House File 697
HOUSE FILE
BY COMMITTEE ON WAYS AND MEANS
(SUCCESSOR TO HSB 317)
Passed House, Date Passed Senate, Date
Vote: Ayes Nays Vote: Ayes Nays
Approved
A BILL FOR
1 An Act relating to the administration of the tax and related laws
2 by the department of revenue and finance, including
3 administration of state individual income, sales, property,
4 motor fuel, special fuel, cigarette, tobacco, inheritance
5 taxes, and local hotel and motel taxes, and the premiums tax
6 on mutual insurance associations, and including effective and
7 retroactive applicability date provisions.
8 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
9 TLSB 2570HV 80
10 mg/pj/5
PAG LIN
1 1 Section 1. Section 15E.42, subsection 3, Code 2003, is
1 2 amended to read as follows:
1 3 3. "Investor" means an individual making a cash investment
1 4 in a qualifying business or an individual taxed on income from
1 5 a revocable trust's cash investment in a qualifying business
1 6 or a person making a cash investment in a community=based seed
1 7 capital fund. "Investor" does not include a person which is a
1 8 current or previous owner, member, or shareholder in a
1 9 qualifying business.
1 10 Sec. 2. Section 15E.43, subsection 1, paragraph a, Code
1 11 2003, is amended to read as follows:
1 12 a. For tax years beginning on or after January 1, 2002, a
1 13 tax credit shall be allowed against the taxes imposed in
1 14 chapter 422, division II, for a portion of an individual
1 15 taxpayer's equity investment, as provided in subsection 2, in
1 16 a qualifying business. An individual shall not claim a tax
1 17 credit under this paragraph of a partnership, limited
1 18 liability company, S corporation, estate, or trust electing to
1 19 have income taxed directly to the individual. However, an
1 20 individual receiving income from a revocable trust's
1 21 investment in a qualified business may claim a tax credit
1 22 under this paragraph against the taxes imposed in chapter 422,
1 23 division II, for a portion of the revocable trust's equity
1 24 investment, as provided in subsection 2, in a qualified
1 25 business.
1 26 Sec. 3. Section 15E.43, subsection 1, Code 2003, is
1 27 amended by adding the following new paragraph:
1 28 NEW PARAGRAPH. d. In the case of a tax credit allowed
1 29 against the taxes imposed in chapter 422, division II, where
1 30 the taxpayer died prior to redeeming the entire tax credit,
1 31 the remaining credit can be redeemed on the decedent's final
1 32 income tax return.
1 33 Sec. 4. Section 15E.45, subsection 2, paragraph c, Code
1 34 2003, is amended to read as follows:
1 35 c. The fund has no fewer than ten individual investors who
2 1 are not affiliates, with no single investor and affiliates of
2 2 that investor together owning a total of more than twenty=five
2 3 percent of the ownership interests outstanding in the fund.
2 4 Sec. 5. Section 15E.51, subsection 4, Code 2003, is
2 5 amended to read as follows:
2 6 4. A taxpayer shall not claim a tax credit under this
2 7 section if the taxpayer is a venture capital investment fund
2 8 allocation manager for the Iowa fund of funds created in
2 9 section 15E.65 or an investor that receives a tax credit for
2 10 an the same investment in a community=based seed capital fund
2 11 as defined in 2002 Iowa Acts, House File 2271.
2 12 Sec. 6. Section 99E.10, subsection 1, unnumbered paragraph
2 13 1, Code 2003, is amended to read as follows:
2 14 Upon receipt of any revenue, the commissioner shall deposit
2 15 the moneys in the lottery fund created pursuant to section
2 16 99E.20. As nearly as is practicable, at least fifty percent
2 17 of the projected annual revenue, after deduction of the amount
2 18 of the sales tax, accruing from the sale of tickets or shares
2 19 is appropriated for payment of prizes to the holders of
2 20 winning tickets. After the payment of prizes, all of the
2 21 following shall be deducted from lottery revenue prior to
2 22 disbursement:
2 23 Sec. 7. Section 99E.10, subsection 1, paragraph b, Code
2 24 2003, is amended by striking the paragraph.
2 25 Sec. 8. Section 422.9, subsection 1, Code 2003, is amended
2 26 to read as follows:
2 27 1. An optional standard deduction, after deduction of
2 28 federal income tax, equal to one thousand two hundred thirty
2 29 dollars for a married person who files separately or a single
2 30 person or equal to three thousand thirty dollars for a husband
2 31 and wife who file a joint return, a surviving spouse, or an
2 32 unmarried head of household. The optional standard deduction
2 33 shall not exceed the amount remaining after deduction of the
2 34 federal income tax. The amount of federal income taxes
2 35 deducted shall be computed as provided under subsection 2,
3 1 paragraph "b".
