1999 Summary of Legislation Published by the Iowa General Assembly -- Legislative Service Bureau

TAXATION

TAXATION LEGISLATION

SENATE FILE 9 - Sales and Use Tax Exemption on Rural Water District Building Materials, Supplies, or Equipment(full text of act)

BY McKIBBEN AND BLACK. This Act amends Code Section 422.45 to provide that a rural water district organized under Code Chapter 504A that performs its own construction of facilities is eligible to receive an exemption from sales and use taxes.

In 1998, the General Assembly enacted S. F. 2365 (1998 Iowa Acts, Ch. 1161), which amended Code Section 357A.15 to provide that a rural water district organized under Code Chapter 504A could receive a refund of sales and use taxes on the gross receipts of all sales of building materials, supplies or equipment sold to a contractor or used in the fulfillment of a written contract for the construction of facilities for the rural water district. A rural water district organized under Code Chapter 357A as a governmental subdivision may receive a similar refund under Code Section 422.45, subsection 7, regardless of whether it constructs the facilities or hires a contractor to construct the facilities.

The Act takes effect April 26, 1999, and applies retroactively to July 1, 1998, for sales made or uses occurring on or after that date.

SENATE FILE 136 - Tax Administration and Related Matters(full text of act)

BY COMMITTEE ON WAYS AND MEANS. This Act amends various provisions of state and local tax law. The Act, in addition to eliminating obsolete provisions, does the following:

