House Study Bill 635
SENATE/HOUSE FILE
BY (PROPOSED DEPARTMENT
OF MANAGEMENT BILL)
Passed Senate, Date Passed House, Date
Vote: Ayes Nays Vote: Ayes Nays
Approved
A BILL FOR
1 An Act relating to utility replacement taxes by redefining major
2 additions for purposes of allocating replacement taxes to
3 taxing districts, requiring certain taxpayers to report
4 estimated replacement taxes, and changing or establishing
5 certain reporting dates and including effective and
6 retroactive applicability date provisions.
7 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
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PAG LIN
1 1 Section 1. Section 437A.3, subsection 18, Code Supplement
1 2 2003, is amended to read as follows:
1 3 18. "Major addition" means any either of the following:
1 4 a. Any acquisition on or after January 1, 1998, by a
1 5 taxpayer, by transfer of ownership, self=construction, or
1 6 capital lease of any interest in any of the following:
1 7 a. (1) A building in this state where the acquisition cost
1 8 of all interests acquired exceeds ten million dollars.
1 9 b. (2) An electric power generating plant where the
1 10 acquisition cost of all interests acquired exceeds ten million
1 11 dollars. For purposes of this paragraph, "electric power
1 12 generating plant" means each nameplate rated electric power
1 13 generating plant owned solely or jointly by any person or
1 14 electric power facility financed under the provisions of
1 15 chapter 28F or 476A in which electrical energy is produced
1 16 from other forms of energy, including all equipment used in
1 17 the production of such energy through its step=up transformer.
1 18 c. (3) Natural gas operating property within a local
1 19 taxing district where the acquisition cost of all interests
1 20 acquired exceeds one million dollars.
1 21 d. (4) Any property described in section 437A.16 in this
1 22 state acquired by a person not previously subject to taxation
1 23 under this chapter.
1 24 b. Any acquisition on or after January 1, 2004, by a
1 25 taxpayer, by transfer of ownership, self=construction, or
1 26 capital lease of any interest in electric transmission
1 27 operating property within a local taxing district where the
1 28 acquisition cost of all interests acquired exceeds one million
1 29 dollars.
1 30 For purposes of this chapter, the acquisition cost of an
1 31 asset acquired by capital lease is its capitalized value
1 32 determined under generally accepted accounting principles.
1 33 Sec. 2. Section 437A.15, subsection 3, paragraph e, Code
1 34 Supplement 2003, is amended to read as follows:
1 35 e. Notwithstanding the provisions of this section, if
2 1 during the tax year a person who was not a taxpayer during the
2 2 prior tax year acquires a new major addition, as defined in
2 3 section 437A.3, subsection 18, paragraph "d" "a", subparagraph
2 4 (4), the replacement tax associated with that major addition
2 5 shall be allocated, for that tax year, under this section in
2 6 accordance with the general allocating formula on the basis of
2 7 the general property tax equivalents established under section
2 8 437A.15, except that the levy rates established and reported
2 9 to the department of management on or before June 30 following
2 10 the tax year in which the major addition was acquired shall be
2 11 applied to the prorated assessed value of the major addition
2 12 and provided that section 437A.19, subsection 2, paragraph
2 13 "b", subparagraph (2), is in any event applicable. For
2 14 purposes of this paragraph, "prorated assessed value of the
2 15 major addition" means the assessed value of the major addition
2 16 as of January 1 of the year following the tax year in which
2 17 the major addition was acquired multiplied by the percentage
2 18 derived by dividing the number of months that the major
2 19 addition existed during the tax year by twelve, counting any
2 20 portion of a month as a full month.