3 2 Sec. 9. Section 422.9, subsection 2, paragraph b, Code
3 3 2003, is amended to read as follows:
3 4 b. Add the amount of federal income taxes paid or accrued
3 5 as the case may be, during the tax year, adjusted by and
3 6 subtract any federal income tax refunds received during the
3 7 tax year. Provided, however, that where Where married
3 8 persons, who have filed a joint federal income tax return,
3 9 file separately, such total shall be divided between them
3 10 according to the portion thereof paid or accrued, as the case
3 11 may be, by each. However, federal income taxes paid for a tax
3 12 year in which an Iowa return was not required to be filed
3 13 shall not be added, and federal income tax refunds received
3 14 from a tax year in which an Iowa return was not required to be
3 15 filed shall not be subtracted.
3 16 Sec. 10. Section 422.42, subsection 19, Code 2003, is
3 17 amended to read as follows:
3 18 19. "Services" means all acts or services rendered,
3 19 furnished, or performed, other than services used in
3 20 processing of tangible personal property for use in retail
3 21 sales or services, for an "employer" as defined in section
3 22 422.4, subsection 3 employer who pays the wages of an
3 23 employee, for a valuable consideration by any person engaged
3 24 in any business or occupation specifically enumerated in this
3 25 division. The tax shall be due and collectible when the
3 26 service is rendered, furnished, or performed for the ultimate
3 27 user of the service.
3 28 Sec. 11. Section 422.43, subsection 2, Code 2003, is
3 29 amended to read as follows:
3 30 2. There is imposed a tax of five percent upon the gross
3 31 receipts derived from the operation of all forms of amusement
3 32 devices and games of skill, games of chance, raffles, and
3 33 bingo games as defined in chapter 99B, operated or conducted
3 34 within the state, the tax to be collected from the operator in
3 35 the same manner as for the collection of taxes upon the gross
4 1 receipts of tickets or admission as provided in this section.
4 2 The tax shall also be imposed upon the gross receipts derived
4 3 from the sale of lottery tickets or shares pursuant to chapter
4 4 99E. The tax on the lottery tickets or shares shall be
4 5 included in the sales price and distributed to the general
4 6 fund as provided in section 99E.10.
4 7 Sec. 12. Section 422.45, Code 2003, is amended by adding
4 8 the following new subsection:
4 9 NEW SUBSECTION. 31. Gross receipts from the sale of a
4 10 lottery ticket or share pursuant to chapter 99E.
4 11 Sec. 13. Section 422.45, Code 2003, is amended by adding
4 12 the following new subsection:
4 13 NEW SUBSECTION. 64. The gross receipts from noncustomer
4 14 point of sale or noncustomer automated teller machine access
4 15 or service charges assessed by a financial institution. For
4 16 purposes of this subsection, "financial institution" means the
4 17 same as defined in section 527.2.
4 18 Sec. 14. Section 422A.1, unnumbered paragraph 3, Code
4 19 2003, is amended to read as follows:
4 20 A local hotel and motel tax shall be imposed on January 1,
4 21 April 1, or July 1, or October 1, following the notification
4 22 of the director of revenue and finance. Once imposed, the tax
4 23 shall remain in effect at the rate imposed for a minimum of
4 24 one year. A local hotel and motel tax shall terminate only on
4 25 March 31, June 30, September 30, or December 31. At least
4 26 forty=five days prior to the tax being effective or prior to a
4 27 revision in the tax rate, or prior to the repeal of the tax, a
4 28 city or county shall provide notice by mail of such action to
4 29 the director of revenue and finance.
4 30 Sec. 15. Section 423.4, Code 2003, is amended by adding
4 31 the following new subsection:
4 32 NEW SUBSECTION. 9A. Vehicles subject to registration
4 33 which are transferred from a corporation that is primarily
4 34 engaged in the business of leasing vehicles subject to
4 35 registration to a corporation that is primarily engaged in the
5 1 business of leasing vehicles subject to registration when the
5 2 transferor and transferee corporations are part of the same
5 3 controlled group for federal income tax purposes.
5 4 Sec. 16. Section 425.1, subsection 4, Code 2003, is
5 5 amended to read as follows:
5 6 4. Annually the department of revenue and finance shall
5 7 estimate the credit not to exceed the actual levy on the first
5 8 four thousand eight hundred fifty dollars of actual value of
5 9 each eligible homestead, and shall certify to the county
5 10 auditor of each county the credit and its amount in dollars.
5 11 Each county auditor shall then enter the credit against the
5 12 tax levied on each eligible homestead in each county payable
5 13 during the ensuing year, designating on the tax lists the
5 14 credit as being from the homestead credit fund, and credit
5 15 shall then be given to the several taxing districts in which
5 16 eligible homesteads are located in an amount equal to the
5 17 credits allowed on the taxes of the homesteads. The amount of
5 18 credits shall be apportioned by each county treasurer to the
5 19 several taxing districts as provided by law, in the same
5 20 manner as though the amount of the credit had been paid by the
5 21 owners of the homesteads. However, the several taxing
5 22 districts shall not draw the funds so credited until after the
5 23 semiannual allocations have been received by the county
5 24 treasurer, as provided in this chapter. Each county treasurer
5 25 shall show on each tax receipt the amount of credit received
5 26 from the homestead credit fund.