1. Deletes the requirement that the State Board of Tax Review meet six times a year and provides that the state board meet as necessary.
2. Provides that not only public officers need to give the Director of Revenue and Finance information to assist in tax administration, but employees and local governments also need to provide the information.
3. Removes the requirement that taxpayers need to get permission to file a composite return and provides that limited liability companies may join the filing of a composite return. This provision applies retroactively to January 1, 1999, for tax years beginning on or after that date.
4. Provides that, at the discretion of the Director of Revenue and Finance, withholding agents need not send wage and tax statements with the annual report if the information is available from other sources such as the federal Internal Revenue Service or other state or federal agencies.
5. Strikes the requirement that provides that personal representatives of an estate can apply to the district court to determine initially whether the estate is subject to Iowa income tax. This provision applies retroactively to January 1, 1999, for tax years beginning on or after that date.
6. Provides that the 30- or 60-day appeal period, as applicable, for the income taxes, sales and use taxes, death taxes, cigarette and tobacco taxes, and the environmental protection charge commences on the date of the notice. Previously, the appeal period commenced on the date the notice was postmarked.
7. Provides that when a taxpayer has paid 90 percent of the final tax liability by the original due date and files the return sometime in the six-month extended period after the original due date, interest on an overpayment of tax on the return starts to accrue two months after the end of the six-month extended period. This provision applies retroactively to January 1, 1999, for tax years beginning on or after that date.
8. Removes the provision that imposes the Iowa corporate income tax upon a corporation whose legal domicile (place where the corporation was created) is in Iowa and instead imposes it on all corporations doing business in Iowa.
9. Provides that an Iowa-based corporation, whose only activity outside Iowa is the ownership of intangible assets that have acquired a business situs outside Iowa, may apportion its income to determine the portion of its income that is subject to Iowa income tax. This provision applies retroactively to January 1, 1999, for tax years beginning on or after that date.
10. Makes the exemption from Iowa sales tax for services performed on tangible property delivered into interstate commerce the same as the exemption from Iowa sales tax on tangible personal property delivered to a point outside of Iowa.
11. Provides that the sales tax exemption for providing transportation service does not apply to the transportation of electric energy effective May 20, 1999, and does not apply to the transportation of natural gas effective April 1, 2000.
12. Provides that governmental units, nonprofit educational institutions, and nonprofit private museums have one year instead of six months from final payment to apply for a refund of sales or use tax paid by a contractor on materials used in the performance of a construction contract.
13. Amends the provision relating to the use of sales tax exemption certificates by providing that an exemption certificate may be used to substantiate the sale of nontaxable items as well as sales made to persons holding a direct pay permit. Previous law only provided for exemption certificates for materials purchased for resale or for use in processing.
14. Provides that retailers are required to keep records on the gross receipts from the sale of services as well as from the sale of tangible personal property for sales tax purposes.
15. Allows the Department of Revenue and Finance to use new technologies to preserve records as required by law.
16. Makes it unlawful to willfully inspect income, franchise and sales tax returns for any reason other than as authorized by the Director of Revenue and Finance. The penalty is a serious misdemeanor.
17. Permits the waiver of the penalty imposed for underpayment of estimated tax for reasonable cause.
18. Provides that an income tax credit in lieu of a full motor fuel tax refund is not available for credit relating to casualty loss, transport diversions, pumping credits, blending errors, idle time, power takeoffs, reefer units, and exports by eligible purchasers. However, a refund remains available if a refund permit is obtained from the Department of Revenue and Finance.
19. Provides that a refund is only available for undyed special fuel since no tax is imposed on dyed special fuel.
20. Specifies the method for calculating the livestock production tax credit for cow-calf operations effective beginning with the 1997 tax year. This provision applies retroactively to January 1, 1997, for tax years beginning on or after that date.
21. Exempts, from both the local option sales and services tax and the local option tax for school infrastructure purposes, sales of self-propelled building equipment, pile drivers, motorized scaffolding, and attachments customarily drawn by such items which are directly and primarily used by contractors, subcontractors and builders for construction work on real property.
22. Provides that when a local option sales and services tax is imposed, a local excise tax shall also be imposed on the purchase price of natural gas, natural gas service, electricity, and electric service which is subject to the state use tax. This excise tax shall be imposed on the same basis as the state use tax. These provisions are effective April 1, 2000.
23. Exempts, from both the local option sales and services tax and the local option tax for school infrastructure purposes, the sale or use of natural gas, natural gas service, electricity, or electric service in a city or county where these items are subject to a franchise fee or user fee during the period such fee is imposed. These provisions are effective April 1, 2000.
24. Provides that if an overpayment has been made to a local jurisdiction for local option sales tax during the previous fiscal year, the November payment must reflect the adjustment.
25. Moves a local income surtax fund from the Office of Treasurer of State to the Department of Revenue and Finance.
26. Moves the sign-up date from July 1 to April 15 for claiming a property tax exemption by war veterans' organizations and religious, literary and charitable societies. This would allow the taxpayer to appeal the assessment to the local board of review prior to its adjournment if the claim is denied.
27. Provides a February 1 deadline for certifying eligibility for the wildlife habitat property tax exemption. Other property tax credits and exemptions provide specific certification deadlines.
28. Provides that the 10-year inheritance tax lien ceases regardless of whether the decedent died prior to or subsequent to July 1, 1995. Prior law was interpreted so that the lien ceased only if the decedent died subsequent to July 1, 1995.
29. Provides that, in addition to the surviving spouse as already provided in statute, when the estate does not have a federal estate tax obligation and all property of the estate is held in joint tenancy with the right of survivorship solely by the decedent and a lineal ascendant, child, stepchild, or lineal descendant, or any combination of these individuals, an Iowa inheritance tax return need not be filed. This provision takes effect July 1, 1999, for estates of decedents dying on or after that date.
30. Allows the Department of Revenue and Finance to adjust previously accepted, submitted, appraised, or agreed upon values of real property for inheritance tax purposes if the new values have been accepted for federal estate tax purposes. Also, the personal representative for the estate may claim a refund of tax if the personal representative for the estate files a claim for refund within six months of the final disposition of any real property valuation matter. This provision takes effect July 1, 1999, for estates of decedents dying on or after that date.
31. Provides that a lien for Iowa estate tax could be made on those items listed as exemptions under Code Section 450.7 for inheritance tax. This provision takes effect July 1, 1999, for estates of decedents dying on or after that date.
32. Provides that a person need not export fuel exclusively to be considered an exporter and that transmix is taxed as motor vehicle fuel. Transmix is a product used as a buffer between fuel types being transported through a pipeline.
33. Requires the person who owns the fuel at the time it is imported into the state to pay the tax on motor fuel.
34. Provides consistency in the motor vehicle fuel tax by changing the word "report" to "return." When the motor vehicle fuel tax chapters were amended in 1995 to change the point of taxation, these sections contained in the Act were not amended.
35. Provides that a fuel tax refund is available for machinery and equipment used for nonhighway purposes and clarifies that distributors who are eligible purchasers are entitled to refund of the tax paid.
36. Provides that records need to be kept relating to fuel used in watercraft and provides that no refund will be issued for undyed special fuel taken out of the state in the fuel supply tank of a vehicle.
37. Extends the time for claiming fuel tax refunds resulting from the excess tax paid on fuel blended with alcohol to produce ethanol from 90 days to one year and prohibits claiming an income tax credit for the excess tax paid.
38. Requires a licensee who collects motor fuel tax in error from a consumer to either return the tax to the consumer or remit it to the Department of Revenue and Finance.
39. Provides that the taxpayer may enter into an agreement with the Department of Revenue and Finance to extend the statute of limitations for assessment and refund of motor fuel taxes and cigarette and tobacco taxes.
40. Lists distributors and manufacturers as those who must stamp cigarettes.
41. Provides that any person who is in possession of unstamped cigarettes shall pay the cigarette tax directly to the Department of Revenue and Finance and provides that the cigarette tax shall be added to the selling price and collected from the purchasers so that the ultimate consumer bears the burden of the tax.
42. Provides that the Department of Revenue and Finance is no longer required to sell cigarette stamps in unbroken books of 1,000 stamps.
43. Provides that any person who is not licensed must keep records, file reports, and pay the cigarette tax in the same manner as permit holders.
44. Provides that manufacturers of cigarettes may only ship unstamped cigarettes into the state to licensed distributors or licensed distributors' agents.
45. Provides that the two-year statute of limitations does not apply if a false or fraudulent report or return is made with the intent to evade the cigarette or tobacco products tax, if a report or return is not filed, or if the person is in possession of unstamped cigarettes. In these instances, the statute of limitations is unlimited.
46. Changes the civil penalty for failure to keep records, selling cigarettes without a valid permit, making a false or incomplete report, or failing to abide by rules of the Department of Revenue and Finance. The previous penalty was $50 for each offense. Each violation was a separate offense, and the same violation was a separate offense for each day it continued. The change strikes the $50-a-day penalty and replaces it with a three-tiered civil penalty for these offenses: $200 for the first offense, $500 for the second offense within two years, and $1,000 for the third offense within two years and for subsequent offenses.
    