2 21 Sec. 3. Section 437A.19, subsection 2, paragraph f,
2 22 unnumbered paragraph 5, Code Supplement 2003, is amended to
2 23 read as follows:
2 24 In addition to reporting the assessed values as described
2 25 in this subsection, the director, on or before October 31,
2 26 2003, in the case of January 1, 2003, values, and on or before
2 27 August 31 of each subsequent assessment year, shall also
2 28 report to the department of management and to the auditor of
2 29 each county the taxable value of taxpayer property as of
2 30 January 1 of such assessment year for each local taxing
2 31 district. For purposes of this chapter, "taxable value" means
2 32 the value for all property subject to the replacement tax
2 33 annually determined by the director, by dividing the estimated
2 34 annual replacement tax liability for that property by the
2 35 prior year's consolidated taxing district rate for the taxing
3 1 district where that property is located, then multiplying the
3 2 quotient by one thousand. The prior year's replacement tax
3 3 amounts for that property shall be used to estimate the
3 4 current tax year's taxable value for that property. If
3 5 property not subject to any threshold recalculation is
3 6 generating replacement tax for the first time, or if a
3 7 taxpayer's replacement tax will not be changed by any
3 8 threshold recalculation and the taxpayer believes that the
3 9 replacement tax will vary more than ten percent from the
3 10 previous tax year, the taxpayer shall report to the director
3 11 by July 15 of the current calendar year, on forms prescribed
3 12 by the director, the estimated replacement tax liability that
3 13 will be attributable to that property for the current tax
3 14 year. A taxpayer who paid more than five hundred thousand
3 15 dollars in replacement tax in the previous tax year or who
3 16 believes their replacement tax liability will vary more than
3 17 ten percent from the previous tax year shall report to the
3 18 director by October 1 of the current calendar year, on forms
3 19 prescribed by the director, the estimated replacement tax
3 20 liability that will be attributable to all of the taxpayer's
3 21 property subject to replacement tax for the current tax year.
3 22 The department shall utilize the estimated replacement tax
3 23 liability as reported by the taxpayer or the taxpayer's prior
3 24 year's replacement tax amounts to estimate the current tax
3 25 year's taxable value for that property. Furthermore, a
3 26 taxpayer who has a new major addition of operating property
3 27 which is put into service for the first time in the current
3 28 calendar year shall report to the director by October 1 of the
3 29 current calendar year, or at the time the major addition is
3 30 put into service, whichever time is later, on forms prescribed
3 31 by the director, the cost of the major addition and, if not
3 32 previously reported, shall report the estimated replacement
3 33 taxes which that asset will generate in the current calendar
3 34 year. For the purposes of computing the taxable value of
3 35 property in a taxing district, the taxing district's share of
4 1 the estimated replacement tax liability shall be the taxing
4 2 district's percentage share of the "assessed value allocated
4 3 by property tax equivalent" multiplied by the total estimated
4 4 replacement tax. "Assessed value allocated by property tax
4 5 equivalent" shall be determined by dividing the taxpayer's
4 6 current year assessed valuation in a taxing district by one
4 7 thousand, and then multiplying by the prior year's
4 8 consolidated tax rate.
4 9 Sec. 4. EFFECTIVE AND RETROACTIVE APPLICABILITY DATES.
4 10 This Act, being deemed of immediate importance, takes effect
4 11 upon enactment and applies retroactively to January 1, 2004.
4 12 EXPLANATION
4 13 This bill amends Code section 437A.3, subsection 18, the
4 14 definition of "major addition", to include acquisition of
4 15 electric transmission operating property. The provision would
4 16 allocate transmission line additions of more than $1 million
4 17 to particular taxing districts. This addresses the current
4 18 situation where it is possible for a taxing district to
4 19 receive little if any replacement tax even with the physical
4 20 presence of a considerable amount of transmission line
4 21 property.
4 22 The bill also amends Code section 437A.19, subsection 2,
4 23 paragraph "f", so as to require gas and electric utility
4 24 companies that paid more than $500,000 in replacement taxes to
4 25 report estimated replacement taxes to the department of
4 26 revenue by October 1. Companies not meeting the threshold,
4 27 but expecting a 10 percent replacement tax variance from the
4 28 previous tax year, would also have to report by October 1
4 29 rather than the current July 15 deadline. This amendment also
4 30 requires gas and electric utility companies to report midyear
4 31 additions of operating property, along with associated
4 32 estimated replacement taxes, to the department of revenue by
4 33 October 1, or the time the asset is put into service,
4 34 whichever is later. Finally, the date that the department of
4 35 revenue certifies gas and electric utility valuations to
5 1 county auditors is changed from August 31 to October 31. This
5 2 is necessary to accommodate the two preceding reporting date
5 3 changes.
5 4 The bill takes effect upon enactment and applies
5 5 retroactively to January 1, 2004.
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