5 27 Sec. 17. Section 441.8, unnumbered paragraphs 6 and 7,
5 28 Code 2003, are amended to read as follows:
5 29 Upon receiving credit equal to one hundred fifty hours of
5 30 classroom instruction during the assessor's current term of
5 31 office of which at least ninety of the one hundred fifty hours
5 32 are from courses requiring an examination upon conclusion of
5 33 the course, the director of revenue and finance shall certify
5 34 to the assessor's conference board that the assessor is
5 35 eligible to be reappointed to the position. For persons
6 1 appointed to complete an unexpired term, the number of credits
6 2 required to be certified as eligible for reappointment shall
6 3 be prorated according to the amount of time remaining in the
6 4 present term of the assessor. The director of revenue and
6 5 finance may extend the period of time for an assessor to
6 6 obtain the required hours of credit if the committee finds
6 7 sufficient reason for granting an extension. If the person
6 8 was an assessor in another jurisdiction, the assessor may
6 9 carry forward any credit hours received in the previous
6 10 position in excess of the number that would be necessary to be
6 11 considered current in that position.
6 12 Within each six=year period following the appointment of a
6 13 deputy assessor, the deputy assessor shall comply with this
6 14 section except that upon the successful completion of ninety
6 15 hours of classroom instruction of which at least sixty of the
6 16 ninety hours are from courses requiring an examination upon
6 17 conclusion of the course, the deputy assessor shall be
6 18 certified by the director of revenue and finance as being
6 19 eligible to remain in the position. If a deputy assessor
6 20 fails to comply with this section, the deputy assessor shall
6 21 be removed from the position until successful completion of
6 22 the required hours of credit. The director of revenue and
6 23 finance may extend the period of time for a deputy assessor to
6 24 obtain the required hours of credit if the committee finds
6 25 sufficient reason for granting an extension. If a deputy is
6 26 appointed to the office of assessor, the hours of credit
6 27 obtained as deputy pursuant to this section shall be credited
6 28 to that individual as assessor and for the individual to be
6 29 reappointed at the expiration of the term as assessor, that
6 30 individual must obtain the credits which are necessary to
6 31 total the number of hours for reappointment.
6 32 Sec. 18. Section 450.37, subsection 2, paragraph a, Code
6 33 2003, is amended to read as follows:
6 34 a. If an agreement has not been reached on the fair market
6 35 value of real property in the ordinary course of trade, the
7 1 director of revenue and finance has thirty sixty days after
7 2 the return is filed to request an appraisal under section
7 3 450.27. If an appraisal request is not made within the
7 4 thirty=day sixty=day period, the value listed on the return is
7 5 the agreed value of the real property.
7 6 Sec. 19. Section 452A.2, Code 2003, is amended by adding
7 7 the following new subsection:
7 8 NEW SUBSECTION. 20A. "Nonterminal storage facility" means
7 9 a facility where motor fuel or special fuel, other than
7 10 liquefied petroleum gas, is stored that is not supplied by a
7 11 pipeline or a marine vessel. "Nonterminal storage facility"
7 12 includes a facility that manufactures products such as
7 13 alcohol, biofuel, blend stocks, or additives which may be used
7 14 as motor fuel or special fuel, other than liquefied petroleum
7 15 gas, for operating motor vehicles or aircraft.
7 16 Sec. 20. Section 452A.2, subsection 24, Code 2003, is
7 17 amended to read as follows:
7 18 24. "Special fuel" means fuel oils and all combustible
7 19 gases and liquids suitable for the generation of power for
7 20 propulsion of motor vehicles or turbine=powered aircraft, and
7 21 includes any substance used for that purpose, except that it
7 22 does not include motor fuel. Kerosene shall not be considered
7 23 to be a special fuel, unless blended with other special fuels
7 24 for use in a motor vehicle with a diesel engine. Methanol
7 25 shall not be considered to be a special fuel, unless blended
7 26 with other special fuels for use in a motor vehicle with a
7 27 diesel engine, and shall not be considered a motor fuel,
7 28 unless blended with other motor fuels for use in an aircraft
7 29 or for propelling motor vehicles.
7 30 Sec. 21. Section 452A.10, unnumbered paragraphs 1, 2, and
7 31 4, Code 2003, are amended to read as follows:
7 32 A motor fuel or special fuel supplier, restrictive
7 33 supplier, importer, exporter, blender, dealer, user, common
7 34 carrier, contract carrier, or terminal or nonterminal storage
7 35 facility shall maintain, for a period of three years, records
8 1 of all transactions by which the supplier, restrictive
8 2 supplier, or importer withdraws from a terminal or nonterminal
8 3 storage facility within this state or imports into this state
8 4 motor fuel or undyed special fuel together with invoices,
8 5 bills of lading, and other pertinent records and papers as
8 6 required by the department.
8 7 If in the normal conduct of a supplier's, restrictive
8 8 supplier's, importer's, exporter's, blender's, dealer's,
8 9 user's, common carrier's, contract carrier's, or terminal's,
8 10 or nonterminal storage facility's business the records are
8 11 maintained and kept at an office outside this state, the
8 12 records shall be made available for audit and examination by
8 13 the department at the office outside this state, but the audit
8 14 and examination shall be without expense to this state.
