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PAG LIN 1 1 Section 1. Section 321.19, subsection 1, unnumbered 1 2 paragraph 2, Code 1997, is amended to read as follows: 1 3 The department shall furnish, on application, free of 1 4 charge, distinguishing plates for vehicles thus exempted, 1 5 which plates except plates on Iowa highway safety patrol 1 6 vehicles shall bear the word "official" and the department 1 7 shall keep a separate record. Registration plates issued for 1 8 Iowa highway safety patrol vehicles, except unmarked patrol 1 9 vehicles, shall bear two red stars on a yellow background, one 1 10 before and one following the registration number on the plate, 1 11 which registration number shall be the officer's badge number. 1 12 Registration plates issued for a county sheriff's patrol 1 13 vehicles shall display one seven-pointed gold star followed by 1 14 the letter "S" and the call number of the vehicle. However, 1 15 the director of general services or the director of 1 16 transportation may order the issuance of regular registration 1 17 plates for any exempted vehicle used by peace officers in the 1 18 enforcement of the law, persons enforcing chapter 124 and 1 19 other laws relating to controlled substances, persons in the 1 20 department of justice, the alcoholic beverages division of the 1 21 department of commerce,andthe department of inspections and 1 22 appeals, and the department of revenue and finance, who are 1 23 regularly assigned to conduct investigations which cannot 1 24 reasonably be conducted with a vehicle displaying "official" 1 25 state registration plates, and persons in the lottery division 1 26 of the department of revenue and finance whose regularly 1 27 assigned duties relating to security or the carrying of 1 28 lottery tickets cannot reasonably be conducted with a vehicle 1 29 displaying "official" registration plates. For purposes of 1 30 sale of exempted vehicles, the exempted governmental body, 1 31 upon the sale of the exempted vehicle, may issue for in- 1 32 transit purposes a pasteboard card bearing the words "Vehicle 1 33 in Transit", the name of the official body from which the 1 34 vehicle was purchased, together with the date of the purchase 1 35 plainly marked in at least one-inch letters, and other 2 1 information required by the department. The in-transit card 2 2 is valid for use only within forty-eight hours after the 2 3 purchase date as indicated on the bill of sale which shall be 2 4 carried by the driver. 2 5 Sec. 2. Section 331.427, subsection 1, unnumbered 2 6 paragraph 1, Code 1997, is amended to read as follows: 2 7 Except as otherwise provided by state law, county revenues 2 8 from taxes and other sources for general county services shall 2 9 be credited to the general fund of the county, including 2 10 revenues received under sections 101A.3, 101A.7, 123.36, 2 11 123.143, 142B.6, 176A.8, 321.105, 321.152, 321G.7, 331.554, 2 12 subsection 6, 341A.20, 364.3, 368.21,422.65,422A.2, 428A.8, 2 13 430A.3, 433.15, 434.19, 445.57, 453A.35, 458A.21, 483A.12, 2 14 533.24, 556B.1, 567.10, 583.6, 602.8108, 904.908, and 906.17, 2 15 and chapter 405A, and the following: 2 16 Sec. 3. NEW SECTION. 405A.10 FRANCHISE TAX REVENUE 2 17 ALLOCATION. 2 18 For the fiscal year beginning July 1, 1997, and each 2 19 subsequent fiscal year, there is appropriated from the general 2 20 fund of the state to the department of revenue and finance the 2 21 sum of eight million eight hundred thousand dollars which 2 22 shall be paid quarterly on warrants by the director as 2 23 allocated pursuant to section 422.65. 2 24 Sec. 4. Section 421.4, Code 1997, is amended to read as 2 25 follows: 2 26 421.4 DEPUTIES. 2 27 The director may appoint deputy directors and may designate 2 28 one or more of the deputies as acting director. A deputy 2 29 designated to serve in the absence of the director has all of 2 30 the powers possessed by the director. The director may employ 2 31 certified public accountants, engineering and technical 2 32 assistants, and other employees, or independent contractors 2 33 necessary to protect the interests of the state and any 2 34 political subdivision. 2 35 Sec. 5. Section 421.17, subsection 21, paragraph b, 3 1 subparagraph (3), Code 1997, is amended to read as follows: 3 2 (3) The child support recovery unit, the foster care 3 3 recovery unit, and the investigations division of the 3 4 department of inspections and appeals shall, at least 3 5 annually, submit to the department of revenue and finance for 3 6 setoff the debts described in this subsection,which are at3 7least fifty dollarsconstituting a minimum amount determined 3 8 by rule of the department of revenue and finance, on a date to 3 9 be specified by the department of human services and the 3 10 department of inspections and appeals by rule. 3 11 Sec. 6. Section 421.17, Code 1997, is amended by adding 3 12 the following new subsection: 3 13 NEW SUBSECTION. 22A. To develop, modify, or contract with 3 14 vendors to create or administer systems or programs which 3 15 identify nonfilers of returns or nonpayers of taxes 3 16 administered by the department. Fees for services, 3 17 reimbursements, or other remuneration paid under contract may 3 18 be funded from the amount of tax, penalty, interest, or fees 3 19 actually collected and shall be paid only after the amount is 3 20 collected. An amount is appropriated from the amount of tax, 3 21 penalty, interest, and fees actually collected, not to exceed 3 22 the amount collected, which are sufficient to pay for 3 23 services, reimbursement, or other remuneration pursuant to 3 24 this subsection. Vendors entering into a contract with the 3 25 department pursuant to this subsection are subject to the 3 26 requirements and penalties of the confidentiality laws of this 3 27 state regarding tax information. 3 28 Sec. 7. Section 421.17, subsection 23, paragraphs c, d, 3 29 and g, Code 1997, are amended to read as follows: 3 30 c. The college student aid commission shall, at least 3 31 annually, submit to the department of revenue and finance for 3 32 setoff the guaranteed student loan defaults,which are at3 33least fifty dollarsconstituting a minimum amount set by rule 3 34 of the department of revenue and finance, on a date or dates 3 35 to be specified by the college student aid commission by rule. 4 1 d. Upon submission of a claim, the department of revenue 4 2 and finance shall notify the college student aid commission 4 3 whether the defaulter is entitled to a refund or rebate ofat4 4least fifty dollarsthe minimum amount set by rule of the 4 5 department and if so entitled shall notify the commission of 4 6 the amount of the refund or rebate and of the defaulter's 4 7 address on the income tax return. Section 422.72, subsection 4 8 1, does not apply to this paragraph. 