House File 642 H-1374 Amend House File 642 as follows: 1 1. Page 1, before line 1 by inserting: 2 < Section 1. Section 423B.1, subsection 1, Code 3 2013, is amended to read as follows: 4 1. A city or county may impose by ordinance of the 5 governing body of the city or the board of supervisors 6 local option taxes authorized by this chapter , subject 7 to this section and subject to the exception provided 8 in subsection 2 . 9 Sec. ___. Section 423B.1, subsection 2, Code 2013, 10 is amended by striking the subsection. 11 Sec. ___. Section 423B.1, subsection 3, Code 2013, 12 is amended to read as follows: 13 3. A local option tax shall be imposed only after 14 an election at which a majority of those voting on the 15 question favors imposition and shall then be imposed 16 until repealed as provided in subsection 6 , paragraph 17 “a” . If the tax is a local vehicle tax imposed by 18 a county, it shall apply to all incorporated and 19 unincorporated areas of the county. If the tax is 20 a local sales and services tax imposed by a county, 21 it shall only apply to those incorporated areas and 22 the unincorporated area of that county in which if a 23 majority of those voting in the unincorporated area 24 on the tax favors its imposition and if the tax is 25 a local sales and services tax imposed by a city it 26 shall only apply to the city if a majority of those 27 voting in the city on the tax favors its imposition . 28 For purposes of the local sales and services tax, all 29 cities contiguous to each other shall be treated as 30 part of one incorporated area and the tax would be 31 imposed in each of those contiguous cities only if the 32 majority of those voting in the total area covered 33 by the contiguous cities favors its imposition. In 34 the case of a local sales and services tax submitted 35 to the registered voters of two or more contiguous 36 counties as provided in subsection 4 , paragraph “c” , 37 all cities contiguous to each other shall be treated as 38 part of one incorporated area, even if the corporate 39 boundaries of one or more of the cities include areas 40 of more than one county, and the tax shall be imposed 41 in each of those contiguous cities only if a majority 42 of those voting on the tax in the total area covered 43 by the contiguous cities favored its imposition. For 44 purposes of the local sales and services tax, a city is 45 not contiguous to another city if the only road access 46 between the two cities is through another state. > 47 2. Page 2, after line 8 by inserting: 48 < Sec. ___. Section 423B.1, subsection 4, paragraph 49 c, Code 2013, is amended by striking the paragraph and 50 -1- HF642.1968 (2) 85 md/rj 1/ 8 #1. #2.

inserting in lieu thereof the following: 1 c. A city is considered to be located in a county 2 if over half of the population of the city is located 3 in that county. 4 Sec. ___. Section 423B.1, subsection 5, Code 2013, 5 is amended to read as follows: 6 5. The county commissioner of elections shall 7 submit the question of imposition of a local option 8 tax at an election held on a date specified in section 9 39.2, subsection 4 , paragraph “a” . The election shall 10 not be held sooner than sixty days after publication 11 of notice of the ballot proposition. The ballot 12 proposition shall specify the type and rate of tax and , 13 in the case of a vehicle tax , the classes that will be 14 exempt and , in the case of a local sales and services 15 tax , the date it will be imposed which date shall not 16 be earlier than ninety days following the election. 17 The ballot proposition shall also specify the 18 approximate amount of local option tax revenues that 19 will be used for property tax relief and shall contain 20 a statement as to the specific purpose or purposes for 21 which the revenues shall otherwise be expended. If 22 the county board of supervisors or city council, as 23 applicable, decides under subsection 6 to specify a 24 date on which the local option sales and services tax 25 shall automatically be repealed, the date of the repeal 26 shall also be specified on the ballot. The rate of the 27 vehicle tax shall be in increments of one dollar per 28 vehicle as set by the petition seeking to impose the 29 tax. The rate of a local sales and services tax shall 30 not be more than one percent as set by the governing 31 body . The state commissioner of elections shall 32 establish by rule the form for the ballot proposition 33 which form shall be uniform throughout the state. 34 Sec. ___. Section 423B.1, subsection 6, paragraph 35 a, Code 2013, is amended to read as follows: 36 a. (1) If a majority of those voting on the 37 question of imposition of a local option vehicle 38 tax favors imposition of a local option the tax, the 39 governing body of that the county shall impose the 40 tax at the rate specified for an unlimited period. 41 However, in the case of a local sales and services tax, 42 the county shall not impose the tax in any incorporated 43 area or the unincorporated area if the majority of 44 those voting on the tax in that area did not favor 45 its imposition. For purposes of the local sales and 46 services tax, all cities contiguous to each other shall 47 be treated as part of one incorporated area and the tax 48 shall be imposed in each of those contiguous cities 49 only if the majority of those voting on the tax in the 50 -2- HF642.1968 (2) 85 md/rj 2/ 8

