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