    A second three-tiered penalty for possession of unstamped cigarettes is provided. This penalty is based on the number of cigarettes in the person's possession.
    
    

    Number of Cigarettes	1st Violation Within 2 Years	2nd Violation Within 2 Years	Third Violation
    41-400	$ 200	$ 400	$ 600
    401-2,000	$ 500	$1,000	$1,500
    2,001 or more	$1,000	$2,000	$3,000

    
    The penalties are no longer subject to mandatory waiver for reasonable cause.
47. Requires persons who sell tobacco products to retain records for two years from the date of sale instead of the present one-year requirement.
48. Requires the Department of Economic Development to submit a report to the General Assembly on the phaseout of the machinery, equipment and computer property tax, including estimated economic impact and recommendations for modification of the reimbursement formula.
49. Provides that items in the Act which do not specify an effective or applicability date take effect May 20, 1999.

SENATE FILE 176 - Investment Counseling Not a Taxable Service - VETOED BY THE GOVERNOR(full text of act)

BY COMMITTEE ON WAYS AND MEANS. This bill would have eliminated investment counseling as a taxable service under the state sales and use taxes.

SENATE FILE 230 - Internal Revenue Code References and Income Tax Provisions(full text of act)

BY COMMITTEE ON WAYS AND MEANS. This Act updates the references to the Internal Revenue Code to make the federal income tax revisions enacted by Congress in 1998 applicable for Iowa income tax purposes.

Iowa Code Sections 15.335, 15A.9, 422.10, and 422.33 are amended to update the Iowa Code references to the state research activities credit for individuals, corporations, corporations in economic development areas, and corporations in quality jobs enterprise zones, to include the 1998 changes to the federal research activities credit.

Iowa Code Section 422.3 is amended to update the reference in the Iowa Code to January 1, 1999, to include the federal income tax revisions made by Congress in the 1998 calendar year, making those revisions applicable for Iowa income tax purposes.

Iowa Code Section 422.6 is amended to allow estates and trusts to take the same credits against computed tax as individuals.

Iowa Code Sections 422.9 and 422.35 are amended to extend the net operating loss carryback period to five years for net operating losses from farming businesses arising in taxable years beginning after December 31, 1997.

Iowa Code Section 422.33 is also amended to add a new subsection that allows a franchise tax credit for unrelated business income earned by qualified pension plans, employee stock option plans, and certain nonprofit organizations as a result of being a shareholder in an S corporation bank.

The Act takes effect May 6, 1999, and applies retroactively to January 1, 1998, for tax years beginning on or after that date.

SENATE FILE 231 - Sales and Use Tax Exemption for Hospices(full text of act)

BY COMMITTEE ON WAYS AND MEANS. This Act exempts from the sales and use taxes the sale of tangible personal property or services furnished or rendered to a freestanding nonprofit hospice facility that operates a hospice program as defined in federal regulations if the property or services are to be used in the hospice program.

