Senate File 596 - Introduced
SENATE FILE
BY COMMITTEE ON WAYS AND MEANS
(SUCCESSOR TO SSB 1075)
Passed Senate, Date Passed House, Date
Vote: Ayes Nays Vote: Ayes Nays
Approved
A BILL FOR
1 An Act relating to the policy and technical administration of the
2 tax and related laws by the department of revenue, including
3 administration of income, sales, use, cigarette, and tobacco
4 taxes, the administration and budgeting for tax increment
5 financing by cities and counties, and creating a reporting
6 committee, providing an effective date and providing for
7 retroactive applicability.
8 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
9 TLSB 1264SV 82
10 mg/je/5
PAG LIN
1 1 DIVISION I
1 2 TAX ADMINISTRATION
1 3 Section 1. Section 15E.44, subsection 1, Code 2007, is
1 4 amended to read as follows:
1 5 1. In order for an equity investment to qualify for a tax
1 6 credit, the business in which the equity investment is made
1 7 shall, within one hundred twenty days of the date of the first
1 8 investment, notify the board of the names, addresses, taxpayer
1 9 identification numbers, shares issued, consideration paid for
1 10 the shares, and the amount of any tax credits, of all
1 11 shareholders who may initially qualify for the tax credits,
1 12 and the earliest year in which the tax credits may be
1 13 redeemed. The list of shareholders who may qualify for the
1 14 tax credits shall be amended as new equity investments are
1 15 sold or as any information on the list shall change.
1 16 Sec. 2. Section 15E.45, subsection 3, paragraph a,
1 17 subparagraph (1), Code 2007, is amended to read as follows:
1 18 (1) The names, addresses, taxpayer identification numbers,
1 19 equity interests issued, consideration paid for the interests,
1 20 and the amount of any tax credits.
1 21 Sec. 3. Section 331.434, subsection 1, Code 2007, is
1 22 amended to read as follows:
1 23 1. The budget shall show the amount required for each
1 24 class of proposed expenditures, a comparison of the amounts
1 25 proposed to be expended with the amounts expended for like
1 26 purposes for the two preceding years, the revenues from
1 27 sources other than property taxation, a tax increment
1 28 financing budget including information required under section
1 29 384.16 for each urban renewal area established by the county,
1 30 and the amount to be raised by property taxation, in the
1 31 detail and form prescribed by the director of the department
1 32 of management.
1 33 Sec. 4. Section 384.16, subsection 1, Code 2007, is
1 34 amended by adding the following new paragraph:
1 35 NEW PARAGRAPH. d. A tax increment financing budget for
2 1 each urban renewal area established by the city.
2 2 Sec. 5. Section 384.16, subsection 1, unnumbered paragraph
2 3 2, Code 2007, is amended to read as follows:
2 4 A budget must show comparisons between the estimated
2 5 expenditures in each program in the following year, the latest
2 6 estimated expenditures in each program in the current year,
2 7 and the actual expenditures in each program from the annual
2 8 report as provided in section 384.22, or as corrected by a
2 9 subsequent audit report. Wherever practicable, as provided in
2 10 rules of the committee, a budget, including the tax increment
2 11 financing budget, must show comparisons between the levels of
2 12 service provided by each program as estimated for the
2 13 following year, and actual levels of service provided by each
2 14 program during the two preceding years. Wherever practicable,
2 15 the tax increment financing budget shall include estimated and
2 16 actual tax increment financing revenues and all estimated and
2 17 actual expenditures of the revenues, proceeds from debt and
2 18 all estimated and actual expenditures of the debt proceeds,
2 19 and identification of any entity receiving a direct payment of
2 20 taxes funded by tax increment financing revenues.
2 21 Sec. 6. Section 421.26, Code 2007, is amended to read as
2 22 follows:
2 23 421.26 PERSONAL LIABILITY FOR TAX DUE.
2 24 If a licensee or other person under section 452A.65, a
2 25 retailer or purchaser under chapter 423A, or 423B, or 423E, or
2 26 section 423.31 or 423.33, or a retailer or purchaser under
2 27 section 423.32, or a user under section 423.34, or permit
2 28 holder or licensee under section 453A.13, 453A.16, or 453A.44
2 29 fails to pay a tax under those sections when due, an officer
2 30 of a corporation or association, notwithstanding sections
2 31 490A.601 and 490A.602, a member or manager of a limited
2 32 liability company, or a partner of a partnership, having
2 33 control or supervision of or the authority for remitting the
2 34 tax payments and having a substantial legal or equitable
2 35 interest in the ownership of the corporation, association,
3 1 limited liability company, or partnership, who has
3 2 intentionally failed to pay the tax is personally liable for
3 3 the payment of the tax, interest, and penalty due and unpaid.
3 4 However, this section shall not apply to taxes on accounts
3 5 receivable. The dissolution of a corporation, association,
3 6 limited liability company, or partnership shall not discharge
3 7 a person's liability for failure to remit the tax due.
3 8 Sec. 7. Section 421.27, subsection 1, Code 2007, is
3 9 amended by adding the following new paragraph:
3 10 NEW PARAGRAPH. m. That an Iowa inheritance tax return is
3 11 filed for an estate within the later of nine months from the
3 12 date of death or sixty days from the filing of a disclaimer by
3 13 the beneficiary of the estate refusing to take the property or
3 14 right or interest in the property.
3 15 Sec. 8. Section 421.27, subsection 2, Code 2007, is
3 16 amended by adding the following new paragraph:
3 17 NEW PARAGRAPH. i. That an Iowa inheritance tax return is
3 18 filed for an estate within the later of nine months from the
3 19 date of death or sixty days from the filing of a disclaimer by
3 20 the beneficiary of the estate refusing to take the property or
3 21 right or interest in the property.