total area covered by the contiguous cities favored 1 its imposition. In the case of a local sales and 2 services tax submitted to the registered voters of two 3 or more contiguous counties as provided in subsection 4 4 , paragraph “c” , all cities contiguous to each other 5 shall be treated as part of one incorporated area, 6 even if the corporate boundaries of one or more of 7 the cities include areas of more than one county, and 8 the tax shall be imposed in each of those contiguous 9 cities only if a majority of those voting on the tax 10 in the total area covered by the contiguous cities 11 favored its imposition. If a majority of those voting 12 on the question of imposition of a local option sales 13 and services tax in a city favors imposition of the 14 tax, the governing body of the city shall impose by 15 ordinance the tax at the rate of one percent. If a 16 majority of those voting on the question of imposition 17 of a local option sales and services tax in the 18 unincorporated area of the county favors imposition of 19 the tax, the governing body of the county shall impose 20 by ordinance the tax in the unincorporated area of the 21 county at the rate of one percent. 22 (2) The local option tax may be repealed or the 23 rate of the local vehicle tax increased or decreased 24 or the use thereof of a local option tax changed after 25 an election at which a majority of those voting on the 26 question of repeal or rate or use change favored the 27 repeal or rate or use change. The date on which the 28 repeal, rate, or use change is to take effect shall not 29 be earlier than ninety days following the election. 30 The election at which the question of repeal or rate 31 or use change is offered shall be called and held 32 in the same manner and under the same conditions as 33 provided in subsections 4 and 5 for the election on the 34 imposition of the local option tax. However, in the 35 case of a local sales and services tax where the tax 36 has not been imposed countywide, the question of repeal 37 or imposition or rate or use change shall be voted 38 on only by the registered voters of the areas of the 39 county where the tax has been imposed or has not been 40 imposed, as appropriate. However, the governing body 41 of the incorporated area city or unincorporated area 42 where the local sales and services tax is imposed may, 43 upon its own motion, request the county commissioner of 44 elections to hold an election in the incorporated city 45 or unincorporated area, as appropriate, on the question 46 of the change in use of local sales and services tax 47 revenues. The election may be held at any time but 48 not sooner than sixty days following publication of 49 the ballot proposition. If a majority of those voting 50 -3- HF642.1968 (2) 85 md/rj 3/ 8

in the incorporated city or unincorporated area on the 1 change in use favors the change, the governing body of 2 that city or area shall change the use to which the 3 revenues shall be used. The ballot proposition shall 4 list the present use of the revenues, the proposed use, 5 and the date after which revenues received will be used 6 for the new use. 7 (3) When submitting the question of the imposition 8 of a local sales and services tax, the county board 9 of supervisors or the governing body of the city 10 may direct that the question contain a provision for 11 the repeal, without election, of the local sales and 12 services tax on a specific date, which date shall be as 13 provided in section 423B.6, subsection 1. 14 Sec. ___. Section 423B.1, Code 2013, is amended by 15 adding the following new subsection: 16 NEW SUBSECTION . 6A. If a proposition for the 17 imposition of a local sales and services tax submitted 18 to the voters of a city or unincorporated area of a 19 county under this section fails to gain approval, the 20 proposition shall not be resubmitted to the voters 21 of that jurisdiction in substantially the same form 22 for a period of three years following the date of the 23 election and may only be resubmitted to the voters on a 24 date specified in section 39.2, subsection 4, paragraph 25 “a” . 26 Sec. ___. Section 423B.1, subsection 7, paragraph 27 b, Code 2013, is amended to read as follows: 28 b. Costs of local option tax elections shall be 29 apportioned among jurisdictions within the county 30 voting on the question at the same election on a pro 31 rata basis in proportion to the number of registered 32 voters in each taxing jurisdiction voting on the 33 question and the total number of registered voters in 34 all of the taxing jurisdictions voting on the question . 35 Sec. ___. Section 423B.1, subsections 8 through 10, 36 Code 2013, are amended to read as follows: 37 8. Local option taxes authorized to be imposed 38 as provided in this chapter are a local sales and 39 services tax and a local vehicle tax. The rate of the 40 tax shall be in increments of one dollar per vehicle 41 for a vehicle tax as set on the petition seeking to 42 impose the vehicle tax. The rate of a local sales and 43 services tax shall not be more than one percent as set 44 by the governing body . 45 9. a. In a county that has imposed a local 46 option sales and services tax in the unincorporated 47 area of the county , the board of supervisors shall, 48 notwithstanding any contrary provision of this chapter , 49 repeal the local option sales and services tax in the 50 -4- HF642.1968 (2) 85 md/rj 4/ 8