8 15 The department, after an audit and examination of records
8 16 required to be maintained under this section, may authorize
8 17 their disposal upon the written request of the supplier,
8 18 restrictive supplier, importer, exporter, blender, dealer,
8 19 user, carrier, terminal, nonterminal storage facility, or
8 20 distributor.
8 21 Sec. 22. Section 452A.62, subsection 1, paragraph a, Code
8 22 2003, is amended to read as follows:
8 23 a. A distributor, supplier, restrictive supplier,
8 24 importer, exporter, blender, terminal operator, nonterminal
8 25 storage facility, common carrier, or contract carrier,
8 26 pertaining to motor fuel or undyed special fuel withdrawn from
8 27 a terminal or nonterminal storage facility or brought into
8 28 this state.
8 29 Sec. 23. Section 452A.62, subsection 2, Code 2003, is
8 30 amended to read as follows:
8 31 2. To examine the records, books, papers, receipts, and
8 32 invoices of any distributor, supplier, restrictive supplier,
8 33 importer, blender, exporter, terminal operator, nonterminal
8 34 storage facility, licensed compressed natural gas or liquefied
8 35 petroleum gas dealer or user, or any other person who
9 1 possesses fuel upon which the tax has not been paid to
9 2 determine financial responsibility for the payment of the
9 3 taxes imposed by this chapter.
9 4 Sec. 24. Section 452A.85, Code 2003, is amended by adding
9 5 the following new subsection:
9 6 NEW SUBSECTION. 4. This section does not apply to an
9 7 increase in the tax rate of a specified fuel, except for
9 8 compressed natural gas, unless the increase in the tax rate of
9 9 that fuel is in excess of one=half cent per gallon.
9 10 Sec. 25. Section 453A.11, Code 2003, is amended to read as
9 11 follows:
9 12 453A.11 CANCELLATION OF STAMPS.
9 13 Stamps affixed to a package of cigarettes shall not be
9 14 canceled by any letter, numeral, or other mark of
9 15 identification or otherwise mutilated in any manner that will
9 16 prevent or hinder the department in making an examination as
9 17 to the genuineness of the stamp. However, the director may
9 18 require such cancellation of the tax stamps affixed to
9 19 packages of cigarettes which is necessary to carry out
9 20 properly the provisions of this division. A person in
9 21 violation of this section shall be considered in possession of
9 22 unstamped cigarettes and is subject to the penalty provided in
9 23 section 453A.31, subsection 1.
9 24 Sec. 26. Section 453A.15, Code 2003, is amended by adding
9 25 the following new subsection:
9 26 NEW SUBSECTION. 7. The director may require by rule that
9 27 reports required to be made under this division be filed by
9 28 electronic transmission.
9 29 Sec. 27. Section 453A.18, Code 2003, is amended to read as
9 30 follows:
9 31 453A.18 FORMS FOR RECORDS AND REPORTS.
9 32 The department shall furnish or make available in
9 33 electronic form, without charge, to holders of the various
9 34 permits, forms in sufficient quantities to enable permit
9 35 holders to make the reports required to be made under this
10 1 division. The permit holders shall furnish at their own
10 2 expense the books, records, and invoices, required to be used
10 3 and kept, but the books, records, and invoices shall be in
10 4 exact conformity to the forms prescribed for that purpose by
10 5 the director, and shall be kept and used in the manner
10 6 prescribed by the director. However, the director may, by
10 7 express order in certain cases, authorize permit holders to
10 8 keep their records in a manner and upon forms other than those
10 9 so prescribed. The authorization may be revoked at any time.
10 10 Sec. 28. Section 453A.32, subsections 1, 4, and 5, Code
10 11 2003, are amended to read as follows:
10 12 1. All cigarettes on which taxes are imposed or required
10 13 to be imposed by this division, which are found in the
10 14 possession or custody, or within the control of any person,
10 15 for the purpose of being sold, distributed, or removed by the
10 16 person in violation of this division, and all cigarettes which
10 17 are removed or are, stored, transported, deposited, or
10 18 concealed in any place with intent to avoid payment of taxes
10 19 without the proper taxes paid, and any automobile, truck,
10 20 boat, conveyance, or other vehicle whatsoever, used in the
10 21 removal, storage, deposit, concealment, or transportation of
10 22 cigarettes for such the purpose of avoiding the payment of the
10 23 proper tax, and all equipment or other tangible personal
10 24 property incident to and used for such the purpose of avoiding
10 25 the payment of the proper tax, found in the place, building,
10 26 or vehicle where cigarettes are found, and all counterfeit
10 27 cigarettes may be seized by the department, with or without
10 28 process and shall be from the time of the seizure forfeited to
10 29 the state of Iowa. A proceeding in the nature of a proceeding
10 30 in rem shall be filed in a court of competent jurisdiction in
10 31 the county of seizure to maintain the seizure and declare and
10 32 perfect the forfeiture. All cigarettes, counterfeit
10 33 cigarettes, vehicles, and property seized, remaining in the
10 34 possession or custody of the department, sheriff or other
10 35 officer for forfeiture or other disposition as provided by
11 1 law, are not subject to replevin.