3 22 Sec. 9. Section 422.7, subsection 32, Code 2007, is
3 23 amended by adding the following new paragraph:
3 24 NEW PARAGRAPH. c. Add the amount resulting from a
3 25 withdrawal made by a taxpayer from the Iowa educational
3 26 savings plan trust for purposes other than the payment of
3 27 qualified education expenses to the extent previously deducted
3 28 as a contribution to the trust.
3 29 Sec. 10. Section 422.11S, subsection 6, paragraph d, Code
3 30 2007, is amended to read as follows:
3 31 d. Each school that is served by a school tuition
3 32 organization shall submit a participation form annually to the
3 33 department by October 15 November 1 providing the following
3 34 information:
3 35 (1) Certified enrollment as of the third Friday of
4 1 September October 1, or the first Monday in October if October
4 2 1 falls on a Saturday or Sunday.
4 3 (2) The school tuition organization that represents the
4 4 school. A school shall only be represented by one school
4 5 tuition organization.
4 6 Sec. 11. Section 422.11S, subsection 7, paragraph b,
4 7 unnumbered paragraph 1, Code 2007, is amended to read as
4 8 follows:
4 9 Each year by November 15 December 1, the department shall
4 10 authorize school tuition organizations to issue tax credit
4 11 certificates for the following tax year. However, for the tax
4 12 year beginning in the 2006 calendar year only, the department,
4 13 by September 1, 2006, shall authorize school tuition
4 14 organizations to issue tax credit certificates for the 2006
4 15 calendar tax year. For the tax year beginning in the 2006
4 16 calendar year only, each school served by a school tuition
4 17 organization shall submit a participation form to the
4 18 department by August 1, 2006, providing the certified
4 19 enrollment as of the third Friday of September 2005, along
4 20 with the school tuition organization that represents the
4 21 school. Tax credit certificates available for issue by each
4 22 school tuition organization shall be determined in the
4 23 following manner:
4 24 Sec. 12. Section 422.12E, unnumbered paragraph 2, Code
4 25 2007, is amended to read as follows:
4 26 If more checkoffs are enacted in the same session of the
4 27 general assembly than there is space for inclusion on the
4 28 individual tax return form, the earliest enacted checkoffs for
4 29 which there is space for inclusion on the return form shall be
4 30 included on the return form, and all other checkoffs enacted
4 31 during that session of the general assembly are repealed. If
4 32 more checkoffs are enacted in the same session of the general
4 33 assembly than there is space for inclusion on the individual
4 34 income tax form and the additional checkoffs are enacted on
4 35 the same day, the director shall determine which checkoffs
5 1 shall be included on the return form.
5 2 Sec. 13. Section 422.13, subsection 5, Code 2007, is
5 3 amended to read as follows:
5 4 5. Notwithstanding subsections 1 through 4 and sections
5 5 422.15 and 422.36, a partnership, a limited liability company
5 6 whose members are taxed on the company's income under
5 7 provisions of the Internal Revenue Code, trust, or corporation
5 8 whose stockholders are taxed on the corporation's income under
5 9 the provisions of the Internal Revenue Code may, not later
5 10 than the due date for filing its return for the taxable year,
5 11 including any extension thereof, elect to file a composite
5 12 return for the nonresident partners, members, beneficiaries,
5 13 or shareholders. Nonresident trusts or estates which are
5 14 partners, members, beneficiaries, or shareholders in
5 15 partnerships, limited liability companies, trusts, or S
5 16 corporations may also be included on a composite return. The
5 17 director may require that a composite return be filed under
5 18 the conditions deemed appropriate by the director. A
5 19 partnership, limited liability company, trust, or corporation
5 20 filing a composite return is liable for tax required to be
5 21 shown due on the return. All powers of the director and
5 22 requirements of the director apply to returns filed under this
5 23 subsection including, but not limited to, the provisions of
5 24 this division and division VI of this chapter.
5 25 Sec. 14. Section 422.35, subsection 17, Code 2007, is
5 26 amended to read as follows:
5 27 17. Subtract the amount of the employer social security
5 28 credit allowable for the tax year under section 45B of the
5 29 Internal Revenue Code to the extent that the credit increases
5 30 federal adjusted gross taxable income.
5 31 Sec. 15. Section 422.73, subsection 3, Code 2007, is
5 32 amended by striking the subsection.
5 33 Sec. 16. Section 422.75, Code 2007, is amended to read as
5 34 follows:
5 35 422.75 STATISTICS == PUBLICATION.
6 1 The department shall prepare and publish an annual report
6 2 which shall include statistics reasonably available, with
6 3 respect to the operation of this chapter, including amounts
6 4 collected, classification of taxpayers, and such other facts
6 5 as are deemed pertinent and valuable. The annual report shall
6 6 also include the reports and information required pursuant to
6 7 section 421.1, subsection 4, paragraph "e"; section 421.17,
6 8 subsection 13; section 421.17, subsection 27, paragraph "h";,
6 9 and section 421.60, subsection 2, paragraphs "i" and "l"; and
6 10 1997 Iowa Acts, ch. 211, section 22, subsection 5, paragraph
6 11 "a".
6 12 Sec. 17. Section 423.2, subsection 6, unnumbered paragraph
6 13 2, Code 2007, is amended to read as follows:
6 14 For the purposes of this subsection, "financial
6 15 institutions" means all national banks, federally chartered
6 16 savings and loan associations, federally chartered savings
6 17 banks, federally chartered credit unions, banks organized
6 18 under chapter 524, savings and loan associations and savings
6 19 banks organized under chapter 534, and credit unions organized
6 20 under chapter 533, and all banks, savings banks, credit
6 21 unions, and savings and loan associations chartered or
6 22 otherwise created under the laws of any state and doing
6 23 business in Iowa.
6 24 Sec. 18. Section 423.2, Code 2007, is amended by adding
6 25 the following new subsection:
6 26 NEW SUBSECTION. 9A. A tax of five percent is imposed upon
6 27 the sales price of audiovisual works, audio works, books,
6 28 computer software, or ring tones that are sold as digital
6 29 products and that are sold by subscription, digital code, or
6 30 in some other manner and delivered electronically for
6 31 temporary or permanent retention when sold to an individual
6 32 for the individual's own use and consumption.