SENATE FILE 305 - Family Farm Tax Credit(full text of act)

BY COMMITTEE ON WAYS AND MEANS. As a result of an error in the certification of the total amount of family farm tax credits to be allowed on agricultural land in Wright County, the total amount of credits for that county payable during FY 1998-1999 was reduced and, therefore, the credit claims were underpaid. This Act requires the county to pay the amount of the underpayment to those qualifying for the family farm tax credit. The county will subsequently be reimbursed for the moneys paid from the appropriation made to the Family Farm Tax Credit Fund to pay credits during FY 1999-2000.

The Act takes effect April 29, 1999.

SENATE FILE 308 - Benefited Fire District Areas - Tax Levy Rates(full text of act)

BY COMMITTEE ON WAYS AND MEANS. Prior to this Act, a benefited fire district could levy an annual tax of 40.5 cents per $1,000 of assessed value for the purpose of fire protection. If this amount was insufficient, another 20.25 cents per $1,000 of assessed value could be levied. However, where a city was part of the benefited fire district prior to the city's incorporation, the levy was 40.5 cents per $1,000 of assessed value in the city and no additional levy in the city was permitted. This Act allows the benefited fire district to levy that additional 20.25 cents per $1,000 of assessed valuation. In addition, the Act increases the amount a city may levy in areas outside of its boundaries, which were part of a dissolved benefited fire district, from 40.5 cents to 60.75 cents per $1,000 of assessed value if the city is providing fire protection services to those areas.

The Act takes effect on May 20, 1999.

SENATE FILE 458 - Property Tax Statement and Equalization Order Information(full text of act)

BY COMMITTEE ON WAYS AND MEANS. This Act requires that the property tax equalization order published by the county auditor contain the following statement: "Assessed values are equalized by the Department of Revenue and Finance every two years. Local taxing authorities determine the final tax levies and may reduce property tax rates to compensate for any increase in valuation due to equalization."

The Act also changes one of the requirements relating to information to be included on the property tax statement prepared by the county treasurer. Prior law required that the tax statement contain the amount of taxes levied in the previous year, the current year, the dollar amount difference between the two, and that amount stated as a percentage increase or decrease. The Act removes the requirement that the difference be stated in dollars.

SENATE FILE 469 - Sales and Use Taxes - Miscellaneous Provisions(full text of act)

BY COMMITTEE ON WAYS AND MEANS. This Act provides that increases or decreases in the rate of state sales and use taxes are to become effective on January 1 or July 1, but not sooner than 90 days following enactment of the increase or decrease in rate. Enactment is accomplished when the Governor approves the bill.

The Act allows, upon approval of the Director of Revenue and Finance, the consolidated filing of state sales tax returns by a parent corporation and its affiliated corporations. The Act also reduces the statute of limitations for assessing a state tax or applying for a tax refund from five years to three years over a two-year period. For quarterly periods beginning on or after January 1, 2000, and before January 1, 2001, the statute of limitations is four years. For quarterly periods beginning on or after January 1, 2001, the statute of limitations is three years. These state sales and use tax changes are effective January 1, 2000.

The rest of the Act makes the following changes in the local option sales and services taxes:

• Authorizes a city located in more than one county to impose a local option sales and services tax in the area of the city located in the county where not more than 15 percent of its residents reside, if the county where at least 85 percent of the residents of that city reside has imposed such tax. This provision takes effect upon May 20, 1999, and is repealed July 1, 2000.
• Provides that the local option sales and services tax and the local option tax for school infrastructure purposes are to be imposed either on January 1 or July 1 but not sooner than 90 days following the favorable election. Repeal of the taxes would be either on June 30 or December 31. This provision takes effect April 1, 2000.
• Provides that local option sales and services tax and the local option tax for school infrastructure purposes do not have to be collected on transactions delivered within the area where the tax is imposed unless the retailer has a physical presence in that area. This provision takes effect July 1, 1999.
• Provides that for the local option sales and services tax imposed by the county, distribution of 75 percent of the revenue, which is done on the basis of population, shall be accomplished using a subsequent certified census that modifies the most recent certified census. This provision is effective July 1, 1999.
• Provides for construction contractors to receive a refund of the local option sales and services tax for school infrastructure purposes paid by the contractor. This provision takes effect May 20, 1999, and applies retroactively to July 1, 1998.
• Permits a school district where the local option sales and services tax for school infrastructure purposes is imposed to enter into an agreement with a county and another school district to receive some of the local option sales and services tax revenues received by the school district. This provision takes effect May 20, 1999, and applies retroactively to July 1, 1998.