11 2 4. In the event final judgment is rendered in the
11 3 forfeiture proceedings aforesaid, maintaining the seizure, and
11 4 declaring and perfecting the forfeiture of said seized
11 5 property, the court shall order and decree the sale thereof of
11 6 the seized property, other than the counterfeit cigarettes, to
11 7 the highest bidder, by the sheriff at public auction in the
11 8 county of seizure after notice is given in the manner provided
11 9 in the case of the sale of personal property under execution,
11 10 and the proceeds of such sale, less expense of seizure and
11 11 court costs, shall be paid into the state treasury.
11 12 Counterfeit cigarettes shall be destroyed or disposed of in a
11 13 manner determined by the director.
11 14 5. In the event the cigarettes seized hereunder and sought
11 15 to be sold upon forfeiture shall be are unstamped, the
11 16 cigarettes shall be sold by the director or the director's
11 17 designee to the highest bidder among the licensed permitted
11 18 distributors in this state after written notice has been
11 19 mailed to all such distributors. If there is no bidder, or in
11 20 the opinion of the director the quantity of cigarettes to be
11 21 sold is insufficient or for any other reason such disposition
11 22 of the cigarettes is impractical, the cigarettes shall be
11 23 destroyed or disposed of in a manner as determined by the
11 24 director. The proceeds of such from the sales shall be paid
11 25 into the state treasury.
11 26 Sec. 29. Section 453A.36, Code 2003, is amended by adding
11 27 the following new subsection:
11 28 NEW SUBSECTION. 9. a. It is unlawful for a person to
11 29 ship or import into this state or to offer for sale, sell,
11 30 distribute, transport, or possess counterfeit cigarettes,
11 31 knowing such cigarettes are counterfeit cigarettes or having
11 32 reasonable cause to believe that such cigarettes are
11 33 counterfeit cigarettes.
11 34 b. For purposes of this subsection and section 453A.32,
11 35 "counterfeit cigarettes" means cigarettes, packages of
12 1 cigarettes, cartons of cigarettes or other containers of
12 2 cigarettes with a label, trademark, service mark, trade name,
12 3 device, design, or word adopted or used by a cigarette
12 4 manufacturer to identify its product that is false or used
12 5 without authority of the cigarette manufacturer.
12 6 Sec. 30. Section 453A.38, Code 2003, is amended to read as
12 7 follows:
12 8 453A.38 COUNTERFEITING AND PREVIOUSLY USED STAMPS.
12 9 Any person who shall print, engrave, make, issue, sell, or
12 10 circulate, or shall possess or have in the person's possession
12 11 with intent to use, sell, circulate, or pass, any counterfeit
12 12 stamp or previously used stamp, or who shall use, or consent
12 13 to the use of, any counterfeit stamp or previously used stamp
12 14 in connection with the sale, or offering for sale, of any
12 15 cigarettes, or who shall place, or cause to be placed, on any
12 16 individual package of cigarettes, any counterfeit stamp or
12 17 previously used stamp, shall be guilty of an aggravated
12 18 misdemeanor. A person in violation of this section shall also
12 19 be subject to the penalty provided in section 453A.31,
12 20 subsection 1.
12 21 Sec. 31. Section 453A.45, subsection 5, unnumbered
12 22 paragraph 2, Code 2003, is amended to read as follows:
12 23 Such report shall be made on forms provided by the director
12 24 or the director may require by rule that the report be filed
12 25 by electronic transmission.
12 26 Sec. 32. Section 453A.46, Code 2003, is amended by adding
12 27 the following new subsection:
12 28 NEW SUBSECTION. 7. The director may require by rule that
12 29 reports be filed by electronic transmission.
12 30 Sec. 33. Section 453C.1, subsection 10, Code 2003, is
12 31 amended to read as follows:
12 32 10. "Units sold" means the number of individual cigarettes
12 33 sold in the state by the applicable tobacco product
12 34 manufacturer, whether directly or through a distributor,
12 35 retailer, or similar intermediary or intermediaries, during
13 1 the year in question, as measured by excise taxes collected by
13 2 the state on packs or roll=your=own tobacco containers bearing
13 3 the excise tax stamp of the state. The department of revenue
13 4 and finance shall adopt rules as are necessary to ascertain
13 5 the amount of state excise tax paid on the cigarettes of such
13 6 tobacco product manufacturer for each year.