4 9 g. The department of revenue and finance shall, after 4 10 notice has been sent to the defaulter by the college student 4 11 aid commission, set off the amount of the default against the 4 12 defaulter's income tax refund or rebateif both the amount of4 13the default and the refund or rebate are at least fifty4 14dollarsconstituting a minimum amount set by rule of the 4 15 department. The department shall refund any balance of the 4 16 income tax refund or rebate to the defaulter. The department 4 17 of revenue and finance shall periodically transfer the amount 4 18 set off to the college student aid commission. If the 4 19 defaulter gives written notice of intent to contest the claim, 4 20 the commission shall hold the refund or rebate until final 4 21 disposition of the contested claim pursuant to chapter 17A or 4 22 by court judgment. The commission shall notify the defaulter 4 23 in writing upon completion of setoff. 4 24 Sec. 8. Section 421.17, subsection 25, paragraph c, Code 4 25 1997, is amended to read as follows: 4 26 c. The clerk of the district court, on the first day of 4 27 February and August of each calendar year, shall submit to the 4 28 department for setoff the debts described in this subsection, 4 29which are at least fifty dollarsconstituting a minimum amount 4 30 set by rule of the department. 4 31 Sec. 9. Section 421.17, subsection 29, paragraphs a and e, 4 32 Code 1997, are amended to read as follows: 4 33 a. For purposes of this subsection unless the context 4 34 requires otherwise: 4 35 (1) "State agency" means a board, commission, department, 5 1 including the department of revenue and finance, or other 5 2 administrative office or unit of the state of Iowa or any 5 3 other state entity reported in the Iowa comprehensive annual 5 4 financial report. The term "state agency" does not include 5 5 the general assembly, the governor, or any political 5 6 subdivision of the state, or its offices and units. 5 7 (2) "Department" means the department of revenue and 5 8 finance and any other state agency that maintains a separate 5 9 accounting system and elects to establish a debt collection 5 10 setoff procedure for collection of debts owed to the state or 5 11 its agencies. 5 12 (3) The term "person" does not include a state agency. 5 13 e. Before setoff, the amount of a person's claim on a 5 14 state agency and the amount of a person's liability to a state 5 15 agency shallbe at least fifty dollarsconstitute a minimum 5 16 amount set by rule of the department. 5 17 Sec. 10. NEW SECTION. 421.61 UNCONSTITUTIONALLY WITHHELD 5 18 TAX BENEFITS. 5 19 If a provision in the Code grants a tax benefit to 5 20 taxpayers that is unconstitutionally withheld from other 5 21 taxpayers as expressed in an Iowa attorney general's opinion 5 22 based upon decisions of the Iowa supreme court, United States 5 23 supreme court, or other courts of competent jurisdiction, the 5 24 tax benefit shall also be granted to the adversely affected 5 25 taxpayers as if the unconstitutional provision did not exist. 5 26 Sec. 11. Section 422.5, subsection 1, paragraph j, 5 27 subparagraph (2), unnumbered paragraph 1, Code 1997, is 5 28 amended to read as follows: 5 29 The tax imposed upon the taxable income of a resident 5 30 shareholder in a value-added corporation which has in effect 5 31 for the tax year an election under subchapter S of the 5 32 Internal Revenue Code and carries on business within and 5 33 without the state may be computed by reducing the amount 5 34 determined pursuant to paragraphs "a" through "i" by the 5 35 amounts of nonrefundable credits under this division and by 6 1 multiplying this resulting amount by a fraction of which the 6 2 resident's net income allocated to Iowa, as determined in 6 3 section 422.8, subsection 2, paragraph "b", is the numerator 6 4 and the resident's total net income computed under section 6 5 422.7 is the denominator. If a resident shareholder has 6 6 elected to take advantage of this subparagraph, and for the 6 7 next tax year elects not to take advantage of this 6 8 subparagraph, the resident shareholder shall not reelect to 6 9 take advantage of this subparagraph for the three tax years 6 10 immediately following the first tax year for which the 6 11 shareholder elected not to take advantage of this 6 12 subparagraph, unless the director consents to the reelection. 6 13 Thisparagraphsubparagraph also applies to individuals who 6 14 are residents of Iowa for less than the entire tax year. 6 15 Sec. 12. Section 422.20, subsection 3, unnumbered 6 16 paragraph 1, Code 1997, is amended to read as follows: 6 17 Unless otherwise expressly permitted by section 421.17, 6 18 subsections 21, 22, 22A, 23, 25, 29, and 32, sections 252B.9, 6 19 421.19, 421.28, 422.72, and 452A.63, and this section, a tax 6 20 return, return information, or investigative or audit 6 21 information shall not be divulged to any person or entity, 6 22 other than the taxpayer, the department, or internal revenue 6 23 service for use in a matter unrelated to tax administration. 6 24 Sec. 13. Section 422.32, subsection 4, Code 1997, is 6 25 amended to read as follows: 6 26 4. "Corporation" includes joint stock companies, and 6 27 associations organized for pecuniary profit, andpublicly6 28tradedpartnerships and limited liability companies taxed as 6 29 corporations under the Internal Revenue Code. 6 30 Sec. 14. Section 422.43, Code 1997, is amended by adding 6 31 the following new subsection: 6 32 NEW SUBSECTION. 12. A tax of five percent is imposed upon 6 33 the gross receipts from the sales of prepaid telephone calling 6 34 cards and prepaid authorization numbers. For the purpose of 6 35 this division, the sales of prepaid telephone calling cards 7 1 and prepaid authorization numbers are sales of tangible 7 2 personal property. 