SENATE FILE 473 - Tax Administration - Additional Related Matters(full text of act)

BY COMMITTEE ON WAYS AND MEANS. This Act amends various provisions of state tax law relating to the administration of the state individual income tax, corporate income tax, sales and use taxes, franchise tax, replacement taxes on electric and natural gas providers, motor fuel taxes, inheritance and estate taxes, property taxes, and collection of taxes and debts owed to or collected by the state.

The Act allows the Department of Revenue and Finance to utilize a participating agency's collection powers to collect the participating agency's delinquent accounts, charges, fees, loans, taxes, or other indebtedness owed to or being collected by the state; allows the department to make and store electronic copies of documents; and changes the date for the department to reimburse counties for the amount of property tax credit claims from February 15 to June 15. The Act also provides that when the Director of Revenue and Finance issues an order revoking or modifying a tax exemption, the order is applicable to the tax year commencing with the tax year in which the application for revocation is made.

The Act provides that persons being prosecuted for tax violations such as sales, withholding, motor fuel, and use tax arising out of operation of a business may be prosecuted where the business operates rather than in each person's county of residence. In addition, the Act provides that venue for drug tax stamp violation is either in the county of the person's residence or the county in which the drugs were located.

The Act clarifies that gain or loss from the disposition of property is business income even if it is only operationally related to sources within and without this state. For example, royalties for the use of a trademark within or without Iowa are considered business income subject to apportionment; however, the previous law did not specifically provide that the gain on the sale of the trademark is subject to apportionment. This provision applies retroactively to January 1, 1999, for tax years beginning on or after that date.

The Act removes the requirement that for services to be exempt from sales tax, the services must be performed on property for use in taxable retail sales.

The Act provides that persons engaged in selling tangible personal property or providing services are not required to obtain a sales tax permit if they make no taxable sales.

The Act modifies provisions related to the low-income elderly and disabled property tax credit and rent reimbursement by deleting the surviving spouse eligibility class for purposes of qualifying for property tax credit and rent reimbursement benefits; deleting the requirement that a claimant live in Iowa for the entire base year to be eligible to claim benefits; deleting the requirement that the person occupy the property during the year to qualify for tax credit benefits; permitting more than one eligible person to file a claim for credit or reimbursement based on their individual incomes and rent or property taxes paid if living in the same homestead; and deleting unnecessary language.

The Act provides that claims for rent reimbursement may be applied to any delinquent accounts, loans, fees, or other debts owed the state.

The Act permits a claim for a reduction in the mobile home tax to be filed on behalf of a deceased person.

The Act deletes the requirement that a claimant for a mobile home reduced tax rate intended to live in the mobile home for six months or more during the year.

The Act makes changes relating to the replacement taxes on electricity and natural gas providers by changing the references to "taxing district" to "taxing authority" to refer to the specific taxing bodies, e.g., city, county or school district; redesignating natural gas competitive service areas; making clear that the replacement tax is an excise tax; better expressing the intent of exempting transmission lines owned by or leased to a lessor if those lines are subject to the replacement transmission tax payable by the lessor; and making clear that all property directly and primarily used in the production, generation, transmission, or delivery of electricity or natural gas which is subject to a replacement tax is exempt from property taxation. These replacement tax changes are effective July 1, 1999.

The Act enacts a new section that provides for an adjustment in the property taxes paid by electricity and natural gas providers during FY 1998-1999 if the actual taxes paid were based upon valuation which did not correct for depreciation. The amount of property taxes paid is the basis for replacement delivery tax rates.

The Act provides that under the Iowa inheritance tax, commissioned appraisers may appraise real property based on fee simple ownership. When valuing property, appraisers do not have jurisdiction to determine what property or interest in property is subject to tax. Joint property is to be appraised at full market value and long-term leases are not to be considered in determining value of appraised property. The inheritance tax changes are effective July 1, 1999, for estates of decedents dying on or after that date.

The Act also eliminates the requirement that municipal utilities report their property taxes based upon valuations determined in the 1993 through 1997 assessment years. Only the valuation for the 1997 assessment year is required for purposes of calculating the replacement delivery tax rates.

Provisions of the Act that do not have a specific effective date are effective May 20, 1999.

