Senate File 2386 - Introduced SENATE FILE 2386 BY COMMITTEE ON WAYS AND MEANS (SUCCESSOR TO SSB 3254) A BILL FOR An Act relating to assessment of telecommunications company 1 property for purposes of property taxation, and including 2 effective date and applicability provisions. 3 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 4 TLSB 6277SV (2) 83 md/sc

S.F. 2386 Section 1. Section 427A.1, subsection 1, paragraph h, Code 1 2009, is amended to read as follows: 2 h. Property assessed by the department of revenue pursuant 3 to sections 428.24 to 428.29, or chapters 433 , chapter 433 if 4 such property was first assessed for taxation in this state 5 before January 1, 1996, or chapters 434, 437, 437A, and 438. 6 Sec. 2. Section 433.4, Code Supplement 2009, is amended to 7 read as follows: 8 433.4 Assessment. 9 1. The director of revenue shall on or before October 31 10 each year, proceed to find the actual value of the property 11 of these companies in this state, taking into consideration 12 the information obtained from the statements required , and any 13 further information the director can obtain , using the same as 14 a means for determining the actual cash value of the property 15 of these companies within this state . 16 2. The For property of a company that was first assessed 17 for taxation in this state before January 1, 1996, the director 18 shall also take into consideration the information described 19 in subsection 1 and the valuation of all property of these 20 companies, including franchises and the use of the property 21 in connection with lines outside the state, and making these 22 deductions as may be necessary on account of extra value of 23 property outside the state as compared with the value of 24 property in the state, in order that the actual cash value 25 of the property of the company within this state may be 26 ascertained. The assessment shall include all property 27 of every kind and character whatsoever, real, personal, or 28 mixed, used by the companies in the transaction of telegraph 29 and telephone business; and the property so included in the 30 assessment shall not be taxed in any other manner than as 31 provided in this chapter. 32 3. For property of a company that was first assessed 33 for taxation in this state on or after January 1, 1996, the 34 director shall determine the value of the property of these 35 -1- LSB 6277SV (2) 83 md/sc 1/ 4

S.F. 2386 companies within this state as follows: 1 a. For the assessment year beginning January 1, 2013, the 2 value of such property shall equal the sum of the following: 3 (1) Eighty percent of the property’s value as determined in 4 the manner provided under subsection 2. 5 (2) Twenty percent of the property’s value as determined in 6 the manner provided under paragraph “e” . 7 b. For the assessment year beginning January 1, 2014, the 8 value of such property shall equal the sum of the following: 9 (1) Sixty percent of the property’s value as determined in 10 the manner provided under subsection 2. 11 (2) Forty percent of the property’s value as determined in 12 the manner provided under paragraph “e” . 13 c. For the assessment year beginning January 1, 2015, the 14 value of such property shall equal the sum of the following: 15 (1) Forty percent of the property’s value as determined in 16 the manner provided under subsection 2. 17 (2) Sixty percent of the property’s value as determined in 18 the manner provided under paragraph “e” . 19 d. For the assessment year beginning January 1, 2016, the 20 value of such property shall equal the sum of the following: 21 (1) Twenty percent of the property’s value as determined in 22 the manner provided under subsection 2. 23 (2) Eighty percent of the property’s value as determined in 24 the manner provided under paragraph “e” . 25 e. For the assessment year beginning January 1, 2017, 26 and each assessment year thereafter, such property shall be 27 assessed in the same manner as all other property assessed 28 as commercial property by the local assessor under chapters 29 427, 427A, 427B, 428, and 441; provided that such property 30 that is not exempt under subsection 4 or other provision of 31 law shall be valued at an amount no greater than the cost 32 of such property, reduced by accounting depreciation and 33 by any appropriate adjustments for functional and economic 34 obsolescence, and in determining said values the director shall 35 -2- LSB 6277SV (2) 83 md/sc 2/ 4

S.F. 2386 not use any minimum amount or percentage of original cost as 1 the base or minimum value for any item or class of property, 2 regardless of whether the property is still in service. 3 4. Property of a company that was first assessed for 4 taxation in this state on or after January 1, 1996, shall 5 not be assessed and taxed as real property to the extent it 6 consists of cable, wire, conduit, vaults, switches, or other 7 equipment or fixtures used primarily to provide or facilitate 8 the electronic transmission, conveyance, or routing of voice, 9 data, audio, video, or any other information or signal to a 10 point, or between or among points, regardless of the content 11 or technology utilized and regardless of whether the property 12 would otherwise be considered attached to the real property. 13 Sec. 3. Section 476.1D, subsection 10, unnumbered paragraph 14 2, Code 2009, is amended by striking the unnumbered paragraph. 15 Sec. 4. EFFECTIVE UPON ENACTMENT AND APPLICABILITY. 16 1. Except as provided in subsection 2, this Act takes effect 17 July 1, 2012, and applies to assessment years beginning on or 18 after January 1, 2013. 19 2. The section of this Act amending section 476.1D takes 20 effect July 1, 2016, and applies to assessment years beginning 21 on or after January 1, 2017. 22 EXPLANATION 23 This bill relates to the manner in which telecommunications 24 company property is taxed. 25 The assessment provisions of Code section 433.4 26 currently provide that in ascertaining the actual value of 27 telecommunications company property the director of revenue 28 shall include all property of every kind and character 29 whatsoever, real, personal, or mixed, used by the company in 30 the transaction of telegraph and telephone business. 31 Under the bill, property of a telecommunications company 32 that was first assessed for taxation before January 1, 1996, 33 continues to be assessed in the manner provided under current 34 Code section 433.4. However, the bill modifies the Code 35 -3- LSB 6277SV (2) 83 md/sc 3/ 4

S.F. 2386 section to provide that the value of a company’s property that 1 was first assessed for taxation on or after January 1, 1996, 2 shall, subject to specific restrictions and provisions in the 3 bill, be determined in the same manner as all other property 4 assessed as commercial property by the local assessor. 5 For the assessment year beginning January 1, 2013, and for 6 each assessment year through the assessment year beginning 7 January 1, 2016, the bill provides for the transition from 8 the current assessment methodology in Code section 433.4 9 to the new assessment methodology created in the bill for 10 telecommunications company property that was first assessed for 11 taxation on or after January 1, 1996. The bill then provides 12 that for the assessment year beginning January 1, 2017, and for 13 each assessment year thereafter, all of the telecommunication 14 company’s property that was first assessed for taxation on or 15 after January 1, 1996, is assessed using the new assessment 16 methodology created in the bill. 17 Except for the section of the bill amending Code section 18 476.1D, the bill takes effect July 1, 2012, and applies to 19 assessment years beginning on or after January 1, 2013. The 20 section of the bill amending Code section 476.1D takes effect 21 July 1, 2016, and applies to assessment years beginning on or 22 after January 1, 2017. 23 -4- LSB 6277SV (2) 83 md/sc 4/ 4