultural, residential, commercial, or11 14industrial property shall not increase the actual, assessed11 15and taxable values of the property for assessment years11 16beginning on January 1, 1979 and ending on or before December11 1731, 1985. In addition, notwithstanding paragraph "a" of this11 18subsection, any construction or installation of a solar energy 11 19 system on property so classified shall not increase the 11 20 actual, assessed and taxable values of the property for five 11 21 full assessment years. 11 22 Sec. 31. Section 453B.1, subsection 3, paragraph b, Code 11 23 1995, is amended to read as follows: 11 24 b. Forty-two and one-half grams or more of processed 11 25 marijuana or of a substance consisting of or containing 11 26 marijuana. 11 27 Sec. 32. Section 453B.1, subsection 3, Code 1995, is 11 28 amended by adding the following new paragraph after paragraph 11 29 b and relettering: 11 30 NEW PARAGRAPH. c. One or more unprocessed marijuana 11 31 plants. 11 32 Sec. 33. Section 453B.1, Code 1995, is amended by adding 11 33 the following new subsections: 11 34 NEW SUBSECTION. 7A. "Processed marijuana" means all 11 35 marijuana except unprocessed marijuana plants. 12 1 NEW SUBSECTION. 10. "Unprocessed marijuana plant" means 12 2 any cannabis plant at any level of growth, whether wet, dry, 12 3 harvested, or growing. 12 4 Sec. 34. Section 453B.7, Code 1995, is amended to read as 12 5 follows: 12 6 453B.7 TAX IMPOSED &endash; RATE OF TAX. 12 7 An excise tax is imposed on dealers at the following rates: 12 8 1. On each gram of processed marijuana, or each portion of 12 9 a gram, five dollars. 12 10 2. On each gram or portion of a gram of any taxable 12 11 substance sold by weight other than marijuana, two hundred 12 12 fifty dollars. 12 13 3. On each unprocessed marijuana plant, seven hundred 12 14 fifty dollars. 12 153.4. On each ten dosage units of any taxable substance, 12 16 other than unprocessed marijuana plants, that is not sold by 12 17 weight, or portion thereof, four hundred dollars. 12 18 Sec. 35. Section 428.27, Code 1995, is repealed. 12 19 Sec. 36. Section 3 of this Act, being deemed of immediate 12 20 importance, takes effect upon enactment, and applies or 12 21 retroactively applies to April 1, 1995, for amended tax 12 22 returns filed on or after that date. 12 23 Sec. 37. Section 4 of this Act applies retroactively to 12 24 January 1, 1995, for tax years beginning on or after that 12 25 date. 12 26 Sec. 38. Sections 12 and 13 of this Act are effective July 12 27 1, 1995, for tax years beginning on or after that date. 12 28 EXPLANATION 12 29 The bill makes a number of changes to the state tax laws 12 30 including income tax changes that treat income from intangible 12 31 property as income from sources within the state for corporate 12 32 income tax purposes; increase from 80 percent to 90 percent 12 33 the amount of estimated tax payments to be paid by 12 34 corporations and financial institutions; specifically allow 12 35 tax preparers to release tax records for examination by 13 1 employees of the department of revenue and finance; and give 13 2 the department 60 days to assess tax on amended returns 13 3 received within 60 days of the statute of limitations. 13 4 Sales and use tax provisions include changes that expand 13 5 taxable services of testing laboratories to include mobile and 13 6 field testing laboratories; eliminate the requirement that 13 7 out-of-state retailers collect sales tax if their only 13 8 activity is catalogue sales; allow interest on refunds to 13 9 governmental bodies, private nonprofit education institutions, 13 10 and private museums to accrue the first day of the second 13 11 month after receipt of the refund claim by the department; 13 12 exempt sales of replacement parts for industrial machinery and 13 13 equipment only if parts are actually depreciated; provide that 13 14 the definition of "retailer" includes persons providing 13 15 enumerated services; include services used in this state as 13 16 subject to use tax if sales tax is not paid; modify certain 13 17 evasion of use tax provisions. 13 18 The bill modifies certain bonding requirements on appeal, 13 19 provides that contest case hearing costs in fraud cases are 13 20 taxed to the taxpayer; repeals certain obsolete property tax 13 21 exemptions, and imposes a tax on unprocessed marijuana plants. 13 22 The bill has numerous effective and applicability date 13 23 provisions. 13 24 BACKGROUND STATEMENT 13 25 SUBMITTED BY THE AGENCY 13 26 The bill specifies that appeal periods under various taxing 13 27 provisions, except licensing, apply to any department of 13 28 revenue and finance action involving calculation of tax and 13 29 directed at a specific taxpayer. 13 30 The bill gives statutory authority to the department of 13 31 revenue and finance not to collect a tax where to do so would 13 32 be prohibited by the Constitution of the United States or laws 13 33 or by the Constitution of the State of Iowa. This provision 13 34 covers all taxes where prior law only covered retail sales 13 35 tax. 14 1 The bill extends the statute of limitations for assessment 14 2 by up to 60 days for amended returns that are filed within 60 14 3 days prior to the date that the statute of limitations for 14 4 assessment was to expire. This provision applies 14 5 retroactively, if need be, to April 1, 1995. 