unincorporated areas or in an incorporated city area in 1 which the tax has been imposed area upon adoption of 2 its own motion for repeal in the unincorporated areas 3 or upon receipt of a motion adopted by the governing 4 body of that incorporated city area requesting repeal . 5 The board of supervisors shall repeal the local option 6 sales and services tax effective on the later of 7 the date of the adoption of the repeal motion or the 8 earliest date specified in section 423B.6, subsection 9 1 . For purposes of this subsection , incorporated city 10 area includes an incorporated city which is contiguous 11 to another incorporated city. 12 b. In a city that has imposed a local sales and 13 services tax, the governing body of the city shall, 14 notwithstanding any contrary provision of this chapter, 15 repeal the local sales and services tax in the city 16 upon adoption of its own motion for repeal. The 17 governing body of the city shall repeal the local sales 18 and services tax effective on the later of the date of 19 the adoption of the repeal motion or the earliest date 20 specified in section 423B.6, subsection 1. 21 10. Notwithstanding subsection 9 or any other 22 contrary provision of this chapter , a local option 23 sales and services tax shall not be repealed or reduced 24 in rate if obligations are outstanding which are 25 payable as provided in section 423B.9 , unless funds 26 sufficient to pay the principal, interest, and premium, 27 if any, on the outstanding obligations at and prior to 28 maturity have been properly set aside and pledged for 29 that purpose. 30 Sec. ___. Section 423B.5, unnumbered paragraph 1, 31 Code 2013, is amended to read as follows: 32 A local sales and services tax at the rate of not 33 more than one percent may be imposed by a city or 34 county on the sales price taxed by the state under 35 chapter 423, subchapter II . A local sales and services 36 tax shall be imposed on the same basis as the state 37 sales and services tax or in the case of the use of 38 natural gas, natural gas service, electricity, or 39 electric service on the same basis as the state use tax 40 and shall not be imposed on the sale of any property or 41 on any service not taxed by the state, except the tax 42 shall not be imposed on the sales price from the sale 43 of motor fuel or special fuel as defined in chapter 44 452A which is consumed for highway use or in watercraft 45 or aircraft if the fuel tax is paid on the transaction 46 and a refund has not or will not be allowed, on the 47 sales price from the sale of equipment by the state 48 department of transportation, or on the sales price 49 from the sale or use of natural gas, natural gas 50 -5- HF642.1968 (2) 85 md/rj 5/ 8

service, electricity, or electric service in a city or 1 county where the sales price from the sale of natural 2 gas or electric energy is subject to a franchise fee or 3 user fee during the period the franchise or user fee is 4 imposed. A local sales and services tax is applicable 5 to transactions within those incorporated and the city 6 or unincorporated areas area of the county where it is 7 imposed and shall be collected by all persons required 8 to collect state sales taxes. All cities contiguous to 9 each other shall be treated as part of one incorporated 10 area and the tax would be imposed in each of those 11 contiguous cities only if the majority of those voting 12 in the total area covered by the contiguous cities 13 favors its imposition. In the case of a local sales 14 and services tax submitted to the registered voters 15 of two or more contiguous counties as provided in 16 section 423B.1, subsection 4 , paragraph “c” , all cities 17 contiguous to each other shall be treated as part of 18 one incorporated area, even if the corporate boundaries 19 of one or more of the cities include areas of more than 20 one county, and the tax shall be imposed in each of 21 those contiguous cities only if a majority of those 22 voting on the tax in the total area covered by the 23 contiguous cities favored its imposition. 24 Sec. ___. Section 423B.5, unnumbered paragraph 4, 25 Code 2013, is amended to read as follows: 26 If a local sales and services tax is imposed by 27 a city or county pursuant to this chapter , a local 28 excise tax at the same rate shall be imposed by 29 the city or county on the purchase price of natural 30 gas, natural gas service, electricity, or electric 31 service subject to tax under chapter 423, subchapter 32 III , and not exempted from tax by any provision of 33 chapter 423, subchapter III . The local excise tax is 34 applicable only to the use of natural gas, natural gas 35 service, electricity, or electric service within those 36 incorporated and unincorporated areas of the county 37 where it is imposed and, except as otherwise provided 38 in this chapter , shall be collected and administered in 39 the same manner as the local sales and services tax. 40 For purposes of this chapter , “local sales and services 41 tax” shall also include the local excise tax. 42 Sec. ___. Section 423B.6, subsection 1, paragraphs 43 b and c, Code 2013, are amended to read as follows: 44 b. A local sales and services tax shall be repealed 45 only on June 30 or December 31 but not sooner than 46 ninety days following the favorable election if one is 47 held. However, a local sales and services tax shall 48 not be repealed before the tax has been in effect for 49 one year. At least forty days before the imposition or 50 -6- HF642.1968 (2) 85 md/rj 6/ 8