7 3 Sec. 15. Section 422.45, subsection 7, unnumbered 7 4 paragraph 1, Code 1997, is amended to read as follows: 7 5 A private nonprofit educational institution in this state, 7 6 nonprofit private museum in this state, tax-certifying or tax- 7 7 levying body or governmental subdivision of the state, 7 8 including the state board of regents, state department of 7 9 human services, state department of transportation, a 7 10 municipally owned solid waste facility which sells all or part 7 11 of its processed waste as fuel to a municipally owned public 7 12 utility, and all divisions, boards, commissions, agencies, or 7 13 instrumentalities of state, federal, county, or municipal 7 14 government which do not have earnings going to the benefit of 7 15 an equity investor or stockholder, may make application to the 7 16 department for the refund of the sales, services, or use tax 7 17 upon the gross receipts of all sales of goods, wares, or 7 18 merchandise, or from services rendered, furnished, or 7 19 performed, to a contractor, used in the fulfillment of a 7 20 written contract with the state of Iowa, any political 7 21 subdivision of the state, or a division, board, commission, 7 22 agency, or instrumentality of the state or a political 7 23 subdivision, a private nonprofit educational institution in 7 24 this state, or a nonprofit private museum in this state if the 7 25 property becomes an integral part of the project under 7 26 contract and at the completion of the project becomes public 7 27 property, is devoted to educational uses, or becomes a 7 28 nonprofit private museum; except goods, wares, or merchandise, 7 29 or services rendered, furnished, or performed used in the 7 30 performance of any contract in connection with the operation 7 31 of any municipal utility engaged in selling gas, electricity, 7 32 or heat to the general public or in connection with the 7 33 operation of a municipal pay television system; and except 7 34 goods, wares, and merchandise used in the performance of a 7 35 contract for a "project" under chapter 419 as defined in that 8 1 chapter other than goods, wares, or merchandise used in the 8 2 performance of a contract for a "project" under chapter 419 8 3 for which a bond issue was approved by a municipality prior to 8 4 July 1, 1968, or for which the goods, wares, or merchandise 8 5 becomes an integral part of the project under contract and at 8 6 the completion of the project becomes public property or is 8 7 devoted to educational uses. 8 8 Sec. 16. Section 422.45, subsection 18, Code 1997, is 8 9 amended to read as follows: 8 10 18. Gross receipts from the sale of tangible personal 8 11 property, except vehicles subject to registration, to a person 8 12 regularly engaged in the business of leasing if the period of 8 13 the lease is for more thanone yearfive months, or in the 8 14 consumer rental purchase business if the property is to be 8 15 utilized in a transaction involving a consumer rental purchase 8 16 agreement as defined in section 537.3604, subsection 8, and 8 17 the leasing or consumer rental of the property is subject to 8 18 taxation under this division. If tangible personal property 8 19 exempt under this subsection is made use of for any purpose 8 20 other than leasing, renting, or consumer rental purchase, the 8 21 person claiming the exemption under this subsection is liable 8 22 for the tax that would have been due except for this 8 23 subsection. The tax shall be computed upon the original 8 24 purchase price. The aggregate of the tax paid on the leasing, 8 25 renting, or rental purchase of such tangible personal 8 26 property, not to exceed the amount of the sales tax owed, 8 27 shall be credited against the tax. This sales tax is in 8 28 addition to any sales or use tax that may be imposed as a 8 29 result of the disposal of such tangible personal property. 8 30 Sec. 17. Section 422.53, Code 1997, is amended by adding 8 31 the following new subsection: 8 32 NEW SUBSECTION. 8. a. Except as provided in paragraph 8 33 "b", purchasers, users, and consumers of tangible personal 8 34 property or enumerated services taxed pursuant to this 8 35 division, chapter 423, or chapter 422B, may be authorized, 9 1 pursuant to rules adopted by the director, to remit tax owed 9 2 directly to the department instead of the tax being collected 9 3 and paid by the seller. To qualify for a direct pay tax 9 4 permit, the purchaser, user, or consumer must accrue a tax 9 5 liability of more than four thousand dollars in tax under this 9 6 division and chapter 423, in a semimonthly period and make 9 7 deposits and file returns pursuant to section 422.52. This 9 8 authority shall not be granted or exercised except upon 9 9 application to the director and then only after issuance by 9 10 the director of a direct pay tax permit. 9 11 b. The granting of a direct pay tax permit is not 9 12 authorized for any of the following: 9 13 (1) Taxes imposed on the sales, furnishing, or service of 9 14 gas, electricity, water, heat, pay television service, and 9 15 communication service. 9 16 (2) Taxes imposed under sections 423.7 and 423.7A and 9 17 chapter 422C. 9 18 Sec. 18. Section 422.65, Code 1997, is amended to read as 9 19 follows: 9 20 422.65 ALLOCATION OF REVENUE. 9 21 All moneys received from the franchise tax shall be 9 22 deposited in the state general fund.Commencing with the9 23fiscal year beginning July 1, 1993, there is appropriated for9 24each fiscal year from the franchise tax money received and9 25deposited in the state general fund the sum of eight million9 26eight hundred thousand dollars which shall be paid quarterly9 27on warrants by the director, after certification by the9 28director,Franchise tax moneys appropriated in section 405A.10 9 29 are allocated as follows: 9 30 1. Sixty percent to the general fund of the city from 9 31 which the tax is collected. 9 32 2. Forty percent to the county from which the tax is 9 33 collected. 9 34 If the financial institution maintains one or more offices 9 35 for the transaction of business, other than its principal 10 1 office, a portion of its franchise tax shall be allocated to 10 2 each office, based upon a reasonable measure of the business 10 3 activity of each office. The director shall prescribe, for 10 4 each type of financial institution, a method of measuring the 10 5 business activity of each office. Financial institutions 10 6 shall furnish all necessary information for this purpose at 10 7 the request of the director. 10 8Quarterly, the director shall certify to the treasurer of10 9state the amounts to be paid to each city and county from the10 10state general fund. All moneys received from the franchise10 11tax are appropriated according to the provisions of this10 12section.10 13 Sec. 19. Section 422.72, subsection 3, unnumbered 10 14 paragraph 1, Code 1997, is amended to read as follows: 10 15 Unless otherwise expressly permitted by section 421.17, 10 16 subsections 21, 22, 22A, 23, 25, 29, and 32, sections 252B.9, 10 17 421.19, 421.28, 422.20, and 452A.63, and this section, a tax 10 18 return, return information, or investigative or audit 10 19 information shall not be divulged to any person or entity, 10 20 other than the taxpayer, the department, or internal revenue 10 21 service for use in a matter unrelated to tax administration. 10 22 Sec. 20. Section 422.72, Code 1997, is amended by adding 10 23 the following new subsection: 10 24 NEW SUBSECTION. 