6 33 For the purposes of this subsection:
6 34 a. "Audiovisual works" means a series of related images
6 35 which, when shown in succession, impart an impression of
7 1 motion, together with accompanying sounds, if any.
7 2 b. "Audio works" means works that result from the fixation
7 3 of a series of musical, spoken, or other sounds.
7 4 c. "Book" means a work which is generally recognized in
7 5 the ordinary and usual sense as a "book". "Book" does not
7 6 include newspapers, periodicals, databases, chat rooms, blogs,
7 7 or other similar products.
7 8 d. "Computer software" means the same as defined in
7 9 section 423.1.
7 10 e. "Delivered electronically" means delivered to or
7 11 received by the purchaser by means other than tangible storage
7 12 media.
7 13 f. "Digital code" means a code that provides a purchaser
7 14 with a right to obtain an item within a specified category of
7 15 selected digital products. A digital code may be obtained by
7 16 any means, including email or by tangible means regardless of
7 17 its designation as "song", "video code", or "book code".
7 18 g. "Ring tones" means digitized sound files which are
7 19 downloaded onto a device and which may be used to alert a
7 20 customer with respect to a communication.
7 21 h. "Subscription" means an agreement with a seller which
7 22 grants a consumer the right to obtain selected digital
7 23 products in a fixed quantity or for a fixed period of time or
7 24 both.
7 25 Sec. 19. Section 423.3, subsection 65, Code 2007, is
7 26 amended to read as follows:
7 27 65. The sales price from charges paid to a provider for
7 28 access to on=line computer services. For purposes of this
7 29 subsection, "on=line computer service" means a service that
7 30 provides or enables computer access by multiple users to the
7 31 internet or to other information made available through a
7 32 computer server or other device.
7 33 Sec. 20. Section 423.3, subsection 80, paragraph b, Code
7 34 2007, is amended to read as follows:
7 35 b. If a contractor, subcontractor, or builder is to use
8 1 building materials, supplies, and equipment in the performance
8 2 of a construction contract with a designated exempt entity,
8 3 the person shall purchase such items of tangible personal
8 4 property without liability for the tax if such property will
8 5 be used in the performance of the construction contract and a
8 6 purchasing agent authorization letter and an exemption
8 7 certificate, issued by the designated exempt entity, are
8 8 presented to the retailer. The sales price of building
8 9 materials, supplies, or equipment is exempt from tax by this
8 10 subsection only to the extent the building materials,
8 11 supplies, or equipment are completely consumed in the
8 12 performance of the construction contract with the designated
8 13 exempt entity.
8 14 Sec. 21. Section 423.41, Code 2007, is amended to read as
8 15 follows:
8 16 423.41 BOOKS == EXAMINATION.
8 17 Every retailer required or authorized to collect taxes
8 18 imposed by this chapter and every person using in this state
8 19 tangible personal property, services, or the product of
8 20 services shall keep records, receipts, invoices, and other
8 21 pertinent papers as the director shall require, in the form
8 22 that the director shall require, for as long as the director
8 23 has the authority to examine and determine tax due. The
8 24 director or any duly authorized agent of the department may
8 25 examine the books, papers, records, and equipment of any
8 26 person either selling tangible personal property or services
8 27 or liable for the tax imposed by this chapter, and investigate
8 28 the character of the business of any person in order to verify
8 29 the accuracy of any return made, or if a return was not made
8 30 by the person, ascertain and determine the amount due under
8 31 this chapter. These books, papers, and records shall be made
8 32 available within this state for examination upon reasonable
8 33 notice when the director deems it advisable and so orders. If
8 34 the taxpayer maintains any records in an electronic format,
8 35 the taxpayer shall comply with reasonable requests by the
9 1 director or the director's authorized agents to provide those
9 2 electronic records in a standard record format. The preceding
9 3 requirements shall likewise apply to users and persons
9 4 furnishing services enumerated in section 423.2.
9 5 Sec. 22. Section 423A.4, unnumbered paragraph 3, Code
9 6 2007, is amended to read as follows:
9 7 A local hotel and motel tax shall be imposed on January 1
9 8 or July 1, following the notification of the director of
9 9 revenue. Once imposed, the tax shall remain in effect at the
9 10 rate imposed for a minimum of one year. A local hotel and
9 11 motel tax shall terminate only on June 30 or December 31. At
9 12 least forty=five days prior to the tax being effective or
9 13 prior to a revision in the tax rate, or prior to the repeal of
9 14 the tax, a city or county shall provide notice by mail of such
9 15 action to the director of revenue. The director shall have
9 16 the authority to waive the notice requirement.
9 17 Sec. 23. Section 423B.1, subsection 6, paragraph b, Code
9 18 2007, is amended to read as follows:
9 19 b. Within ten days of the election at which a majority of
9 20 those voting on the question favors the imposition, repeal, or
9 21 change in the rate of a local option tax, the county auditor
9 22 shall give written notice of the result of the election by
9 23 sending a copy of the abstract of the votes from the favorable
9 24 election to the director of revenue or, in the case of a local
9 25 vehicle tax, to the director of the department of
9 26 transportation. The appropriate director shall have the
9 27 authority to waive the notice requirement.
9 28 Sec. 24. Section 423E.2, subsection 5, paragraph b, Code
9 29 2007, is amended to read as follows:
9 30 b. Within ten days of the election at which a majority of
9 31 those voting on the question favors the imposition, repeal,
9 32 extension, or change in the rate of the tax, the county
9 33 auditor shall give written notice of the result of the
9 34 election by sending a copy of the abstract of the votes from
9 35 the favorable election to the director of revenue. Election
10 1 costs shall be apportioned among school districts within the
10 2 county on a pro rata basis in proportion to the number of
10 3 registered voters in each school district who reside within
10 4 the county and the total number of registered voters within
10 5 the county. The director shall have the authority to waive
10 6 the notice requirement.