HOUSE FILE 199 - State Sales, Services, and Use Taxes on Aircraft(full text of act)

BY COMMITTEE ON WAYS AND MEANS. This Act exempts the sales of aircraft from the state sales tax but subjects the use of aircraft required to register with the state Department of Transportation to the state use tax. Exemptions that were previously provided for sales of aircraft in the state will still apply to the use of such aircraft in the state. The use tax is to be paid at the time and place the aircraft is registered in Iowa.

HOUSE FILE 387 - Taxpayer Communications - Confidentiality(full text of act)

BY COMMITTEE ON JUDICIARY. This Act creates the privilege of confidentiality for state tax purposes for those individuals who are authorized to practice before the Internal Revenue Service and who provide tax advice to persons in regard to state tax purposes. The confidentiality privilege applies to tax advice communication to the same extent that such communication would be considered privileged if it occurred between the taxpayer and an attorney. The confidentiality privilege applies to a noncriminal tax matter before the Iowa Department of Revenue and Finance or a noncriminal tax proceeding in federal or state court brought by or against the State of Iowa. However, the privilege does not apply to communication with a director, officer, shareholder, or agent of a corporation in connection with a tax shelter where the main purpose is the avoidance of federal income tax.

HOUSE FILE 418 - Sales and Use Taxes on Argon and Similar Gases(full text of act)

BY COMMITTEE ON WAYS AND MEANS. This Act exempts from the sales and use taxes the sale of argon and similar gases to be used in the manufacturing process. The Act provides for a limit of $25,000 on the total amount of refunds allowed as a result of the retroactivity of the Act. If refund claims exceed that amount, each refund will be prorated.

The Act takes effect May 24, 1999, and applies retroactively to January 1, 1991, for sales occurring between those dates.

HOUSE FILE 744 - Individual Income Tax Reductions - VETOED BY THE GOVERNOR(full text of act)

BY COMMITTEE ON WAYS AND MEANS. This bill would have increased the pension income deduction from $5,000 for single filers and $10,000 for joint filers to $6,000 and $12,000, respectively, and the personal and dependent credits from $40 to $70 under the individual income tax.

HOUSE FILE 748 - State Sales, Services, and Use Tax Exemption for Internet Access(full text of act)

BY COMMITTEE ON WAYS AND MEANS. This Act exempts from the state sales tax access charges paid to a provider for access to the Internet.

HOUSE FILE 755 - Property Assessments and Taxes - Omitted Property and Erroneous Payments(full text of act)

BY COMMITTEE ON WAYS AND MEANS. This Act limits the time in which the Department of Revenue and Finance and local officials may assess and tax omitted property to two years. Prior to this Act, the law allowed the department and local officials to go back up to five years to assess omitted property and collect taxes that would have been levied if the omitted property had been assessed.

The Act also permits a property taxpayer to receive a refund for erroneous property taxes paid if the refund is applied for within two years from the date the tax was due or, if appealed, within two years of the final decision. Prior to this Act, the law limited the time to one year.

The Act takes effect May 24, 1999.

HOUSE FILE 757 - Real Estate Transfer Tax - Payment and Allocation(full text of act)

BY COMMITTEE ON WAYS AND MEANS. The real estate transfer tax is collected at the time deeds are recorded. The proceeds are divided 82.75 percent to the state and 17.25 percent to the county. Under prior law, when multiple parcels of land from different counties are sold and the tax is paid on the entire amount in one county, that county receives the whole 17.25 percent. The Act requires the tax be paid to each recorder in the county where the parcel is located. To enable the tax to be paid when a transfer is made involving parcels located in more than one county, separate declarations of value are to be filed with the county recorder in each county where the parcel is located. This will permit each county to retain 17.25 percent of the amount of value allocated to the county.

HOUSE FILE 769 - Property Tax Classification of Apartments in Condominiums(full text of act)

BY COMMITTEE ON WAYS AND MEANS. The Department of Revenue and Finance adopted rules providing that, beginning with the assessment year beginning January 1, 2000, horizontal property regimes (condominiums) will be classified for purposes of property taxation based upon the majority use of the condominium apartments included in the building.

This Act provides that if a condominium apartment was used for human habitation on January 1, 1999, or was intended for human habitation pursuant to a declaration submitting a parcel of property to a horizontal property regime, which declaration was recorded prior to January 1, 1999, the condominium apartment will be residential property as long as the apartment is used for human habitation. In addition, if a development plan to build condominium apartments was approved by a city or county prior to January 1, 1999, and the condominiums are built to the general specifications, such a condominium apartment will be classified as residential as long as the apartment is used for human habitation. However, these provisions are repealed December 31, 2004.