7. Notwithstanding subsection 3, the 10 25 director shall provide state tax returns and return 10 26 information in response to a subpoena issued by the court 10 27 pursuant to rule of criminal procedure 5 commanding the 10 28 appearance before the attorney general or an assistant 10 29 attorney general if the subpoena is accompanied by affidavits 10 30 from such person and from a sworn peace officer member of the 10 31 department of public safety affirming that the information is 10 32 necessary for the investigation of a felony violation of 10 33 chapter 124 or chapter 706B. The affidavits accompanying the 10 34 subpoenas and the information provided by the director shall 10 35 remain a confidential record which may be disseminated only to 11 1 a prosecutor or peace officer involved in the investigation, 11 2 or to the taxpayer who filed the information and to the court 11 3 in connection with the filing of criminal charges or 11 4 institution of a forfeiture action. A person who knowingly 11 5 files a false affidavit with the director to secure 11 6 information or who divulges information received under this 11 7 subsection in a manner prohibited by this subsection commits a 11 8 serious misdemeanor. 11 9 Sec. 21. Section 423.1, subsection 8, Code 1997, is 11 10 amended to read as follows: 11 11 8. "Retailer maintaining a place of business in this 11 12 state" or any like term includes any retailer having or 11 13 maintaining within this state, directly or by a subsidiary, an 11 14 office, distribution house, sales house, warehouse, or other 11 15 place of business, or anyagentrepresentative operating 11 16 within this state under the authority of the retailer or its 11 17 subsidiary, irrespective of whethersuchthat place of 11 18 business oragentrepresentative is located here permanently 11 19 or temporarily, or whether the retailer or subsidiary is 11 20 admitted to do business within this state pursuant to chapter 11 21 490. 11 22 Sec. 22. Section 423.25, Code 1997, is amended to read as 11 23 follows: 11 24 423.25 TAXATION IN ANOTHER STATE. 11 25 If any person who causes tangible personal property to be 11 26 brought into this state or who uses in this state services 11 27 enumerated in section 422.43 has already paid a tax in another 11 28 state in respect to the sale or use of the property or the 11 29 performance of the service, or an occupation tax in respect to 11 30 the property or service, in an amount less than the tax 11 31 imposed by this title, the provisions of this title shall 11 32 apply, but at a rate measured by the difference only between 11 33 the rate fixed in this title and the rate by which the 11 34 previous tax on the sale or use, or the occupation tax, was 11 35 computed. If the tax imposed and paid in the other state is 12 1 equal to or more than the tax imposed by this title, then a 12 2 tax is not due in this state on the personal property or 12 3 service. 12 4 Sec. 23. Section 425.7, subsection 3, Code 1997, is 12 5 amended to read as follows: 12 6 3. If the director of revenue and finance determines that 12 7 a claim for homestead credit has been allowed by the board of 12 8 supervisors which is not justifiable under the law and not 12 9 substantiated by proper facts, the director may, at any time 12 10 within thirty-six months from July 1 of the year in which the 12 11 claim is allowed, set aside the allowance. Notice of the 12 12 disallowance shall be given to the county auditor of the 12 13 county in which the claim has been improperly granted and a 12 14 written notice of the disallowance shall also be addressed to 12 15 the claimant at the claimant's last known address. The 12 16 claimant or board of supervisors may appeal to the state board 12 17 of tax review pursuant to section 421.1, subsection 4. The 12 18 claimant or the board of supervisors may seek judicial review 12 19 of the action of thedirector of revenue and financestate 12 20 board of tax review in accordance withthe Iowa administrative12 21procedure Actchapter 17A. 12 22 If a claim is disallowed by the director of revenue and 12 23 finance and not appealed to the state board of tax review or 12 24 appealed to and upheld by the state board of tax review and a 12 25 petition for judicial review is not filed with respect to the 12 26 disallowance, any amounts of credits allowed and paid from the 12 27 homestead credit fund including the penalty, if any, become a 12 28 lien upon the property on which credit was originally granted, 12 29 if still in the hands of the claimant, and not in the hands of 12 30 a bona fide purchaser, and any amount so erroneously paid 12 31 including the penalty, if any, shall be collected by the 12 32 county treasurer in the same manner as other taxes and the 12 33 collections shall be returned to the department of revenue and 12 34 finance and credited to the homestead credit fund. The 12 35 director of revenue and finance may institute legal 13 1 proceedings against a homestead credit claimant for the 13 2 collection of payments made on disallowed credits and the 13 3 penalty, if any. If a homestead credit is disallowed and the 13 4 claimant failed to give written notice to the assessor as 13 5 required by section 425.2 when the property ceased to be used 13 6 as a homestead by the claimant, a civil penalty equal to fifty 13 7 percent of the amount of the disallowed credit is assessed 13 8 against the claimant. 13 9 Sec. 24. Section 426A.6, Code 1997, is amended to read as 13 10 follows: 13 11 426A.6 SETTING ASIDE ALLOWANCE. 13 12 If the director of revenue and finance determines that a 13 13 claim for military service tax exemption has been allowed by a 13 14 board of supervisors which is not justifiable under the law 13 15 and not substantiated by proper facts, the director may, at 13 16 any time within thirty-six months from July 1 of the year in 13 17 which the claim is allowed, set aside the allowance. Notice 13 18 of the disallowance shall be given to the county auditor of 13 19 the county in which the claim has been improperly granted and 13 20 a written notice of the disallowance shall also be addressed 13 21 to the claimant at the claimant's last known address. The 13 22 claimant or the board of supervisors may appeal to the state 13 23 board of tax review pursuant to section 421.1, subsection 4. 13 24 The claimant or the board of supervisors may seek judicial 13 25 review of the action of thedirector of revenue and finance13 26 state board of tax review in accordance with chapter 17A. If 13 27 a claim is disallowed by the director of revenue and finance 13 28 and not appealed to the state board of tax review or appealed 13 29 to and upheld by the state board of tax review and a petition 13 30 for judicial review is not filed with respect to the 13 31 disallowance, the credits allowed and paid from the general 13 32 fund of the state become a lien upon the property on which the 13 33 credit was originally granted, if still in the hands of the 13 34 claimant and not in the hands of a bona fide purchaser, the 13 35 amount so erroneously paid shall be collected by the county 14 1 treasurer in the same manner as other taxes, and the 14 2 collections shall be returned to the department of revenue and 14 3 finance and credited to the general fund of the state. The 14 4 director of revenue and finance may institute legal 14 5 proceedings against a military service tax exemption claimant 14 6 for the collection of payments made on disallowed exemptions. 