Text: HF02399 Text: HF02401 Text: HF02400 - HF02499 Text: HF Index Bills and Amendments: General Index Bill History: General Index
PAG LIN 1 1 Section 1. Section 422.42, subsection 15, Code Supplement 1 2 1999, is amended to read as follows: 1 3 15. Sales of building materials, supplies, and equipment 1 4 to owners, contractors, subcontractors or builders, for the 1 5 erection of buildings or the alteration, repair, or 1 6 improvement of real property, are retail sales in whatever 1 7 quantity sold. Where the contractor, subscontractor, or 1 8 builder has paid the tax on the purchase of building 1 9 materials, supplies, and equipment which are to be used in the 1 10 performance of a construction contract with a city or county, 1 11 the contractor, subcontractor, or builder shall grant the city 1 12 or county a credit, equal to the tax paid, to be applied 1 13 against the contractual payment obligation for the 1 14 construction project. The contractor, subcontractor, or 1 15 builder is entitled to a refund of the tax paid as provided in 1 16 section 422.47, subsection 2. Where the owner, contractor, 1 17 subcontractor, or builder is also a retailer holding a retail 1 18 sales tax permit and transacting retail sales of building 1 19 materials, supplies, and equipment, the person shall purchase 1 20 such items of tangible personal property without liability for 1 21 the tax if such property will be subject to the tax at the 1 22 time of resale or at the time it is withdrawn from inventory 1 23 for construction purposes. The sales tax shall be due in the 1 24 reporting period when the materials, supplies, and equipment 1 25 are withdrawn from inventory for construction purposes or when 1 26 sold at retail. The tax shall not be due when materials are 1 27 withdrawn from inventory for use in construction outside of 1 28 Iowa and the tax shall not apply to tangible personal property 1 29 purchased and consumed by the manufacturer as building 1 30 materials in the performance by the manufacturer or its 1 31 subcontractor of construction outside of Iowa. The tax shall 1 32 not be due when materials are withdrawn from inventory for use 1 33 in construction performed for a city or county in the state 1 34 and the tax shall not apply to tangible personal property 1 35 purchased and consumed by the manufacturer as building 2 1 materials in the performance by the manufacturer or its 2 2 subcontractor of construction performed for a city or county 2 3 in this state. 2 4 For the purposes of this subsection, the sale of carpeting 2 5 is not a sale of building materials. The sale of carpeting to 2 6 owners, contractors, subcontractors, or builders shall be 2 7 treated as the sale of ordinary tangible personal property and 2 8 subject to the tax imposed under section 422.43, subsection 1, 2 9 and the tax imposed under section 423.2. If the contractor, 2 10 subcontractor, or builder uses the carpeting in the 2 11 performance of a construction contract with a city or county, 2 12 the contractor, subcontractor, or builder shall grant the city 2 13 or county a credit, equal to the tax paid, to be applied 2 14 against the contractual payment obligation for the 2 15 construction project. The contractor, subcontractor, or 2 16 builder is entitled to a refund of the tax paid as provided in 2 17 section 422.47, subsection 2. 2 18 Sec. 2. Section 422.47, subsection 2, unnumbered paragraph 2 19 1, and paragraph a, Code supplement 1999, are amended to read 2 20 as follows: 2 21 Construction contractors may make application to the 2 22 department for a refund of theadditional one percenttax paid 2 23 under this division or theadditional one percenttax paid 2 24 under chapter 423by reason of the increase in the tax from2 25four to five percent for taxes paid on goods, wares, or2 26merchandiseon the sales or use of building materials, 2 27 supplies, and equipment, and carpeting under the following 2 28 conditions: 2 29 a. Thegoods, wares, or merchandisebuilding materials, 2 30 supplies, and equipment, and carpeting are incorporated into 2 31 an improvement to real estate in fulfillment of a written 2 32 contractfully executed prior to July 1, 1992with a city or 2 33 county and a credit has been granted the city or county by the 2 34 construction contractor as provided in section 422.42, 2 35 subsection 15.The refund shall not apply to equipment3 1transferred in fulfillment of a mixed construction contract.3 2 EXPLANATION 3 3 Under present law, cities and counties that hire 3 4 construction contractors to erect buildings or make other 3 5 improvements to real property pay the state sales and use 3 6 taxes pursuant to the construction contract and then apply to 3 7 the state for a refund of those taxes paid. This bill 3 8 provides a procedure where cities and counties will not have 3 9 to apply for the refund. The procedure is for construction 3 10 contractors to grant a city or county a credit, equal to the 3 11 amount of the tax paid, against the contractual payment 3 12 obligation and the contractor would then recoup the credit by 3 13 applying for a refund from the state. In the case where the 3 14 construction contractor has not paid the tax, the contractor 3 15 would not include the tax in the contractual payment 3 16 obligation. 3 17 LSB 5824HH 78 3 18 mg/as/5
Text: HF02399 Text: HF02401 Text: HF02400 - HF02499 Text: HF Index Bills and Amendments: General Index Bill History: General Index
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