The Act also requests the Legislative Council to establish an interim committee to study the issue of the property taxation of condominiums, including the classification for property tax purposes of condominiums located in buildings with multiple uses. Any recommendations are to be reported to the General Assembly by January 15, 2000.

HOUSE FILE 770 - Manufactured Housing - Sales and Use Taxes - Certificates of Title(full text of act)

BY COMMITTEE ON WAYS AND MEANS. This Act deals with the treatment of transactions involving manufactured housing under the state sales and use taxes and the requirements for issuance of a title for manufactured housing. Manufactured housing is a factory-built structure constructed under federal standards on or after June 15, 1976, which is required to display a seal from the U.S. Department of Housing and Urban Development. The Act specifically states that manufactured housing is subject only to issuance of a certificate of title, which was its status under prior law. The Act provides that a certificate of title must be applied for within 30 days of acquisition, which is an increase from the previous 15 days.

The Act provides that the sale of manufactured housing for use in this state is subject to the state use tax. The 5 percent use tax rate is applied to the purchase price of the manufactured housing if sold in the form of tangible personal property, or is applied to the installed purchase price if sold in the form of realty. The installed purchase price includes the charge for installing a foundation and for electrical and plumbing hookups in addition to the purchase price. There is an exemption for 40 percent of the purchase price or installed purchase price that is not attributable to costs of the tangible personal property, e.g., labor costs. In addition, the use tax is to be paid to the county treasurer or the state Department of Transportation from whom the certificate of title was obtained.

HOUSE FILE 776 - Urban Renewal(full text of act)

BY COMMITTEE ON WAYS AND MEANS. This Act requires a municipality (city or county) that has established an urban renewal program to annually report information on the urban renewal program to the Department of Management and the county auditor. The annual financial report, to be submitted on or before September 30, must include the following information:

1. A listing and description of each project within an urban renewal area.
2. A description of the original purpose for establishing the urban renewal area.
3. The establishment date of the urban renewal area and the expiration date of the urban renewal area and, if applicable or otherwise, the term of the indebtedness.
4. The designation under which the urban renewal area was established.
5. The base year valuation of the urban renewal area.
6. The amount of incremental valuation in the urban renewal area.
7. A description of the use for the incremental funding.
8. The number of businesses that have located in each urban renewal area.
9. The number of urban renewal projects that have been completed in each urban renewal area.
10. The type and term length of financing for urban renewal projects.
11. The amount of loans, advances, indebtedness, or bonds that qualified for payment from the special fund for each urban renewal project in the preceding fiscal year.
12. The total of the amount specified in paragraph 11 for each urban renewal area located in the municipality.

RELATED LEGISLATION

SENATE FILE 53 -- Tax Sales - Date of Sale (Complete summary under LOCAL GOVERNMENT.)

This Act allows a county treasurer with good cause to designate a date in June other than the third Monday of June on which to hold the annual tax sale. The Act takes effect February 17, 1999, and applies to tax sales held on or after that date.

SENATE FILE 392 -- Telecommunications - City Utilities (Complete summary under LOCAL GOVERNMENT.)

This Act provides that a city utility includes telecommunications systems or services offered separately or combined with certain other city systems or services. The Act provides that a municipal utility providing local exchange services will be subject to taxation on the facilities used for providing local exchange services. The Act takes effect April 26, 1999, and applies retroactively to July 1, 1993. City elections held after June 30, 1993, for the purpose of voting on the question of offering communications or telecommunications systems or services, are deemed to be valid for the purpose of offering such systems or services.

SENATE FILE 448 -- Abandoned Property - Delinquent Taxes - Purchase by City or County (Complete summary under LOCAL GOVERNMENT.)

This Act allows a city or county to bid on parcels containing certain abandoned property at the annual tax sale. The Act also allows a city or county to assign tax sale certificates on abandoned property purchased by the city or county to certain persons or organizations and to buy such certificates from current certificate holders. The Act shortens the length of the redemption period on a parcel containing abandoned property that is bid on and purchased by a city or county. The Act takes effect April 15, 1999, and applies beginning with the tax sale held in June 1999.

SENATE FILE 457 -- Iowa Educational Savings Plan Trust - Miscellaneous Provisions (Complete summary under EDUCATION.)

This Act amends certain Code provisions relating to the Iowa Educational Savings Plan Trust. The Act takes effect May 14, 1999.

SENATE FILE 459 -- School Finance - State Aid - Gifted and Talented Children Program Plans (Complete summary under EDUCATION.)