14 7 Sec. 25. Section 426B.1, subsection 1, Code 1997, is 14 8 amended to read as follows: 14 9 1. A property tax relief fund is created in the state 14 10 treasury under the authority of the department ofrevenue and14 11financehuman services. The fund shall be separate from the 14 12 general fund of the state and shall not be considered part of 14 13 the general fund of the state except in determining the cash 14 14 position of the state for payment of state obligations. The 14 15 moneys in the fund are not subject to the provisions of 14 16 section 8.33 and shall not be transferred, used, obligated, 14 17 appropriated, or otherwise encumbered except as provided in 14 18 this chapter. Moneys in the fund may be used for cash flow 14 19 purposes, provided that any moneys so allocated are returned 14 20 to the fund by the end of each fiscal year. However, the fund 14 21 shall be considered a special account for the purposes of 14 22 section 8.53, relating to elimination of any GAAP deficit. 14 23 For the purposes of this chapter, unless the context otherwise 14 24 requires, "property tax relief fund" means the property tax 14 25 relief fund created in this section. 14 26 Sec. 26. Section 426B.4, Code 1997, is amended to read as 14 27 follows: 14 28 426B.4 RULES. 14 29 The council on human services shall consult with the state- 14 30 county management committee created in section 331.438 and the 14 31 director ofrevenue and financehuman services in prescribing 14 32 forms and adopting rules pursuant to chapter 17A to administer 14 33 this chapter. 14 34 Sec. 27. Section 427.1, subsection 16, Code 1997, is 14 35 amended to read as follows: 15 1 16. REVOKING EXEMPTION. Any taxpayer or any taxing 15 2 district may make application to the director of revenue and 15 3 finance for revocation for any exemption, based upon alleged 15 4 violations of this chapter. The director of revenue and 15 5 finance may also on the director's own motion set aside any 15 6 exemption which has been granted upon property for which 15 7 exemption is claimed under this chapter. The director of 15 8 revenue and finance shall give notice by mail to the taxpayer 15 9 or taxing district applicant and to the societies or 15 10 organizations claiming an exemption upon property, exemption 15 11 of which is questioned before or by the director of revenue 15 12 and finance,and shall hold a hearing prior to issuing any 15 13 order for revocation. An order made by the director of 15 14 revenue and finance revoking or modifying an exemption is 15 15 subject to judicial review in accordance with chapter 17A, the 15 16 Iowa administrative procedure Act. Notwithstanding the terms 15 17 of that Act, petitions for judicial review may be filed in the 15 18 district court having jurisdiction in the county in which the 15 19 property is located, and must be filed within thirty days 15 20 after any order revoking an exemption is made by the director 15 21 of revenue and finance. 15 22 Sec. 28. Section 427B.19, subsection 3, unnumbered 15 23 paragraph 1, Code 1997, is amended to read as follows: 15 24 On or beforeJuly 1, 1996, and on or before JulySeptember 15 25 1 of eachsucceedingfiscal year through June 30, 2006, the 15 26 county auditor shall prepare a statement, based upon the 15 27 report received pursuant to subsections 1 and 2, listing for 15 28 each taxing district in the county: 15 29 Sec. 29. Section 427B.19, subsection 4, Code 1997, is 15 30 amended to read as follows: 15 31 4. The county auditor shall certify and forward one copy 15 32 of the statement to the department of revenue and finance not 15 33 later thanJulySeptember 1 of each year. 15 34 Sec. 30. Section 427B.19A, subsection 2, Code 1997, is 15 35 amended to read as follows: 16 1 2. If an amount appropriated for a fiscal year is 16 2 insufficient to pay all claims, the director shall prorate the 16 3 disbursements from the fund to the county treasurers and shall 16 4 notify the county auditors of the pro rata percentage on or 16 5 beforeAugust 1September 30. 16 6 Sec. 31. Section 428.4, unnumbered paragraph 3, Code 1997, 16 7 is amended to read as follows: 16 8 Any buildings erected, improvements made, or buildings or 16 9 improvements removed in a year after the assessment of the 16 10 class of real estate to which they belong, shall be valued, 16 11 listed, and assessed and reported by the assessor to the 16 12 county auditor after approval of the valuations by the local 16 13 board of review, andsaidthe auditor shall thereupon enter 16 14 the taxable value of such building or taxable improvement on 16 15 the tax list as a part of real estate to be taxed. If such 16 16 buildings or improvements are erected or made by any person 16 17 other than the owner of the land, they shall be listed and 16 18 assessed to the owner of the buildings or improvements as real 16 19 estate. 16 20 Sec. 32. Section 440.1, Code 1997, is amended to read as 16 21 follows: 16 22 440.1 ASSESSMENT OF OMITTED PROPERTY. 16 23 When the director of revenue and finance is vested with the 16 24 power and duty to assess property andsaidan assessment has, 16 25 for any reason, been omitted, the director shall proceed to 16 26 assesssaidthe property for each of the omitted years, not16 27exceeding five years last past. The omitted assessment shall 16 28 only apply to the assessment year in which the omitted 16 29 assessment is made and the four prior assessment years. 16 30 Chapter 429 shall apply to assessments of omitted property. 16 31 Sec. 33. Section 441.8, unnumbered paragraphs 6 and 7, 16 32 Code 1997, are amended to read as follows: 16 33 Upon receiving credit equal to one hundred fifty hours of 16 34 classroom instruction during the assessor's current term of 16 35 office of which at least ninety of the one hundred fifty hours 17 1 are from courses requiring an examination upon conclusion of 17 2 the course, the director of revenue and finance shall certify 17 3 to the assessor's conference board that the assessor is 17 4 eligible to be reappointed to the position. Forassessors17 5whose present terms of office expire before six years from17 6January 1, 1979, or who arepersons appointed to complete an 17 7 unexpired term, the number of credits required to be certified 17 8 as eligible for reappointment shall be prorated according to 17 9 the amount of time remaining in the present term of the 17 10 assessor. If the person was an assessor in another 17 11 jurisdiction, the assessor may carry forward any credit hours 17 12 received in the previous position in excess of the number that 17 13 would be necessary to be considered current in that position. 