13 7 Sec. 34. Section 453C.2, subsection 2, paragraph b,
13 8 subparagraph (2), Code 2003, is amended to read as follows:
13 9 (2) To the extent that a tobacco product manufacturer
13 10 establishes that the amount the manufacturer was required to
13 11 place into escrow on account of units sold in the state in a
13 12 particular year was greater than the state's allocable share
13 13 of the total payments that such manufacturer would have been
13 14 required to make in that year under the master settlement
13 15 agreement the master settlement agreement payments, as
13 16 determined pursuant to section IX(i) of that agreement
13 17 including after final determination of all adjustments, that
13 18 such manufacturer would have been required to make on account
13 19 of such units sold had such manufacturer been a participating
13 20 manufacturer, as such payments are determined pursuant to
13 21 section IX(i)(2) of the master settlement agreement and before
13 22 any of the adjustments or offsets described in section
13 23 IX(i)(3) of that agreement other than the inflation
13 24 adjustment, the excess shall be released from escrow and
13 25 revert back to such tobacco product manufacturer.
13 26 Sec. 35. SEVERABILITY.
13 27 1. If this entire Act or any portion of section 453C.2,
13 28 subsection 2, paragraph "b", subparagraph (2), as amended in
13 29 this Act, is held by a court of competent jurisdiction to be
13 30 unconstitutional, section 453C.2, subsection 2, paragraph "b",
13 31 subparagraph (2), is repealed in its entirety.
13 32 2. If section 453C.2, subsection 2, paragraph "b",
13 33 subparagraph (2), is repealed pursuant to subsection 1 and a
13 34 court of competent jurisdiction subsequently finds that
13 35 section 453C.2, subsection 2, paragraph "b", is
14 1 unconstitutional due to such repeal, section 453C.2,
14 2 subsection 2, paragraph "b", subparagraph (2), Code 2003,
14 3 shall be restored.
14 4 3. Any holding of unconstitutionality or any repeal of
14 5 section 453C.2, subsection 2, paragraph "b", subparagraph (2),
14 6 as amended in this Act, or of section 453C.2, subsection 2,
14 7 paragraph "b", subparagraph (2), Code 2003, shall not affect,
14 8 impair, or invalidate any other portion of section 453C.2 or
14 9 the application of that section to any other person or
14 10 circumstance, and the remaining portions of section 453C.2,
14 11 shall continue in full force and effect.
14 12 Sec. 36. Section 518.18, unnumbered paragraph 2, Code
14 13 2003, is amended to read as follows:
14 14 1. Two The applicable percent of the gross amount of
14 15 premiums received during the preceding calendar year, after
14 16 deducting the amount returned upon the canceled policies,
14 17 certificates, and rejected applications; and after deducting
14 18 premiums paid for windstorm or hail reinsurance on properties
14 19 specifically reinsured; provided, however, that. However, the
14 20 reinsurer of such windstorm or hail risks shall pay two the
14 21 applicable percent of the gross amount of reinsurance premiums
14 22 received upon such risks after deducting the amounts returned
14 23 upon canceled policies, certificates, and rejected
14 24 applications. For purposes of this section, "applicable
14 25 percent" means the same as specified in section 432.1,
14 26 subsection 4.
14 27 2. Except as provided in subsection 3, the premium tax
14 28 shall be paid on or before March 1 of the year following the
14 29 calendar year for which the tax is due. The commissioner of
14 30 insurance may suspend the certificate of authority of a county
14 31 mutual insurance association that fails to pay its premium tax
14 32 on or before the due date.
14 33 3. a. Each county mutual insurance association
14 34 transacting business in this state whose Iowa premium tax
14 35 liability for the preceding calendar year was one thousand
15 1 dollars or more shall remit on or before June 1, on a
15 2 prepayment basis, an amount equal to one=half of the premium
15 3 tax liability for the preceding calendar year.
15 4 b. In addition to the prepayment amount in paragraph "a",
15 5 each association shall remit on or before June 30, on a
15 6 prepayment basis, an additional amount equal to the following
15 7 percent of the premium tax liability for the preceding
15 8 calendar year as follows:
15 9 (1) For prepayment in the 2003 and 2004 calendar years,
15 10 eleven percent.
15 11 (2) For prepayment in the 2005 calendar year, twenty=six
15 12 percent.
15 13 (3) For prepayment in the 2006 and subsequent calendar
15 14 years, fifty percent.
15 15 c. The sums prepaid by a county mutual insurance
15 16 association under this subsection shall be allowed as credits
15 17 against its premium tax liability for the calendar year during
15 18 which the payments are made. If a prepayment made under this
15 19 subsection exceeds the annual premium tax liability, the
15 20 excess shall be allowed as a credit against subsequent
15 21 prepayment or tax liabilities. The commissioner of insurance
15 22 may suspend the certificate of authority of an association
15 23 that fails to make a prepayment on or before the due date.
15 24 Sec. 37. Section 518A.35, Code 2003, is amended to read as
15 25 follows:
15 26 518A.35 ANNUAL TAX.