10 7 Sec. 25. INDUSTRIAL NEW JOBS TRAINING TAX INCENTIVES
10 8 REPORTING COMMITTEE. An industrial new jobs training tax
10 9 incentives reporting committee shall be formed consisting of
10 10 two representatives of the department of economic development,
10 11 two representatives of community colleges, and two
10 12 representatives of the department of revenue. One of the
10 13 representatives of the department of revenue shall serve as
10 14 the chairperson of the committee. The committee shall study
10 15 the reporting of information related to tax incentives
10 16 received pursuant to chapter 260E. By December 31, 2007, the
10 17 committee shall submit a written report to the general
10 18 assembly which shall include but not be limited to a proposed
10 19 system for collecting data for tax incentives received
10 20 pursuant to chapter 260E. The system shall collect data
10 21 including but not limited to the recipient of tax incentives
10 22 and the aggregate amount of tax incentives received under an
10 23 agreement pursuant to chapter 260E.
10 24 DIVISION II
10 25 CIGARETTES AND TOBACCO
10 26 Sec. 26. Section 421B.3, Code 2007, is amended by adding
10 27 the following new subsection:
10 28 NEW SUBSECTION. 3. a. The following civil penalties
10 29 shall be imposed for a violation of this section:
10 30 (1) A two hundred dollar penalty for the first violation.
10 31 (2) A five hundred dollar penalty for a second violation
10 32 within three years of the first violation.
10 33 (3) A thousand dollar penalty for a third or subsequent
10 34 violation within three years of the first violation.
10 35 Each day the violation occurs counts as a new violation for
11 1 purposes of this subsection.
11 2 b. The civil penalty imposed under this subsection is in
11 3 addition to the penalty imposed under subsection 1. Penalties
11 4 collected under this subsection shall be deposited into the
11 5 general fund of the state.
11 6 Sec. 27. Section 453A.7, unnumbered paragraph 2, Code
11 7 2007, is amended to read as follows:
11 8 There is appropriated annually from the general fund of the
11 9 state the sum of one hundred fifteen thousand dollars state
11 10 treasury from funds not otherwise appropriated an amount
11 11 sufficient to carry out the provisions of this section.
11 12 Sec. 28. Section 453A.13, subsections 5 and 9, Code 2007,
11 13 are amended to read as follows:
11 14 5. APPLICATION == BOND. Said permits Permits shall be
11 15 issued only upon applications accompanied by the fee indicated
11 16 above, and by an adequate bond as provided in section 453A.14,
11 17 and upon forms furnished by the department upon written
11 18 request. The failure to furnish such forms shall be no excuse
11 19 for the failure to file the same forms unless absolute refusal
11 20 is shown. Said The forms shall set forth all of the
11 21 following:
11 22 a. The manner under which such the distributor,
11 23 wholesaler, or retailer, transacts or intends to transact such
11 24 business as a distributor, wholesaler, or retailer.
11 25 b. The principal office, residence, and place of business,
11 26 for which where the permit is to apply.
11 27 c. If the applicant is not an individual, the principal
11 28 officers or members thereof, not to exceed three, and their
11 29 addresses.
11 30 d. Such Any other information as the director shall by
11 31 rules prescribe.
11 32 9. PERMIT == FORM AND CONTENTS. Each permit issued shall
11 33 describe clearly the place of business for which it is issued,
11 34 shall be nonassignable, consecutively numbered, designating
11 35 the kind of permit, and shall authorize the sale of cigarettes
12 1 in this state subject to the limitations and restrictions
12 2 herein contained. The retail permits shall be upon forms
12 3 furnished by the department or on forms made available or
12 4 approved by the department.
12 5 Sec. 29. Section 453A.13, Code 2007, is amended by adding
12 6 the following new subsection:
12 7 NEW SUBSECTION. 10. PERMIT DISPLAYED. The permit shall,
12 8 at all times, be publicly displayed by the distributor,
12 9 wholesaler, or retailer at the place of business so as to be
12 10 easily seen by the public and the persons authorized to
12 11 inspect the place of business. The proprietor or keeper of
12 12 any building or place where cigarettes and other tobacco
12 13 products are kept for sale, or with intent to sell, shall upon
12 14 request of any agent of the department or any peace officer
12 15 exhibit the permit. A refusal or failure to exhibit the
12 16 permit is prima facie evidence that the cigarettes or other
12 17 tobacco products are kept for sale or with intent to sell in
12 18 violation of this division.
12 19 Sec. 30. Section 453A.15, subsection 2, Code 2007, is
12 20 amended to read as follows:
12 21 2. Where a state permit holder sells cigarettes at retail,
12 22 the holder shall be required to issue an invoice to the
12 23 holder's retail department for maintain detailed records for
12 24 sales of cigarettes to be sold at retail and such the
12 25 cigarette invoices sales records shall be kept separate and
12 26 apart.
12 27 Sec. 31. Section 453A.15, Code 2007, is amended by adding
12 28 the following new subsection:
12 29 NEW SUBSECTION. 7. The director may require by rule that
12 30 reports required to be made under this division be filed by
12 31 electronic transmission.
12 32 Sec. 32. Section 453A.18, Code 2007, is amended to read as
12 33 follows:
12 34 453A.18 FORMS FOR RECORDS AND REPORTS.
12 35 The department shall furnish or make available in
13 1 electronic form, without charge, to holders of the various
13 2 permits, forms in sufficient quantities to enable permit
13 3 holders to make the reports required to be made under this
13 4 division. The permit holders shall furnish at their own
13 5 expense the books, records, and invoices, required to be used
13 6 and kept, but the books, records, and invoices shall be in
13 7 exact conformity to the forms prescribed for that purpose by
13 8 the director, and shall be kept and used in the manner
13 9 prescribed by the director. However, the director may, by
13 10 express order in certain cases, authorize permit holders to
13 11 keep their records in a manner and upon forms other than those
13 12 so prescribed. The authorization may be revoked at any time.