17 14 Within each six-year period followingJanuary 1, 1980 or17 15 the appointment of a deputy assessorappointed after January17 161, 1979, the deputy assessor shall comply with this section 17 17 except that upon the successful completion of ninety hours of 17 18 classroom instruction of which at least sixty of the ninety 17 19 hours are from courses requiring an examination upon 17 20 conclusion of the course, the deputy assessor shall be 17 21 certified by the director of revenue and finance as being 17 22 eligible to remain in the position. If a deputy assessor 17 23 fails to comply with this section, the deputy assessor shall 17 24 be removed from the position until successful completion of 17 25 the required hours of credit. If a deputy is appointed to the 17 26 office of assessor, the hours of credit obtained as deputy 17 27 pursuant to this section shall be credited to that individual 17 28 as assessor and for the individual to be reappointed at the 17 29 expiration of the term as assessor, that individual must 17 30 obtain the credits which are necessary to total the number of 17 31 hours for reappointment. 17 32 Sec. 34. Section 441.11, Code 1997, is amended to read as 17 33 follows: 17 34 441.11 INCUMBENT DEPUTY ASSESSORS. 17 35 The director of revenue and finance shall grant a 18 1 restricted certificate to any deputy assessor holding office 18 2 as of January 1, 1976. A deputy assessor possessing such a 18 3 certificate shall be considered eligible to remain in the 18 4 deputy's present position provided continuing education 18 5 requirements are met. To become eligible for another deputy 18 6 assessor position, a deputy assessor presently holding office 18 7 is required to obtain certification as provided for in section 18 8 441.5 and 441.10. The number of credit hours required for 18 9 certification as eligible for appointment as a deputy in a 18 10 jurisdiction other than where the deputy is currently serving 18 11 shall be prorated according to the completed portion of the 18 12 deputy's six-year continuing education period. 18 13 Sec. 35. Section 444.26, Code 1997, is amended to read as 18 14 follows: 18 15 444.26 PROPERTY TAX LEVY LIMITATIONS NOT AFFECTED. 18 16 Sections444.25,444.25A,and 444.25B shall not be 18 17 construed as removing or otherwise affecting the property tax 18 18 limitations otherwise provided by law for any tax levy of the 18 19 political subdivision, except that, upon an appeal from the 18 20 political subdivision, the state appeal board may approve a 18 21 tax levy consistent with the provisions of section 24.48 or 18 22 331.426. 18 23 Sec. 36. Section 444.27, subsection 1, Code 1997, is 18 24 amended to read as follows: 18 25 1.For purposes of section 444.25, sections 24.48 and18 26331.426 are void for the fiscal years beginning July 1, 1993,18 27and July 1, 1994.For purposes of section 444.25A, sections 18 28 24.48 and 331.426 are void for the fiscal years beginning July 18 29 1, 1995, and July 1, 1996. 18 30 Sec. 37. Section 445.32, Code 1997, is amended to read as 18 31 follows: 18 32 445.32 LIENS ON BUILDINGS OR IMPROVEMENTS. 18 33 If a building or improvement is erected or made by a person 18 34 other than the owner of the land on which the building or 18 35 improvement is located, as provided for in section 428.4, the 19 1 taxes on the building or improvement are and remain a lien on 19 2 the building or improvement from the date of levy until paid. 19 3 If the taxes on the building or improvement become delinquent, 19 4 as provided in section 445.37, the county treasurer shall 19 5 collect the tax as provided in sections 445.3 and 445.4. This 19 6 section does not apply to special assessments, or rates or 19 7 charges. 19 8 Sec. 38. Section 452A.65, unnumbered paragraph 1, Code 19 9 1997, is amended to read as follows: 19 10 In addition to the tax or additional tax, the taxpayer 19 11 shall pay a penalty as provided in section 421.27. The 19 12 taxpayer shall also pay interest on the tax or additional tax 19 13 at the rate in effect under section 421.7 counting each 19 14 fraction of a month as an entire month, computed from the date 19 15 the return was required to be filed. If the amount of the tax 19 16 as determined by the appropriate state agency is less than the 19 17 amount paid, the excess shall be refunded with interest, the 19 18 interest to begin to accrue on the first day of thethird19 19 second calendar month following the date of payment or the 19 20 date the return was due to be filed or was filed, whichever is 19 21 the latest, at the rate in effect under section 421.7 counting 19 22 each fraction of a month as an entire month under the rules 19 23 prescribed by the appropriate state agency.In lieu of a19 24refund allowed under this section, the licensee may request19 25that the department allow the refund to be held as a credit19 26for the licensee.Claims for refund filed under sections 19 27 452A.17 and 452A.21 shall accrue interest beginning with the 19 28 first day of the second calendar month following the date the 19 29 refund claim is received by the department. 19 30 Sec. 39. Section 99D.14, subsection 6, Code 1997, as 19 31 amended by 1997 Iowa Acts, House File 212, section 2, is 19 32 amended to read as follows: 19 33 6. Real property used in the operation of a racetrack or 19 34 racetrack enclosure which is exempt from property taxation 19 35 under another provision of the law, including being exempt 20 1 because it is owned by a city, county, state, or charitable or 20 2 nonprofit entity, may be subject to real property taxation by 20 3 any taxing district in which the real property used in the 20 4 operation of the racetrack or racetrack enclosure is located. 20 5 To subject such real property to taxation, the taxing 20 6 authority of the taxing district shall pass a resolution 20 7 imposing the tax and, if the resolution is passed prior to 20 8 September 1, 1997, shall notify thecountylocal assessor,20 9director of revenue and finance,and the owner of record of 20 10 the real property by September 1, 1997, preceding the fiscal 20 11 year in which the real property taxes are due and payable. 