15 27 1. A state mutual insurance association doing business
15 28 under this chapter shall on or before the first day of March,
15 29 each year, pay to the director of revenue and finance, or a
15 30 depository designated by the director, a sum equivalent to two
15 31 the applicable percent of the gross receipts from premiums and
15 32 fees for business done within the state, including all
15 33 insurance upon property situated in the state without
15 34 including or deducting any amounts received or paid for
15 35 reinsurance. However, a company reinsuring windstorm or hail
16 1 risks written by county mutual insurance associations is
16 2 required to pay a two the applicable percent tax on the gross
16 3 amount of reinsurance premiums received upon such risks, but
16 4 after deducting the amount returned upon canceled policies and
16 5 rejected applications covering property situated within the
16 6 state, and dividends returned to policyholders on property
16 7 situated within the state. For purposes of this section,
16 8 "applicable percent" means the same as specified in section
16 9 432.1, subsection 4.
16 10 2. Except as provided in subsection 3, the premium tax
16 11 shall be paid on or before March 1 of the year following the
16 12 calendar year for which the tax is due. The commissioner of
16 13 insurance may suspend the certificate of authority of a state
16 14 mutual insurance association that fails to pay its premium tax
16 15 on or before the due date.
16 16 3. a. Each state mutual insurance association transacting
16 17 business in this state whose Iowa premium tax liability for
16 18 the preceding calendar year was one thousand dollars or more
16 19 shall remit on or before June 1, on a prepayment basis, an
16 20 amount equal to one=half of the premium tax liability for the
16 21 preceding calendar year.
16 22 b. In addition to the prepayment amount in paragraph "a",
16 23 each association shall remit on or before June 30, on a
16 24 prepayment basis, an additional amount equal to the following
16 25 percent of the premium tax liability for the preceding
16 26 calendar year as follows:
16 27 (1) For prepayment in the 2003 and 2004 calendar years,
16 28 eleven percent.
16 29 (2) For prepayment in the 2005 calendar year, twenty=six
16 30 percent.
16 31 (3) For prepayment in the 2006 and subsequent calendar
16 32 years, fifty percent.
16 33 c. The sums prepaid by a state mutual insurance
16 34 association under this subsection shall be allowed as credits
16 35 against its premium tax liability for the calendar year during
17 1 which the payments are made. If a prepayment made under this
17 2 subsection exceeds the annual premium tax liability, the
17 3 excess shall be allowed as a credit against subsequent
17 4 prepayment or tax liabilities. The commissioner of insurance
17 5 may suspend the certificate of authority of an association
17 6 that fails to make a prepayment on or before the due date.
17 7 Sec. 38. GUARANTEE OF REPLACEMENT FUNDS. The revaluation
17 8 of all industrial machinery, equipment, and computers
17 9 authorized in section 427B.19B, Code 2003, as a result of the
17 10 insufficient funding of the industrial machinery, equipment
17 11 and computers property tax replacement fund for the fiscal
17 12 year beginning July 1, 2002, is void and taxes payable in the
17 13 fiscal year beginning July 1, 2003, shall not be levied on the
17 14 amount of such revaluation.
17 15 Sec. 39. Section 427B.19B, Code 2003, is repealed.
17 16 Sec. 40. EFFECTIVE AND RETROACTIVE APPLICABILITY
17 17 PROVISION.
17 18 1. Sections 1 through 5 of this Act, amending sections
17 19 15E.42, 15E.43, 15E.45, and 15E.51, apply retroactively to
17 20 January 1, 2002, for tax years beginning on or after that
17 21 date.
17 22 2. Sections 8 and 9 of this Act, amending section 422.9,
17 23 apply retroactively to January 1, 2003, for tax years
17 24 beginning on or after that date.
17 25 3. Sections 33, 34, and 35 of this Act, amending sections
17 26 453C.1 and 453C.2 and relating to severability, being deemed
17 27 of immediate importance, take effect upon enactment.
17 28 4. Sections 36 and 37 of this Act, amending sections
17 29 518.18 and 518A.35, being deemed of immediate importance, take
17 30 effect upon enactment.
17 31 5. Section 38 of this Act that voids the revaluation of
17 32 machinery, equipment, and computers, being deemed of immediate
17 33 importance, takes effect upon enactment.
17 34 EXPLANATION
17 35 Code sections 15E.42 and 15E.43(1), paragraph "a", are
18 1 amended to add individuals receiving income from a revocable
18 2 trust which invests in a qualified business to qualify for a
18 3 tax credit for an equity investment in a qualifying business.
18 4 Code section 15E.43(1) is amended by adding a new paragraph
18 5 that provides that an individual who dies before redeeming the
18 6 entire investment tax credit for an equity investment in a
18 7 qualifying business or community=based seed capital fund can
18 8 claim the remaining credit on the decedent's final income tax
18 9 return.
18 10 Code section 15E.45 is amended to provide that since
18 11 investors in a community=based seed capital fund are not
18 12 restricted to individual taxpayers, the reference to
18 13 individual investors should be stricken.
18 14 Code section 15E.51 is amended to provide that an investor
18 15 who makes separate investments into a community=based seed
18 16 capital fund and a venture capital fund should be entitled to
18 17 claim a tax credit for both investments.
18 18 The amendments to Code sections 15E.42, 15E.43, 15E.45, and
18 19 15E.51 are effective upon enactment and apply retroactively to
18 20 January 1, 2002.