13 13 Sec. 33. Section 453A.24, Code 2007, is amended to read as
13 14 follows:
13 15 453A.24 CARRIER TO PERMIT ACCESS TO RECORDS.
13 16 1. Every common carrier or person in this state having
13 17 custody of books or records showing the transportation of
13 18 cigarettes both interstate and intrastate shall give and allow
13 19 the department free access to such those books and records.
13 20 2. The director may require by rule that common carriers
13 21 or the appropriate persons provide monthly reports to the
13 22 department detailing all information the department deems
13 23 necessary on shipments into and out of Iowa of cigarettes and
13 24 tobacco products as set forth in divisions I and II of this
13 25 chapter. The director may require by rule that the reports be
13 26 filed by electronic transmission.
13 27 Sec. 34. Section 453A.25, subsection 3, Code 2007, is
13 28 amended to read as follows:
13 29 3. The director is hereby authorized to appoint an
13 30 assistant, whose sole duty it shall be may designate employees
13 31 to administer and enforce the provisions of this chapter,
13 32 including the collection of all taxes provided for herein in
13 33 this chapter. In such the enforcement, the director may
13 34 request aid from the attorney general, the special agents of
13 35 the state, any county attorney, or any peace officer. The
14 1 director is authorized to may appoint such clerks and
14 2 additional help as may be needed to carry out the provisions
14 3 of administer this chapter.
14 4 Sec. 35. Section 453A.30, Code 2007, is amended to read as
14 5 follows:
14 6 453A.30 ASSESSMENT OF COST OF AUDIT.
14 7 The department may employ auditors or other persons to
14 8 audit and examine the books and records of any permit holder
14 9 or other person dealing in cigarettes to ascertain whether
14 10 such the permit holder or other person has paid the amount of
14 11 the taxes required to be paid by the holder or person or filed
14 12 all reports containing all required information as specified
14 13 by the department under the provisions of this chapter. If
14 14 such taxes have not been paid or such reports not filed, as
14 15 required, the department shall assess against such the permit
14 16 holder or other person, as additional penalty, the reasonable
14 17 expenses and costs of such the investigation and audit.
14 18 Sec. 36. Section 453A.31, Code 2007, is amended by adding
14 19 the following new unnumbered paragraph:
14 20 NEW UNNUMBERED PARAGRAPH. If a cigarette distributor fails
14 21 to file a return or to report timely, stamps shall not be
14 22 provided to that cigarette distributor until all returns and
14 23 reports are filed properly and all tax, penalties, and
14 24 interest are paid.
14 25 Sec. 37. Section 453A.32, Code 2007, is amended by adding
14 26 the following new subsection:
14 27 NEW SUBSECTION. 6. The provisions of this section
14 28 applying to cigarettes shall also apply to tobacco products
14 29 taxed under division II of this chapter.
14 30 Sec. 38. Section 453A.36, subsection 6, Code 2007, is
14 31 amended to read as follows:
14 32 6. Any sales of cigarettes or tobacco products made
14 33 through a cigarette vending machine are subject to rules and
14 34 penalties relative to retail sales of cigarettes and tobacco
14 35 products provided for in this chapter. No cigarettes shall
15 1 Cigarettes shall not be sold through any cigarette vending
15 2 machine unless the cigarettes have been properly stamped or
15 3 metered as provided by this division, and in case of violation
15 4 of this provision, the permit of the dealer authorizing retail
15 5 sales of cigarettes shall be canceled revoked. Payment of the
15 6 license permit fee as provided in section 453A.13 authorizes a
15 7 cigarette vendor to sell cigarettes or tobacco products
15 8 through vending machines. However, cigarettes or tobacco
15 9 products shall not be sold through a vending machine unless
15 10 the vending machine is located in a place where the retailer
15 11 ensures that no person younger than eighteen years of age is
15 12 present or permitted to enter at any time. This section does
15 13 not require a retail licensee permit holder to buy a cigarette
15 14 vendor's permit if the retail licensee permit holder is in
15 15 fact the owner of the cigarette vending machines and the
15 16 machines are operated in the location described in the retail
15 17 permit.
15 18 Sec. 39. Section 453A.43, subsections 1 and 2, Code 2007,
15 19 as amended by 2007 Iowa Acts, Senate File 128, are amended to
15 20 read as follows:
15 21 1. a. A tax is imposed upon all tobacco products in this
15 22 state and upon any person engaged in business as a distributor
15 23 of tobacco products, at the rate of twenty=two percent of the
15 24 wholesale sales price of the tobacco products, except little
15 25 cigars and snuff as defined in section 453A.42.
15 26 b. In addition to the tax imposed under paragraph "a", a
15 27 tax is imposed upon all tobacco products in this state and
15 28 upon any person engaged in business as a distributor of
15 29 tobacco products, at the rate of twenty=eight percent of the
15 30 wholesale sales price of the tobacco products, except little
15 31 cigars and snuff as defined in section 453A.42, with the
15 32 limitation that if the tobacco product is a cigar, the
15 33 additional tax shall not exceed fifty cents per cigar.
15 34 c. Notwithstanding the rate of tax imposed pursuant to
15 35 paragraphs "a" and "b", if the tobacco product is a cigar, the
16 1 total amount of the tax imposed pursuant to paragraphs "a" and
16 2 "b" combined shall not exceed fifty cents per cigar.
16 3 c. d. Little cigars shall be subject to the same rate of
16 4 tax imposed upon cigarettes in section 453A.6, payable at the
16 5 time and in the manner provided in section 453A.6; and stamps
16 6 shall be affixed as provided in division I of this chapter.
16 7 Snuff shall be subject to the tax as provided in subsections 3
16 8 and 4.