20 12 The assessed value shall be determined and notice of the 20 13 assessed value shall be provided to the county auditor by the 20 14department of revenue and financelocal assessor by October 20 15 15, 1997, and the owner may protest the assessed value to the 20 16statelocal board oftaxreview by December 1, 1997. For 20 17 resolutions passed on or after September 1, 1997, the taxing 20 18 authority shall notify the local assessor and owner of record 20 19 prior to the next assessment year and the valuation and appeal 20 20 shall be done in the manner and time as for other valuations. 20 21 Property taxes due as a result of this subsection shall be 20 22 paid to the county treasurer in the manner and time as other 20 23 property taxes. The county treasurer shall remit the tax 20 24 revenue to those taxing authorities imposing the property tax 20 25 under this subsection. Real property subject to tax as 20 26 provided in this subsection shall continue to be taxed until 20 27 such time as the taxing authority of the taxing district 20 28 repeals the resolution subjecting the property to taxation. 20 29Notwithstanding section 99D.7, the department of revenue and20 30finance shall adopt rules to implement this subsection.20 31 Sec. 40. Sections 236.15A, 427A.13, 440.2, 440.3, 440.4, 20 32 444.25, and 444.28, Code 1997, are repealed. 20 33 Sec. 41. Sections 11 and 13 of this Act which amend 20 34 sections 422.5 and 422.32 apply retroactively to January 1, 20 35 1997, for tax years beginning on or after that date. 21 1 Sec. 42. Section 16 of this Act, amending section 422.45, 21 2 subsection 18, being deemed of immediate importance, takes 21 3 effect upon enactment. 21 4 Sec. 43. Sections 6, 12, and 19 of this Act, enacting 21 5 section 421.17, subsection 22A and amending section 422.20 and 21 6 section 422.72, subsection 3, and relating to contractual 21 7 agreements by the department of revenue and finance, being 21 8 deemed of immediate importance, take effect upon enactment. 21 9 Sec. 44. Section 17 of this Act, enacting section 422.53, 21 10 subsection 8, takes effect January 1, 1998. 21 11 EXPLANATION 21 12 Code section 236.15A, the income tax checkoff for domestic 21 13 abuse services, is repealed to implement the requirement of 21 14 section 422.12E. Code section 422.12E requires that the 21 15 checkoff which collects the least amount of money over a 21 16 three-year period shall be repealed. 21 17 Code section 321.19 is amended to allow the department of 21 18 revenue and finance to request that certain vehicles be 21 19 registered with a regular registration plate rather than an 21 20 "official" plate for those persons who are regularly assigned 21 21 to conduct investigations which cannot reasonably be conducted 21 22 with a vehicle displaying "official" plates. 21 23 Code sections 331.427(1), 405A.10, and 422.65 appropriate 21 24 $8.8 million annually from franchise tax revenue in the 21 25 general fund of the state to be allocated to cities and 21 26 counties. These changes move the appropriation into the 21 27 appropriate Code chapter and are only technical since $8.8 21 28 million is presently being appropriated. 21 29 Code section 421.4 is amended to provide that the director 21 30 of revenue and finance may contract with independent 21 31 contractors necessary to protect the interests of the state 21 32 and the political subdivisions. 21 33 Code section 421.17 is amended to provide the minimum 21 34 amount for setoff to be determined by the department of 21 35 revenue and finance by rule. This will grant the department 22 1 greater flexibility by providing a means of amendment of the 22 2 minimum amount through the rulemaking process rather than 22 3 through the legislative process. 22 4 Code sections 421.17(22A), 422.20(3), and 422.72(3) are 22 5 amended to authorize the department of revenue and finance to 22 6 develop a program to identify nonfilers and nonpayers of taxes 22 7 and to contract for services to carry out the program. The 22 8 costs of the identification program shall be paid from taxes, 22 9 penalties, interest, and other fees actually collected. 22 10 Vendors are required to observe confidentiality requirements 22 11 regarding tax information obtained from identification of 22 12 nonfilers and nonpayers of taxes. These sections are 22 13 effective upon enactment. 22 14 Code section 421.17(29) is amended to expand the definition 22 15 of "state agency" to include other state entities as provided 22 16 in the Iowa comprehensive annual financial report which may 22 17 not be included in the current definition. This report sets 22 18 forth the financial operations and status of the various state 22 19 funds to assure compliance and accountability. Entities 22 20 included in this definition of state agency may enter into an 22 21 agreement with the director of revenue and finance to 22 22 participate in the setoff program provided in section 421.17. 22 23 Amendment of this definition will expand collection efforts 22 24 and the base of participation in the setoff program. The 22 25 section also amends the term "department" by broadening the 22 26 definition to include other state agencies who maintain a 22 27 separate accounting system. Agencies included in this 22 28 definition may enter into an agreement with the director of 22 29 revenue and finance to participate in the setoff debt 22 30 collection program. 22 31 Code section 421.61 is created to provide that if a 22 32 provision of the Iowa law grants a tax benefit, whether in the 22 33 form of a tax exemption, deduction, credit, or otherwise, to 22 34 some taxpayers but withholds the tax benefit from other 22 35 taxpayers with the result that such withholding is 23 1 unconstitutional, the tax benefit shall be extended to the 23 2 other taxpayers in a manner which removes the 23 3 unconstitutionality. 23 4 Code section 422.5(1), the new Code provision enacted in 23 5 1996 that allows a resident shareholder of a "value added" S 23 6 corporation to elect to reduce state income tax by 23 7 apportioning income, is amended to provide that if the 23 8 taxpayer then elects not to apportion income in a later tax 23 9 year, the taxpayer could not reelect to apportion income for 23 10 four tax years without the approval of the director of revenue 23 11 and finance. The amendment is made retroactively applicable 23 12 to tax years beginning on or after January 1, 1997. 23 13 Code section 422.32 is amended to treat any partnership 23 14 which is taxed as a corporation for federal purposes as a 23 15 corporation for Iowa tax purposes rather than only publicly 23 16 traded partnerships as is presently provided in the current 23 17 law. The amendment is made retroactively applicable to tax 23 18 years beginning on or after January 1, 1997. 23 19 Code section 422.43 is amended by adding a new subsection 23 20 that imposes the sales tax on the sale of prepaid telephone 23 21 calling cards and prepaid authorization numbers. 