repeal of the tax, a the city or county , as applicable, 1 shall provide notice of the action by certified mail 2 to the director of revenue. 3 c. The imposition of or a rate change for a 4 local sales and services tax shall not be applied to 5 purchases from a printed catalog wherein a purchaser 6 computes the local tax based on rates published in the 7 catalog unless a minimum of one hundred twenty days’ 8 notice of the imposition or rate change has been given 9 to the seller from the catalog and the first day of 10 a calendar quarter has occurred on or after the one 11 hundred twentieth day. 12 Sec. ___. Section 423B.6, subsection 2, paragraph 13 b, Code 2013, is amended to read as follows: 14 b. The ordinance of a governing body of a city or 15 county board of supervisors imposing a local sales and 16 services tax shall adopt by reference the applicable 17 provisions of the appropriate sections of chapter 18 423 . All powers and requirements of the director 19 to administer the state sales tax law and use tax 20 law are applicable to the administration of a local 21 sales and services tax law and the local excise tax, 22 including but not limited to the provisions of section 23 422.25, subsection 4 , sections 422.30 , 422.67 , and 24 422.68 , section 422.69, subsection 1 , sections 422.70 25 through 422.75 , section 423.14, subsection 1 and 26 subsection 2 , paragraphs “b” through “e” , and sections 27 423.15 , 423.23 , 423.24 , 423.25 , 423.31 through 423.35 , 28 423.37 through 423.42 , 423.46 , and 423.47 . Local 29 officials shall confer with the director of revenue 30 for assistance in drafting the ordinance imposing a 31 local sales and services tax. A certified copy of the 32 ordinance shall be filed with the director as soon as 33 possible after passage. 34 Sec. ___. Section 423B.6, subsection 3, paragraph 35 b, Code 2013, is amended to read as follows: 36 b. All local tax moneys and interest and penalties 37 received or refunded one hundred eighty days or more 38 after the date on which the city or county repeals its 39 local sales and services tax shall be deposited in or 40 withdrawn from the state general fund. 41 Sec. ___. Section 423B.7, subsection 1, paragraph 42 a, Code 2013, is amended to read as follows: 43 a. Except as provided in paragraph “b” , the 44 director shall credit the local sales and services 45 tax receipts and interest and penalties from a 46 county-imposed tax or a city-imposed tax to the 47 county’s account in the local sales and services tax 48 fund and from a city-imposed tax under section 423B.1, 49 subsection 2, to the city’s account in the local sales 50 -7- HF642.1968 (2) 85 md/rj 7/ 8

and services tax fund for the county in which the tax 1 was collected . If the director is unable to determine 2 from which county any of the receipts were collected, 3 those receipts shall be allocated among the possible 4 counties based on allocation rules adopted by the 5 director. 6 Sec. ___. Section 423B.7, subsection 5, Code 2013, 7 is amended by striking the subsection. 8 Sec. ___. Section 423B.8, subsection 1, paragraph 9 a, Code 2013, is amended to read as follows: 10 a. The goods, wares, or merchandise are 11 incorporated into an improvement to real estate in 12 fulfillment of a written contract fully executed prior 13 to the date of the imposition or increase in rate of a 14 local sales and services tax under this chapter . The 15 refund shall not apply to equipment transferred in 16 fulfillment of a mixed construction contract. 17 Sec. ___. Section 423B.10, subsection 1, paragraph 18 b, Code 2013, is amended to read as follows: 19 b. “Eligible city” means a city in which a local 20 sales and services tax imposed by the city or county 21 applies or a city described in section 423B.1, 22 subsection 2 , paragraph “a” , Code 2013, and in which an 23 urban renewal area has been designated. 24 Sec. ___. EFFECT OF ACT —— CURRENT LOCAL OPTION 25 TAXES. This Act shall not affect the imposition and 26 collection of a local option tax imposed, or that will 27 take effect, as the result of a petition received or 28 a motion approved under chapter 423B prior to July 1, 29 2013. 30 Sec. ___. APPLICABILITY. 31 1. This Act applies to petitions received pursuant 32 to section 423B.1, subsection 4, paragraph “a”, on or 33 after July 1, 2013. 34 2. This Act applies to motions adopted pursuant 35 to section 423B.1, subsection 4, paragraph “b”, on or 36 after July 1, 2013. > 37 3. Title page, by striking lines 1 through 4 38 and inserting < An Act relating to the approval 39 and imposition of local option taxes and including 40 applicability provisions. > 41 4. By renumbering as necessary. 42 ______________________________ WATTS of Dallas -8- HF642.1968 (2) 85 md/rj 8/ 8 #3. #4.