16 9 d. e. The taxes on tobacco products, excluding little
16 10 cigars and snuff, shall be imposed at the time the distributor
16 11 does any of the following:
16 12 (1) Brings, or causes to be brought, into this state from
16 13 outside the state tobacco products for sale.
16 14 (2) Makes, manufactures, or fabricates tobacco products in
16 15 this state for sale in this state.
16 16 (3) Ships or transports tobacco products to retailers in
16 17 this state, to be sold by those retailers.
16 18 2. a. A tax is imposed upon the use or storage by
16 19 consumers of tobacco products in this state, and upon the
16 20 consumers, at the rate of twenty=two percent of the cost of
16 21 the tobacco products.
16 22 b. In addition to the tax imposed in paragraph "a", a tax
16 23 is imposed upon the use or storage by consumers of tobacco
16 24 products in this state, and upon the consumers, at a rate of
16 25 twenty=eight percent of the cost of the tobacco products, with
16 26 the limitation that if the tobacco product is a cigar, the
16 27 additional tax shall not exceed fifty cents per cigar.
16 28 c. Notwithstanding the rate of tax imposed pursuant to
16 29 paragraphs "a" and "b", if the tobacco product is a cigar, the
16 30 total amount of the tax imposed pursuant to paragraphs "a" and
16 31 "b" combined shall not exceed fifty cents per cigar.
16 32 c. d. The taxes imposed by this subsection shall not
16 33 apply if the taxes imposed by subsection 1 on the tobacco
16 34 products have been paid.
16 35 d. e. The taxes imposed under this subsection shall not
17 1 apply to the use or storage of tobacco products in quantities
17 2 of:
17 3 (1) Less than twenty=five cigars.
17 4 (2) Less than one pound smoking or chewing tobacco or
17 5 other tobacco products not specifically mentioned herein, in
17 6 the possession of any one consumer.
17 7 Sec. 40. Section 453A.45, subsection 5, unnumbered
17 8 paragraphs 2 and 4, Code 2007, are amended to read as follows:
17 9 Such The report shall be made on forms provided by the
17 10 director or the director may require by rule that the report
17 11 be filed by electronic transmission.
17 12 Any person who fails or refuses to transmit to the director
17 13 the required reports or whoever refuses to permit the
17 14 examination of the records by the director shall be guilty of
17 15 a simple serious misdemeanor.
17 16 Sec. 41. Section 453A.46, subsections 1 and 3, Code 2007,
17 17 are amended to read as follows:
17 18 1. On or before the twentieth day of each calendar month
17 19 every distributor with a place of business in this state shall
17 20 file a return with the director showing for the preceding
17 21 calendar month the quantity and wholesale sales price of each
17 22 tobacco product brought, or caused to be brought, into this
17 23 state for sale; and made, manufactured, or fabricated in this
17 24 state for sale in this state, during the preceding calendar
17 25 month; and any other information the director may require.
17 26 Every licensed distributor outside this state shall in like
17 27 manner file a return with the director showing for the
17 28 preceding calendar month the quantity and wholesale sales
17 29 price of each tobacco product shipped or transported to
17 30 retailers in this state to be sold by those retailers, during
17 31 the preceding calendar month and any other information the
17 32 director may require. Returns shall be made upon forms
17 33 furnished or made available in electronic form and prescribed
17 34 by the director and shall contain other information as the
17 35 director may require. Each return shall be accompanied by a
18 1 remittance for the full tax liability shown on the return,
18 2 less a discount as fixed by the director not to exceed five
18 3 percent of the tax. Within three years after the return is
18 4 filed or within three years after the return became due,
18 5 whichever is later, the department shall examine it, determine
18 6 the correct amount of tax, and assess the tax against the
18 7 taxpayer for any deficiency. The period for examination and
18 8 determination of the correct amount of tax is unlimited in the
18 9 case of a false or fraudulent return made with the intent to
18 10 evade tax, or in the case of a failure to file a return.
18 11 The three=year period of limitation period may be extended
18 12 by a taxpayer by signing a waiver agreement form to be
18 13 provided by the department. The agreement must stipulate the
18 14 period of extension period and the tax period to which the
18 15 extension applies. The agreement must also provide stipulate
18 16 that a claim for refund may be filed by the taxpayer at any
18 17 time during the period of extension period.
18 18 3. In addition to the tax or additional tax, the taxpayer
18 19 shall also pay a penalty as provided in section 421.27 and be
18 20 subject to the civil penalties set forth in sections 421.27;
18 21 453A.31, subsection 2; and 453A.50, subsection 3, as
18 22 applicable.
18 23 Sec. 42. Section 453A.46, Code 2007, is amended by adding
18 24 the following new subsection:
18 25 NEW SUBSECTION. 7. The director may require by rule that
18 26 reports be filed by electronic transmission.
18 27 Sec. 43. Section 453A.50, subsection 2, Code 2007, is
18 28 amended to read as follows:
18 29 2. Any Except as otherwise provided, any person who
18 30 otherwise violates any provisions of this division shall be
18 31 guilty of a simple misdemeanor.
18 32 Sec. 44. Section 453A.50, Code 2007, is amended by adding
18 33 the following new subsection:
18 34 NEW SUBSECTION. 3. The following civil penalties shall be
18 35 imposed for a violation of this division:
19 1 a. A two hundred dollar penalty for the first violation.
19 2 b. A five hundred dollar penalty for a second violation
19 3 within three years of the first violation.
19 4 c. A thousand dollar penalty for a third or subsequent
19 5 violation within three years of the first violation.
19 6 The penalty imposed in this subsection is in addition to
19 7 the tax, penalty, and interest imposed in other sections of
19 8 this division. Each day a violation occurs counts as a new
19 9 violation for purposes of this subsection.
19 10 Sec. 45. NEW SECTION. 453A.51 ASSESSMENT OF COST OF
19 11 AUDIT.