18 21 Code sections 99E.10(1), 422.43(2), and 422.45 are amended
18 22 to exempt the sale of lottery tickets and shares from the
18 23 state sales and use taxes.
18 24 Code sections 422.9(1) and (2)(b) are amended to provide
18 25 that no adjustment for federal income tax is allowed for a tax
18 26 year in which an Iowa return was not required to be filed.
18 27 This change is applicable beginning with the 2003 tax year.
18 28 Code section 422.42(19) is amended to define "employer" in
18 29 this subsection for purposes of the state sales tax or
18 30 services as the person who actually pays the wages of an
18 31 employee.
18 32 Code section 422.45 is amended to add a new subsection 64
18 33 that exempts from the sales and use taxes the access or
18 34 service charges assessed by financial institutions on
18 35 noncustomer point of sale or noncustomer use of automated
19 1 teller machines.
19 2 Code section 422A.1 is amended to provide that local hotel
19 3 and motel tax shall be imposed on January 1 and July 1 only
19 4 and terminated on June 30 and December 31 only.
19 5 Code section 423.4 is amended to exempt from the use tax
19 6 the transfer of vehicles subject to registration from one
19 7 leasing corporation to another if both corporations are part
19 8 of a controlled group for federal income tax purposes.
19 9 Code section 425.1(4) is amended to rescind the requirement
19 10 that the department estimate the amount of homestead tax
19 11 credits payable to the counties each year.
19 12 Code section 441.8 is amended to permit the director of
19 13 revenue and finance to extend for sufficient reason the period
19 14 of time for an assessor or deputy assessor to meet continuing
19 15 education requirements.
19 16 Code section 450.37(2)(a) is amended to extend from 30 to
19 17 60 days the period of time the director has to request an
19 18 appraisal after an inheritance tax return is filed.
19 19 Code section 452A.2 is amended to add a definition for
19 20 "nonterminal storage facility" in the motor fuel tax statute.
19 21 Code section 452A.2(24) is amended to state that for fuel tax
19 22 purposes, methanol is not a special fuel or motor fuel unless
19 23 blended for use in diesel engines or for use in aircraft or a
19 24 motor vehicle.
19 25 Code sections 452A.10 and 452A.62 are amended to require
19 26 nonterminal storage facilities to maintain the same records as
19 27 terminals.
19 28 Code section 452A.85 is amended to provide that the
19 29 inventory tax does not apply unless the increase in the fuel
19 30 tax rate is more than one=half cent per gallon.
19 31 Code section 453A.11 is amended to impose a penalty against
19 32 any person found to have altered a cigarette tax stamp.
19 33 Code section 453A.15 is amended to give the director the
19 34 authority to require that cigarette reports be filed by
19 35 electronic transmission.
20 1 Code section 453A.18 authorizes the department to furnish
20 2 permit holders with electronic forms in lieu of paper forms.
20 3 Code sections 453A.32(1) and (5) are amended to strengthen
20 4 the language relating to the seizure and forfeiture of
20 5 unstamped cigarettes and to reflect that cigarette
20 6 distributors receive a permit, not a license, to do business.
20 7 Code sections 453A.32 and 453A.36 are amended to make it
20 8 unlawful to ship or import into Iowa or sell, distribute, or
20 9 possess counterfeit cigarettes and allow for the confiscation
20 10 and destruction of those cigarettes. "Counterfeit cigarettes"
20 11 are cigarettes that are marked in such a manner that would
20 12 lead someone to believe the cigarettes were of a specific
20 13 known brand or manufacturer.
20 14 Code section 453A.38 is amended to subject counterfeiters
20 15 to a civil penalty in addition to the current criminal
20 16 penalty.
20 17 Code section 453A.45(5) is amended to give the director the
20 18 authority to require by rule that tobacco transportation
20 19 reports be filed electronically.
20 20 Code section 453A.46 is amended to give the director the
20 21 authority to require by rule that distributors file tobacco
20 22 reports electronically.
20 23 Code sections 453C.1 and 453C.2 are amended to allow
20 24 cigarette manufacturers that are not members of the master
20 25 settlement agreement and that are required to place moneys
20 26 into escrow on account of cigarettes to be sold in the state
20 27 to receive a refund of any excess escrow amounts remitting
20 28 because of fewer cigarettes sold than anticipated. The
20 29 amendments take effect upon enactment.
20 30 Code sections 518.18 and 518A.35 are amended to reduce the
20 31 premiums tax from 2 percent to 1 percent over four years and
20 32 increase the prepayment of such tax for county and state
20 33 mutual insurance associations. These amendments are effective
20 34 upon enactment.
20 35 The bill provides that the revaluation of machinery,
21 1 equipment, and computers authorized in Code section 427B.19B,
21 2 when insufficient replacement moneys are provided by the
21 3 state, is void and taxes payable based upon that revaluation
21 4 during the fiscal year beginning July 1, 2003, shall not be
21 5 levied or collected. This provision takes effect upon
21 6 enactment and Code section 427B.19B is repealed.
21 7 LSB 2570HV 80
21 8 mg/pj/5