14 6 The bill allows an Iowa domiciled corporation to apportion 14 7 its income if its only contact with another state is the 14 8 licensing of the use of an intangible in that state. States 14 9 may constitutionally tax a corporation if its only contact 14 10 with that state is the licensing of intangibles. This 14 11 provision will prevent the double taxation of some Iowa 14 12 corporations' income. The bill will also tax the Iowa income 14 13 from intangibles of non-Iowa corporations. 14 14 The bill clarifies existing law by adding language which 14 15 states explicitly that the taxable service of "test 14 16 laboratories" includes the service of mobile testing 14 17 laboratories and field testing by testing laboratories. 14 18 The bill repeals the sales tax provision which allows the 14 19 state to require certain retailers with no physical presence 14 20 in Iowa to collect sales tax on the gross receipts from sales 14 21 of tangible personal property in Iowa. 14 22 Present law provides that all refunds shall accrue interest 14 23 at the rate in effect under section 421.7 from the first day 14 24 of the second month following the date of payment or the date 14 25 the return was due to be filed or was filed, whichever is the 14 26 latest. Under state law, contractors are the consumer and 14 27 must pay sales or use tax on all materials they use to 14 28 incorporate into real property. Section 422.45, subsection 7, 14 29 provides that private nonprofit educational institutions, 14 30 nonprofit private museums, tax certifying or tax levying 14 31 bodies, or governmental subdivisions of the state are entitled 14 32 to a refund of all sales and use tax paid by contractors, when 14 33 performing construction for the above. This is a situation 14 34 where the person that paid the tax does not receive the 14 35 refund. This bill provides that the interest will not start 15 1 to accrue until the refund claim is actually filed by the 15 2 organization entitled to the refund. 15 3 The bill changes the conditions under which sale or use of 15 4 replacements parts for industrial machinery, equipment or 15 5 computers is exempt from tax. Under existing law, their sale 15 6 or use is exempt if the cost of a replacement part could be 15 7 depreciated under federal and state income tax law. As 15 8 amended, the cost of the replacement part must be depreciated 15 9 if the sale or use of it is to be exempt from tax. The 15 10 exemption will not apply if the cost of the replacement part 15 11 is deducted as an expense rather than depreciated over its 15 12 useful life. The statute's reference to state law is deleted 15 13 as redundant because Iowa law always follows federal law with 15 14 regard to depreciation. 15 15 The bill allows for the denial of a sales tax permit where 15 16 an officer having a substantial legal or equitable ownership 15 17 in a corporation owes any delinquent sales tax, penalty, or 15 18 interest. Current language is confusing and contrary to the 15 19 purpose of the statute. 15 20 The bill amends bonding provisions associated with sales 15 21 tax contested case decisions and with environmental protection 15 22 charge contested case decisions to read the same as section 15 23 422.29, subsection 2, relating to income tax contested case 15 24 decisions. If for cause, the director of revenue and finance 15 25 shows that collection of the tax in dispute is in doubt, the 15 26 court may order a petitioner to file a bond for the amount of 15 27 tax in dispute. This was overlooked in the taxpayer bill of 15 28 rights enacted in 1994. 15 29 The bill makes clear that in the event of fraud, the costs 15 30 of a contested case hearing are to be taxed to the taxpayer to 15 31 the same extent as the costs of other hearings under section 15 32 422.70. In cases other than fraud, the state pays the costs. 15 33 For corporations and financial institutions, the bill 15 34 raises the portion from 80 to 90 percent of the current year 15 35 tax liability that must be paid through estimated tax payments 16 1 to avoid penalty for underpayment of estimated tax. This is 16 2 consistent with federal standards. 16 3 The bill adds clarifying references to taxable enumerated 16 4 services to sections of the use tax law which currently only 16 5 mention tangible personal property, but which should also 16 6 apply to services subject to use tax. 16 7 The bill amends the use tax statutes relating to the 16 8 evasion of tax. The burden of proof is on the department so 16 9 the 90 percent provision has no bearing. This also makes use 16 10 tax consistent with section 422.58, subsections 3 and 5, of 16 11 the sales tax law. 16 12 The bill specifically allows the disclosure of tax 16 13 information to a representative of the department of revenue 16 14 and finance when performing an audit or investigation of a tax 16 15 preparer's client. 16 16 The bill repeals a number of property tax exemption 16 17 statutes that are obsolete and makes clarifying technical 16 18 corrections. 16 19 The bill significantly simplifies the calculation of the 16 20 drug stamp tax by imposing an excise tax on unprocessed 16 21 marijuana plants. 16 22 LSB 1115DP 76 16 23 mg/cf/24
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