19 12 The department may employ auditors or other persons to
19 13 audit and examine the books and records of a permit holder or
19 14 other person dealing in tobacco products to ascertain whether
19 15 the permit holder or other person has paid the amount of the
19 16 taxes required to be paid by the permit holder or other person
19 17 under the provisions of this chapter. If the taxes have not
19 18 been paid, as required, the department shall assess against
19 19 the permit holder or other person, as additional penalty, the
19 20 reasonable expenses and costs of the investigation and audit.
19 21 Sec. 46. Section 453C.1, subsection 10, Code 2007, is
19 22 amended to read as follows:
19 23 10. "Units sold" means the number of individual cigarettes
19 24 sold in the state by the applicable tobacco product
19 25 manufacturer, whether directly or through a distributor,
19 26 retailer, or similar intermediary or intermediaries, during
19 27 the year in question, as measured by excise taxes collected by
19 28 the state on packs bearing the excise stamp of the state or on
19 29 roll=your=own tobacco containers. The department of revenue
19 30 shall adopt rules as are necessary to ascertain the amount of
19 31 state excise tax paid on the cigarettes of such tobacco
19 32 product manufacturer for each year.
19 33 Sec. 47. REFUNDS. Refunds of taxes which result from the
19 34 amendment to section 453A.43, in this division of this Act,
19 35 relating to the limitation on the taxes imposed on cigars
20 1 occurring between March 15, 2007, and the effective date of
20 2 the amendment to section 453A.43 in this division of this Act,
20 3 shall not be allowed unless refund claims are filed prior to
20 4 October 1, 2007, notwithstanding any other provision of law.
20 5 Claimants shall not be entitled to interest on any refunds.
20 6 Sec. 48. EFFECTIVE DATE AND APPLICABILITY. The provision
20 7 in this division of this Act amending section 453A.43, and the
20 8 section of this division of this Act providing refunds
20 9 resulting from the amendment of section 453A.43, being deemed
20 10 of immediate importance, take effect upon enactment and are
20 11 retroactively applicable to March 15, 2007.
20 12 EXPLANATION
20 13 DIVISION I == TAX ADMINISTRATION. Code sections 15E.44,
20 14 subsection 1, and 15E.45, subsection 3, are amended to
20 15 eliminate the requirement that tax identification numbers of
20 16 investors (social security numbers) must be provided at the
20 17 time that a qualifying business or community=based seed
20 18 capital fund submits an application to the Iowa capital
20 19 investment board. The tax identification numbers are provided
20 20 at the time that the investors apply for a tax credit
20 21 certificate.
20 22 Code sections 331.434 and 384.16 are amended to require
20 23 cities and counties to include as part of their annual
20 24 budgeting procedures a tax increment financing budget. The
20 25 amendments provide that the tax increment financing budget,
20 26 wherever practicable, shall include estimated and actual tax
20 27 increment financing revenues and all estimated and actual
20 28 expenditures of the revenues, proceeds from debt and all of
20 29 the expenditure of debt proceeds, and identification of any
20 30 entity receiving a direct tax increment financing rebate of
20 31 taxes.
20 32 Code section 421.26 is amended to require cigarette permit
20 33 holders to be personally liable for unpaid cigarette taxes.
20 34 This requirement is the same as presently exists for
20 35 licensees, retailers, purchasers, users, and permit holders
21 1 for other taxes.
21 2 Code section 421.27, subsections 1 and 2, are amended to
21 3 allow a penalty waiver which reflects a legislative change
21 4 made to correct an inconsistent time frame for filing
21 5 disclaimers by the beneficiary of an estate refusing to take
21 6 the property.
21 7 Code section 422.7, subsection 32, is amended to provide
21 8 that withdrawals from the Iowa educational savings plan trust
21 9 that are not used for qualified education expenses must be
21 10 added back on the Iowa individual income tax return to the
21 11 extent that a deduction for a contribution was previously
21 12 allowed.
21 13 Code section 422.11S, subsections 6 and 7, are amended to
21 14 change the deadlines for certified enrollment and notification
21 15 requirements for the school tuition organization tax credit to
21 16 be consistent with the notification requirements of Code
21 17 section 257.6 relating to the school aid formula.
21 18 Code section 422.12E is amended to state that the director
21 19 will determine which checkoffs will be included on the
21 20 individual income tax form in situations where additional
21 21 checkoffs in excess of the number allowed are enacted on the
21 22 same day.
21 23 Code section 422.13, subsection 5, is amended to allow
21 24 nonresident trusts and estates that are members of
21 25 partnerships, limited liability, trusts, or S corporations to
21 26 be included on an Iowa composite return.
21 27 Code section 422.35, subsection 17, is amended to correct
21 28 the reference to federal taxable income for the deduction
21 29 allowed for the social security credit for corporation income
21 30 tax.
21 31 Code section 422.73, subsection 3, adopted as part of 2006
21 32 Iowa Acts, House File 2351, is repealed. Because any capital
21 33 or ordinary gain from the involuntary conversion relating to
21 34 eminent domain is exempt from Iowa individual or corporation
21 35 income tax, there is no need to file a claim for refund
22 1 relating to the repurchase of property when tax was not paid
22 2 on the gain in the initial instance.
22 3 Code section 422.75 is amended to update current reporting
22 4 requirements related to the annual report filed by the
22 5 department.
22 6 Code section 423.2, subsection 6, is amended to require
22 7 financial institutions unregulated by federal or Iowa
22 8 authorities to pay sales tax on service charges if they are
22 9 doing business in Iowa.
22 10 Code section 423.2 is amended to impose a sales tax on the
22 11 sale of audiovisual works, audio works, books, computer
22 12 software, and ring tones that are sold to an individual for
22 13 the individual's use and consumption. The tax is imposed on
22 14 these items when they are digitally or electronically
22 15 delivered to the individual. This proposal equalizes the sale
22 16 of these items between an Iowa retail business and an internet
22 17 business.