This Act increases the regular program foundation base per pupil, for the portion of weighted enrollment that is additional enrollment because of special education, to 87.5 percent of the regular program state cost per pupil, for the school budget year beginning July 1, 1999, and succeeding budget years. The Act takes effect May 24, 1999, for computation of state school aid for school budget years beginning on or after July 1, 1999.

SENATE FILE 462 -- Veterans Benefits and Interests (Complete summary under STATE GOVERNMENT.)

This Act increases the tax credit to local governments from $6.75 to $6.92 per $1,000 of exempt property arising from the veteran's property tax exemption. The Act also expands the definition of "veteran," which has the effect of extending the property tax exemption of $1,852 to these newly eligible veterans.

SENATE FILE 465 -- Accelerated Career Education Program (Complete summary under ECONOMIC DEVELOPMENT.)

This Act provides that a community college may enter into an agreement with certain employers to establish an Accelerated Career Education Program. The Governor item vetoed provisions of the Act regarding the use and allocation of tax credits from withholding as a funding source to pay for program costs. The Act takes effect May 24, 1999.

S.J.R. 1 - Proposed Constitutional Amendments - State Expenditures and Taxes (Complete summary under STATE GOVERNMENT.)

This Joint Resolution proposes two amendments, which relate to state budgets, within a new Article XIII to the Constitution of the State of Iowa. One amendment establishes a State General Fund expenditure limitation. The other amendment provides that any bill which enacts, amends or repeals the state income tax or the state sales and use taxes, and which causes, in the aggregate, an increase in state tax revenues, as determined by the General Assembly, must be adopted by three-fifths of the whole membership of each house of the General Assembly. This amendment also requires a three-fifths majority vote of each house of the General Assembly in order to enact a new state tax to be imposed by the state. The amendments will be submitted to the voters for ratification at a special election on June 29, 1999.

HOUSE FILE 293 -- Iowa Sheep and Wool Promotion Board Assessments (Complete summary under AGRICULTURE.)

This Act amends Code Chapter 182, which provides for the assessment (commonly referred to as a checkoff) of sheep and wool, by providing for the imposition of the assessment regardless of whether the sheep are sold for slaughter or whether the sale occurs at a concentration point.

HOUSE FILE 417 -- Property Tax Rent Reimbursement - Claimant Information (Complete summary under STATE GOVERNMENT.)

This Act allows the Department of Revenue and Finance to release information pertaining to an individual's eligibility or claim for property tax rent reimbursement to employees of the Department of Inspections and Appeals.

HOUSE FILE 474 -- County Records and Assessments (Complete summary under LOCAL GOVERNMENT.)

This Act makes a number of changes to the powers and duties of county treasurers relating to special assessments, vehicle ownership transfers, tax statement addresses, tax redemption, and tax clearance statements for mobile homes.

HOUSE FILE 570 -- Marketing of Turkeys and Turkey Products - Council - Producer Assessment (Complete summary under AGRICULTURE.)

This Act amends Code Chapter 184A, which provides for the establishment of the Iowa Turkey Marketing Council, the imposition of an assessment (commonly referred to as a checkoff) on turkeys sold to processors, and the use of those moneys. The Act takes effect May 20, 1999.

HOUSE FILE 733 -- Economic Development Tax Credits - Miscellaneous Provisions (Complete summary under ECONOMIC DEVELOPMENT.)

This Act defines the meaning of "new investment" in the New Investment Tax Credit under the New Jobs and Income Program. The Act adds an insurance premium tax credit to the list of incentives and assistance available under the Enterprise Zone Program.

HOUSE FILE 758 -- Mobile Home Park Storm Shelters (Complete summary under LOCAL GOVERNMENT.)

This Act provides a property tax exemption for storm shelter structures in mobile home parks. If the structure is used exclusively as a storm shelter, the entire assessed value of the storm shelter is exempt. If it is not used exclusively as a storm shelter, 75 percent of the assessed valuation is exempt. The storm shelter shall be assessed for tax purposes as commercial property for the assessment years beginning on or after January 1, 2000.

HOUSE FILE 760 -- Appropriations - Human Services (Complete summary under APPROPRIATIONS.)

This Act provides appropriations to the Department of Human Services (DHS) for FY 1999-2000, and includes provisions related to human services and health care. The Act maintains the requirement that DHS use moneys deposited in the Child Day Care Credit Fund for state child care assistance.

© 1998 Cornell College and League of Women Voters of Iowa

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Last update: SAT July 10 1999
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