House File 2776 - Introduced
HOUSE FILE
BY COMMITTEE ON WAYS AND MEANS
(SUCCESSOR TO HSB 655)
Passed House, Date Passed Senate, Date
Vote: Ayes Nays Vote: Ayes Nays
Approved
A BILL FOR
1 An Act exempting from sales and use taxes certain equipment used
2 in transmitting telecommunications services.
3 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
4 TLSB 5894HV 81
5 mg/cf/24
PAG LIN
1 1 Section 1. Section 423.3, Code Supplement 2005, is amended
1 2 by adding the following new subsection:
1 3 NEW SUBSECTION. 47A. a. Subject to paragraph "b", the
1 4 sales price from the sale or rental of central office
1 5 equipment or transmission equipment primarily used by local
1 6 exchange carriers and competitive local exchange service
1 7 providers as defined in section 476.96; by franchised cable
1 8 television operators, mutual companies, municipal utilities,
1 9 cooperatives, and companies furnishing communications services
1 10 which are not subject to rate regulation as provided in
1 11 chapter 476; by long distance companies as defined in section
1 12 477.10; or for a commercial mobile radio service as defined in
1 13 47 C.F.R. } 20.3 in the furnishing of telecommunications
1 14 services on a commercial basis. For the purposes of this
1 15 subsection, "central office equipment" means equipment
1 16 utilized in the initiating, processing, amplifying, switching,
1 17 or monitoring of telecommunications services. "Transmission
1 18 equipment" means equipment utilized in the process of sending
1 19 information from one location to another location. "Central
1 20 office equipment" and "transmission equipment" also include
1 21 ancillary equipment and apparatus which support, regulate,
1 22 control, repair, test, or enable such equipment to accomplish
1 23 its function.
1 24 b. The exemption in this subsection shall be phased in by
1 25 means of tax refunds as follows:
1 26 (1) If the sale or rental occurs on or after July 1, 2006,
1 27 through June 30, 2007, one=seventh of the state tax on the
1 28 sales price shall be refunded.
1 29 (2) If the sale or rental occurs on or after July 1, 2007,
1 30 through June 30, 2008, two=sevenths of the state tax on the
1 31 sales price shall be refunded.
1 32 (3) If the sale or rental occurs on or after July 1, 2008,
1 33 through June 30, 2009, three=sevenths of the state tax on the
1 34 sales price shall be refunded.
1 35 (4) If the sale or rental occurs on or after July 1, 2009,
2 1 through June 30, 2010, four=sevenths of the state tax on the
2 2 sales price shall be refunded.
2 3 (5) If the sale or rental occurs on or after July 1, 2010,
2 4 through June 30, 2011, five=sevenths of the state tax on the
2 5 sales price shall be refunded.
2 6 (6) If the sale or rental occurs on or after July 1, 2011,
2 7 through June 30, 2012, six=sevenths of the state tax on the
2 8 sales price shall be refunded.
2 9 (7) If the sale or rental occurs on or after July 1, 2012,
2 10 the sales price is exempt and no payment of tax and subsequent
2 11 refund are required.
2 12 c. For sales or rentals occurring on or after July 1,
2 13 2006, through June 30, 2012, a refund of the tax paid as
2 14 provided in paragraph "b", subparagraph (1), (2), (3), (4),
2 15 (5), or (6), must be applied for, not later than six months
2 16 after the month in which the sale or rental occurred, in the
2 17 manner and on the forms provided by the department. Refunds
2 18 shall only be of the state tax collected. Refunds authorized
2 19 shall accrue interest at the rate in effect under section
2 20 421.7 from the first day of the second calendar month
2 21 following the date the refund claim is received by the
2 22 department.
2 23 EXPLANATION
2 24 This bill exempts from sales and use taxes beginning July
2 25 1, 2012, central office equipment and transmission equipment
2 26 sold or rented for use in transporting communications services
2 27 by local exchange carriers, competitive local exchange service
2 28 providers, certain franchised cable television operators,
2 29 mutual companies, cooperatives, and municipal utilities not
2 30 subject to rate regulation, long distance companies, and
2 31 commercial mobile radio services. From July 1, 2006, until
2 32 June 30, 2012, the taxes on such equipment are paid but a
2 33 refund may be applied for. The amount of the refund is one=
2 34 seventh of the tax for sales or rentals occurring in FY 2006=
2 35 2007. The refund increases each succeeding fiscal year by
3 1 another one=seventh of the tax paid.
3 2 The bill defines central office equipment as equipment used
3 3 in initiating, processing, amplifying, switching, or
3 4 monitoring of telecommunications services and any ancillary
3 5 equipment. Transmission equipment is defined as equipment
3 6 utilized in sending information and any ancillary equipment.
3 7 LSB 5894HV 81
3 8 mg:rj/cf/24