House File 703HOUSE FILE BY QUIRK Passed House, Date Passed Senate, Date Vote: Ayes Nays Vote: Ayes Nays Approved A BILL FOR 1 An Act relating to assessment of telecommunications company 2 property for purposes of property taxation, and providing 3 effective and retroactive applicability dates. 4 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 5 TLSB 2161HH 82 6 rn/je/5 PAG LIN 1 1 Section 1. Section 427A.1, Code 2007, is amended by adding 1 2 the following new subsection: 1 3 NEW SUBSECTION. 6A. Notwithstanding the other provisions 1 4 of this section, property described in this section shall not 1 5 be assessed and taxed as real property to the extent it 1 6 consists of cable, wire, conduit, vaults, switches, or other 1 7 equipment or fixtures used primarily to provide or facilitate 1 8 the electronic transmission, conveyance, or routing of voice, 1 9 data, audio, video, or any other information or signal to a 1 10 point, or between or among points, regardless of the content 1 11 or technology utilized and regardless of whether the property 1 12 would otherwise be considered "attached" to the real property. 1 13 Sec. 2. Section 427B.17, subsection 5, unnumbered 1 14 paragraph 1, Code 2007, is amended to read as follows: 1 15 This section shall not apply to property assessed by the 1 16 department of revenue pursuant to sections 428.24 to 428.29, 1 17 or chapters 433,434, 437, 437A, and 438, and such property 1 18 shall not receive the benefits of this section. 1 19 Sec. 3. Section 433.4, Code 2007, is amended to read as 1 20 follows: 1 21 433.4 ASSESSMENT. 1 22 The director of revenue shall on the second Monday in July 1 23 of each year, proceed to find the actual value of the property 1 24 of these companies in this state, taking into consideration 1 25 the information obtained from the statements required, and any 1 26 further information the director can obtain,usingand shall 1 27 determine thesame as a means for determining the actual cash1 28 value of the property of these companies within this state in 1 29 the same manner as all other property assessed as commercial 1 30 property by the local assessor under chapters 427, 427A, 427B, 1 31 428, and 441; provided that such property that is not 1 32 otherwise exempt shall be valued at an amount no greater than 1 33 the cost of such property, reduced by accounting depreciation 1 34 and by any appropriate adjustments for functional and economic 1 35 obsolescence, and in determining said values the director 2 1 shall not use any minimum amount or percentage of original 2 2 cost as the base or minimum value for any item or class of 2 3 property, regardless of whether the property is still in 2 4 service.The director shall also take into consideration the 2 5 valuation of all property of these companies, including 2 6 franchises and the use of the property in connection with 2 7 lines outside the state, and making these deductions as may be 2 8 necessary on account of extra value of property outside the 2 9 state as compared with the value of property in the state, in 2 10 order that the actual cash value of the property of the 2 11 company within this state may be ascertained. The assessment 2 12 shall include all property of every kind and character 2 13 whatsoever, real, personal, or mixed, used by the companies in 2 14 the transaction of telegraph and telephone business; and the 2 15 property so included in the assessment shall not be taxed in 2 16 any other manner than as provided in this chapter.2 17 Sec. 4. Section 476.1D, subsection 10, unnumbered 2 18 paragraph 2, Code 2007, is amended by striking the unnumbered 2 19 paragraph. 2 20 Sec. 5. EFFECTIVE AND RETROACTIVE APPLICABILITY DATES. 2 21 This Act, being deemed of immediate importance, takes effect 2 22 upon enactment and applies retroactively to assessment years 2 23 beginning on or after January 1, 2007. 2 24 EXPLANATION 2 25 This bill relates to the manner in which telecommunications 2 26 company property is taxed. 2 27 The assessment provisions of Code section 433.4 currently 2 28 provide that in ascertaining the actual value of 2 29 telecommunications company property the director of revenue 2 30 shall include all property of every kind and character 2 31 whatsoever, real, personal, or mixed, used by the company in 2 32 the transaction of telegraph and telephone business. The bill 2 33 modifies the Code section to provide that the value shall be 2 34 determined in the same manner as all other property assessed 2 35 as commercial property by the local assessor. The bill 3 1 provides, however, that telecommunications company property 3 2 that is not otherwise exempt shall be valued at an amount no 3 3 greater than the cost of the property reduced by accounting 3 4 depreciation with appropriate adjustments for functional and 3 5 economic obsolescence, and that in determining the value the 3 6 director shall not use any minimum amount or percentage of 3 7 original cost as the base or minimum value for any item or 3 8 class of property, regardless of whether the property is still 3 9 in service. 3 10 The bill also provides that telecommunications company 3 11 property shall not be taxed as real property to the extent it 3 12 consists of cable, wire, conduit, vaults, switches, or other 3 13 equipment or fixtures used primarily to provide or facilitate 3 14 the electronic transmission, conveyance, or routing of voice, 3 15 data, audio, video, or any other information or signal to a 3 16 point, or between or among points, regardless of the content 3 17 or technology utilized and regardless of whether the property 3 18 would otherwise be considered "attached" to the real property. 3 19 The bill additionally provides that telecommunications 3 20 company property classified as machinery used in 3 21 manufacturing, and computers and related equipment, currently 3 22 not subject to special valuation provisions conferring 3 23 property tax exempt status, shall be made subject to those 3 24 provisions and considered either exempt from property taxation 3 25 or valued at 0 percent of their net acquisition cost. 3 26 The bill makes conforming changes to additional Code 3 27 sections consistent with the bill's provisions. 3 28 The bill takes effect upon enactment and applies 3 29 retroactively to assessment years beginning on or after 3 30 January 1, 2007. 3 31 LSB 2161HH 82 3 32 rn:sc/je/5