23 22 Code section 422.45(7) is amended to provide for the 23 23 additional language of "in this state" to be added after the 23 24 term "nonprofit private museum" in order to acquire uniformity 23 25 in the application of the sales tax exemption and refund 23 26 provision. It makes the exemption consistent with other 23 27 exemptions available only to entities located in this state. 23 28 Code section 422.45(18) is amended to shorten the lease 23 29 period from one year to five months. The present exemption 23 30 from sales tax on the purchase of personal property by a 23 31 person for leasing applies if the person is regularly engaged 23 32 in leasing the property, leases for one year or more, and the 23 33 lease receipts are taxed. This section is effective upon 23 34 enactment. 23 35 Code section 422.53 is amended by adding a new subsection 24 1 that authorizes a purchaser, user, and consumer to pay sales 24 2 or use tax owed on a purchase directly to the department of 24 3 revenue and finance instead of to the seller if the person has 24 4 a direct pay tax permit issued by the department. Such person 24 5 must accrue at least $4,000 in a semimonthly period to be 24 6 eligible for a direct pay tax permit. Use taxes on purchases 24 7 or leases of motor vehicles may not be made by direct payment 24 8 to the department. This provision takes effect January 1, 24 9 1998. 24 10 Code section 422.72 is amended to provide that the 24 11 department of public safety can gain access to tax records on 24 12 a restricted basis. The information would be restricted to 24 13 special highly complex drug or money laundering investigations 24 14 and would be released by court order after the request for the 24 15 information has been approved by the Iowa attorney general. 24 16 Code section 423.1(8) is amended to define "retailer 24 17 maintaining a place of business in this state" under the use 24 18 tax law to include a retailer having a representative 24 19 operating in Iowa under the retailer's authority. Present law 24 20 requires the person be an agent of the retailer. This change 24 21 would include independent contractors hired by the retailer to 24 22 act on the retailer's behalf. 24 23 Code section 423.25 is amended to provide that sales and 24 24 service tax credits for taxes paid in other states apply to 24 25 occupational service taxes. 24 26 Code sections 425.7(3) and 426A.6 are amended to require a 24 27 taxpayer to file a protest of a homestead property tax credit 24 28 or military service property tax exemption disallowance made 24 29 by the director with the state board of tax review prior to 24 30 proceeding in district court. This is consistent with the way 24 31 similar property tax appeals are handled. 24 32 Code sections 426B.1(1) and 426B.4 are amended to provide 24 33 that the mental health property tax relief fund that is 24 34 currently in the department of revenue and finance will be in 24 35 the department of human services because the claims are filed 25 1 with the department of human services. 25 2 Code section 427.1(16) is amended to require that a hearing 25 3 be held before certain property tax exemptions are revoked or 25 4 modified by the director of revenue and finance. 25 5 Code sections 427B.19 and 427B.19A are amended to change 25 6 the date for the county auditor to file machinery and 25 7 equipment property tax replacement claims with the department 25 8 of revenue and finance from July 1 to September 1 and change 25 9 the date for the department to certify the pro rata percentage 25 10 to the county auditor from August 1 to September 30 if the 25 11 appropriation is insufficient to pay all claims. 25 12 Code sections 428.4 and 445.32 are amended to provide for 25 13 the assessment of real estate improvements. 25 14 Code section 440.1 is amended to provide for a taxpayer 25 15 hearing on an omitted assessment made by the director after 25 16 the making of the assessment rather than prior to the making 25 17 of the assessment. The five-year period to which an omitted 25 18 assessment applies is specified. Code sections 440.2 through 25 19 440.4, which contain obsolete provisions pertaining to holding 25 20 hearings prior to assessment, are repealed. 25 21 Code section 441.8 is amended to permit an assessor 25 22 changing assessment jurisdictions to carry forward continuing 25 23 education credit hours to the new position. 25 24 Code sections 441.8 and 441.11 are amended to require that 25 25 a deputy assessor complete continuing education requirements 25 26 in order to continue to serve in the capacity of a deputy. 25 27 Code section 445.32 is amended to provide that if an 25 28 improvement to land is erected by a person other than the 25 29 owner, the taxes on the improvement are and remain a lien on 25 30 the improvement until paid. Present law only refers to 25 31 buildings. 25 32 Code section 452A.65 is amended to change the date for 25 33 interest to begin accruing on motor fuel tax refunds from the 25 34 first day of the third calendar month following payment or 25 35 filing to the first day of the second calendar month following 26 1 the date the claim for refund is received by the department of 26 2 revenue and finance. Refunds for taxes paid for nonhighway 26 3 use or in blending to produce ethanol shall accrue interest 26 4 beginning with the first day of the second calendar month 26 5 following the date the refund claim is received by the 26 6 department. 26 7 Code section 99D.14, subsection 6, was rewritten by 1997 26 8 Iowa Acts, House File 212, and allowed taxing authorities to 26 9 levy property taxes on real property used in the operation of 26 10 a racetrack or racetrack enclosure even if exempt because it 26 11 was owned by a local unit of government. 1997 Iowa Acts, 26 12 House File 212, provided that the department of revenue and 26 13 finance would assess such real property and would adopt the 26 14 rules to implement the rewritten subsection 6. The amendment 26 15 in this bill provides for the assessment of such property by 26 16 the local assessor and eliminates the involvement of the 26 17 department of revenue and finance from the taxation process 26 18 just the same as other noncentrally assessed property. 26 19 Code section 427A.13 is repealed since there is no longer a 26 20 personal property property tax replacement appropriation in 26 21 that section. 26 22 Code sections 444.25 and 444.28 are repealed since those 26 23 sections only applied to the 1993-1994 and 1994-1995 fiscal 26 24 years for the property tax freeze and are now obsolete. Code 26 25 sections 444.26 and 444.27 are amended to strike references to 26 26 the repealed Code sections 444.25 and 444.28. 26 27 LSB 2736SV 77 26 28 mg/jw/5.1
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