22 18 Code section 423.3, subsection 65, is amended to exempt
22 19 from sales tax charges paid for access to the internet by
22 20 means of any device and not solely by means of a computer
22 21 server.
22 22 Code section 423.3, subsection 80, is amended to exempt
22 23 from sales tax sales of building materials, supplies, or
22 24 equipment only to the extent those items are consumed in an
22 25 exempt construction project.
22 26 Code section 423.41 is amended to require a taxpayer
22 27 maintaining electronic records to provide those electronic
22 28 records relating to sales and use taxes to the director for
22 29 examination upon request.
22 30 Code sections 423A.4, 423B.1, subsection 6, and 423E.2,
22 31 subsection 5, are amended to grant the director the authority
22 32 to waive the requirement that a city or county notify the
22 33 director of the imposition, repeal, extension, or change in
22 34 the rate of the local option tax.
22 35 The division requires an industrial new jobs training tax
23 1 incentives reporting committee to be formed consisting of two
23 2 representatives of the department of economic development, two
23 3 representatives of community colleges, and two representatives
23 4 of the department of revenue. The committee is to study the
23 5 reporting of information related to tax incentives received
23 6 pursuant to Code chapter 260E. By December 31, 2007, the
23 7 committee is to submit a written report to the general
23 8 assembly which shall include but not be limited to a proposed
23 9 system for collecting data for tax incentives received
23 10 pursuant to Code chapter 260E.
23 11 DIVISION II == CIGARETTE/TOBACCO TAXES. Code section
23 12 421B.3 is amended to impose civil penalties for the sale of
23 13 cigarettes below minimum price. These penalties are
23 14 consistent with those for violations of other cigarette and
23 15 tobacco tax laws and rules. The penalties are in addition to
23 16 other penalties for violating the chapter and moneys collected
23 17 are to be deposited into the state general fund.
23 18 Code section 453A.7 is amended to provide sufficient funds
23 19 for the department to purchase tax stamps for placement on
23 20 packages of cigarettes as evidence that the tax has been paid.
23 21 Code section 453A.13 is amended to require furnishing of
23 22 the names and addresses of all officers of the business
23 23 applying for a bond to obtain a cigarette permit. Code
23 24 section 453A.13 is further amended to permit the use of
23 25 cigarette retail permit forms approved by the department.
23 26 Code section 453A.13 is also amended to require the public
23 27 display of the permit at the place of business.
23 28 Code section 453A.15, subsection 2, requires cigarette
23 29 permit holders to maintain separate records for cigarette
23 30 sales that are sold at wholesale and sold at retail from the
23 31 same location.
23 32 Code section 453A.15 is amended to require the permit
23 33 holder to maintain detailed records and to give the director
23 34 the authority to require that cigarette reports be filed by
23 35 electronic transmission.
24 1 Code section 453A.18 authorizes the department to furnish
24 2 permit holders with electronic forms in lieu of paper forms.
24 3 Code section 453A.24 is amended to require common carriers
24 4 or other persons to provide monthly reports to the department
24 5 by electronic transmission if the director requires by rule.
24 6 Code section 453A.25, subsection 3, is amended to delete
24 7 the requirement that the director appoint a person whose only
24 8 responsibility is to administer cigarette and tobacco taxes.
24 9 Code section 453A.30 is amended to include the requirements
24 10 for the filing of cigarette reports the same as those for the
24 11 filing of cigarette returns relating to the cost of an audit.
24 12 Code section 453A.31 is amended to prohibit the sale of
24 13 cigarette stamps to distributors who do not file appropriate
24 14 returns or reports in a timely manner.
24 15 Code section 453A.32 is amended to make the cigarette
24 16 seizure provisions applicable to tobacco products.
24 17 Code section 453A.36, subsection 6, is amended to specify
24 18 that cigarette retailers receive a permit, not a license, to
24 19 do business in Iowa.
24 20 Code section 453A.43 is amended to provide that the
24 21 increase in tobacco products tax pursuant to 2007 Iowa Acts,
24 22 Senate File 128, plus the prior tax on tobacco products shall
24 23 not exceed fifty cents per cigar. A refund provision is
24 24 provided for those who have paid a higher rate of tax than the
24 25 fifty cents between March 15, 2007, and the effective date of
24 26 this provision.
24 27 Code section 453A.45, subsection 5, is amended to give the
24 28 director the authority to require by rule that tobacco
24 29 transportation reports be filed electronically and makes the
24 30 failure or refusal to file or allow the examination of the
24 31 required reports a serious misdemeanor rather than a simple
24 32 misdemeanor.
24 33 Code section 453A.46 is amended to give the director the
24 34 authority to require by rule any additional information that
24 35 should be included on a return, adds language to reference
25 1 civil penalties, and gives the director the authority to
25 2 require by rule that distributors file tobacco reports
25 3 electronically.
25 4 Code section 453A.50, subsection 2, is amended to specify
25 5 that unless otherwise stated, violations of the tobacco
25 6 products division are simple misdemeanors.
25 7 Code section 453A.50 is also amended to impose civil
25 8 penalties for violation of the tobacco tax laws and
25 9 regulations. These penalties are consistent with penalties
25 10 that are applicable to cigarettes.
25 11 Code section 453A.51 is enacted to make tobacco products
25 12 tax enforcement provisions similar to cigarette tax
25 13 enforcement provisions related to the cost of an audit.
25 14 Code section 453C.1 is amended to provide a more specific
25 15 definition of "units sold" for the purposes of the tobacco
25 16 product manufacturers' obligations which is the basis for
25 17 determining the amount that a nonparticipating manufacturer in
25 18 the tobacco master settlement agreement must place in escrow.
25 19 The amended definition provides that "units sold" is measured
25 20 only by those packs bearing an excise stamp of the state.
25 21 LSB 1264SV 82
25 22 mg:sc/je/5