Senate Study Bill 3123 - Introduced SENATE FILE _____ BY (PROPOSED COMMITTEE ON WAYS AND MEANS BILL BY CHAIRPERSON BOLKCOM) A BILL FOR An Act relating to assessment of telecommunications company 1 property for purposes of property taxation, and including 2 effective date and retroactive applicability provisions. 3 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 4 TLSB 5573XC (5) 83 md/sc

S.F. _____ 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 427A.1, Code 2009, is amended by adding the 7 following new subsection: 8 NEW SUBSECTION . 6A. Notwithstanding the other provisions 9 of this section, property described in this section that was 10 first assessed for taxation in this state on or after January 11 1, 1996, shall not be assessed and taxed as real property 12 to the extent it consists of cable, wire, conduit, vaults, 13 switches, or other equipment or fixtures used primarily to 14 provide or facilitate the electronic transmission, conveyance, 15 or routing of voice, data, audio, video, or any other 16 information or signal to a point, or between or among points, 17 regardless of the content or technology utilized and regardless 18 of whether the property would otherwise be considered attached 19 to the real property. 20 Sec. 3. Section 427B.17, subsection 5, unnumbered paragraph 21 1, Code 2009, is amended to read as follows: 22 This section shall not apply to property assessed by the 23 department of revenue pursuant to sections 428.24 to 428.29, 24 or chapters 433 , chapter 433 if such property was first 25 assessed for taxation in this state before January 1, 1996, or 26 chapters 434, 437, 437A, and 438, and such property shall not 27 receive the benefits of this section. 28 Sec. 4. Section 433.4, Code Supplement 2009, is amended to 29 read as follows: 30 433.4 Assessment. 31 1. The director of revenue shall on or before October 31 32 each year, proceed to find the actual value of the property 33 of these companies in this state, taking into consideration 34 the information obtained from the statements required , and any 35 -1- LSB 5573XC (5) 83 md/sc 1/ 4

S.F. _____ further information the director can obtain , using the same as 1 a means for determining the actual cash value of the property 2 of these companies within this state . 3 2. The For property of a company that was first assessed 4 for taxation in this state before January 1, 1996, the director 5 shall also take into consideration the information described 6 in subsection 1 and the valuation of all property of these 7 companies, including franchises and the use of the property 8 in connection with lines outside the state, and making these 9 deductions as may be necessary on account of extra value 10 of property outside the state as compared with the value 11 of property in the state, in order that the actual cash 12 value of the property of the company within this state may 13 be ascertained. The assessment shall include all property 14 of every kind and character whatsoever, real, personal, or 15 mixed, used by the companies in the transaction of telegraph 16 and telephone business; and the property so included in the 17 assessment shall not be taxed in any other manner than as 18 provided in this chapter. 19 3. For property of a company that was first assessed 20 for taxation in this state on or after January 1, 1996, the 21 director shall determine the value of the property of these 22 companies within this state in the same manner as all other 23 property assessed as commercial property by the local assessor 24 under chapters 427, 427A, 427B, 428, and 441; provided that 25 such property that is not otherwise exempt shall be valued at 26 an amount no greater than the cost of such property, reduced 27 by accounting depreciation and by any appropriate adjustments 28 for functional and economic obsolescence, and in determining 29 said values the director shall not use any minimum amount 30 or percentage of original cost as the base or minimum value 31 for any item or class of property, regardless of whether the 32 property is still in service. 33 Sec. 5. Section 476.1D, unnumbered paragraph 2, Code 2009, 34 is amended by striking the unnumbered paragraph. 35 -2- LSB 5573XC (5) 83 md/sc 2/ 4

S.F. _____ Sec. 6. EFFECTIVE UPON ENACTMENT AND RETROACTIVE 1 APPLICABILITY. This Act, being deemed of immediate importance, 2 takes effect upon enactment and applies retroactively to 3 January 1, 2010, for assessment years beginning on or after 4 that date. 5 EXPLANATION 6 This bill relates to the manner in which telecommunications 7 company property is taxed. 8 The assessment provisions of Code section 433.4 9 currently provide that in ascertaining the actual value of 10 telecommunications company property the director of revenue 11 shall include all property of every kind and character 12 whatsoever, real, personal, or mixed, used by the company in 13 the transaction of telegraph and telephone business. 14 Under the bill, property of a telecommunications company 15 that was first assessed for taxation before January 1, 1996, 16 continues to be taxed in the manner provided under current Code 17 section 433.4. However, the bill modifies the Code section to 18 provide that the value of a company’s property that was first 19 assessed for taxation on or after January 1, 1996, shall be 20 determined in the same manner as all other property assessed as 21 commercial property by the local assessor. 22 The bill also provides that telecommunications company 23 property that was first assessed for taxation on or after 24 January 1, 1996, and that is not otherwise exempt, shall be 25 valued at an amount no greater than the cost of the property 26 reduced by accounting depreciation with appropriate adjustments 27 for functional and economic obsolescence, and that in 28 determining the value the director shall not use any minimum 29 amount or percentage of original cost as the base or minimum 30 value for any item or class of property, regardless of whether 31 the property is still in service. 32 The bill further provides that telecommunications company 33 property that was first assessed for taxation on or after 34 January 1, 1996, shall not be taxed as real property to the 35 -3- LSB 5573XC (5) 83 md/sc 3/ 4

S.F. _____ extent it consists of cable, wire, conduit, vaults, switches, 1 or other equipment or fixtures used primarily to provide or 2 facilitate the electronic transmission, conveyance, or routing 3 of voice, data, audio, video, or any other information or 4 signal to a point, or between or among points, regardless of 5 the content or technology utilized and regardless of whether 6 the property would otherwise be considered “attached” to the 7 real property. 8 The bill provides that telecommunications company property 9 that was first assessed for taxation on or after January 1, 10 1996, and classified as machinery used in manufacturing, 11 and computers and related equipment, currently not subject 12 to special valuation provisions conferring property tax 13 exempt status, shall be made subject to those provisions and 14 considered either exempt from property taxation or valued at 0 15 percent of their net acquisition cost. 16 The bill takes effect upon enactment and applies 17 retroactively to assessment years beginning on or after January 18 1, 2010. 19 -4- LSB 5573XC (5) 83 md/sc 4/ 4