HOUSE FILE _____

BY  (PROPOSED COMMITTEE ON WAYS AND MEANS BILL BY CHAIRPERSON SANDS)

A BILL FOR

An Act eliminating specified provisions relating to the administration of the replacement tax for new cogeneration facilities.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

   Section 1.  Section 437A.3, subsection 1, paragraph b, Code 2011, is amended by striking the paragraph.
   Sec. 2.  Section 437A.3, subsection 4, paragraph b, Code 2011, is amended by striking the paragraph.
   Sec. 3.  Section 437A.3, subsection 11, paragraph b, subparagraphs (1) and (2), Code 2011, are amended to read as follows:
   (1)  An electric power generating plant that is owned by or leased to an electric company, electric cooperative, or municipal utility,or any other taxpayer, and that initially generates electricity subject to replacement generation tax under section 437A.6 on or after January 1, 2003.
   (2)  An electric power generating plant that is owned by or leased to an electric company, electric cooperative, or municipal utility,or any other taxpayer, that initially generated electricity subject to replacement generation tax under section 437A.6 before January 1, 2003, and that is sold, leased, or transferred, in full or in part, on or after January 1, 2003. If any portion of an electric power generating plant is sold, the entire plant shall be treated as if it were a new electric power generating plant.
   Sec. 4.  Section 437A.5, subsection 1, paragraph c, unnumbered paragraph 3, Code 2011, is amended to read as follows:
   If the new electric power generating plant is part of a cogeneration facility or new cogeneration facility, the natural gas delivery rate for that plant shall be the lesser of the natural gas delivery rate established in this paragraph “c” or the rate per therm of natural gas as in effect at the time of the initial natural gas deliveries to the plant for the natural gas competitive service area where the new electric power generating plant is located.
   Sec. 5.  Section 437A.8, subsection 4, paragraph d, unnumbered paragraph 2, Code 2011, is amended by striking the unnumbered paragraph.
   Sec. 6.  Section 437A.14, subsection 4, paragraph b, Code 2011, is amended by striking the paragraph.
   Sec. 7.  Section 437A.15, subsection 7, Code 2011, is amended by striking the subsection.
   Sec. 8.  Section 437A.18, Code 2011, is amended to read as follows:
   437A.18  Tax imposition.
   An annual statewide property tax of three cents per one thousand dollars of assessed value is imposed upon all property described in sections section 437A.16 and 437A.16A on the assessment date of January 1.
   Sec. 9.  Section 437A.19, subsection 1, paragraph a, subparagraph (8), Code 2011, is amended by striking the subparagraph.
   Sec. 10.  Section 437A.19, subsection 2, paragraph e, Code 2011, is amended to read as follows:
   e.  In addition to reporting the assessed values as described in this subsection, the director, on or before October 31 of each assessment year, shall also report to the department of management and to the auditor of each county the taxable value of taxpayer property as of January 1 of such assessment year for each local taxing district. For purposes of this chapter, “taxable value” means the value for all property subject to the replacement tax annually determined by the director, by dividing the estimated annual replacement tax liability for that property by the current fiscal prior year’s consolidated taxing district rate for the taxing district where that property is located, then multiplying the quotient by one thousand. A taxpayer who paid more than five hundred thousand dollars in replacement tax in the previous tax year or who believes the taxpayer’s replacement tax liability will vary more than ten percent from the previous tax year shall report to the director by October 1 of the current calendar year, on forms prescribed by the director, the estimated replacement tax liability that will be attributable to all of the taxpayer’s property subject to replacement tax for the current tax year. The department shall utilize the estimated replacement tax liability as reported by the taxpayer or the taxpayer’s prior year’s replacement tax amounts to estimate the current tax year’s taxable value for that property. Furthermore, a taxpayer who has a new major addition of operating property which is put into service for the first time in the current calendar year shall report to the director by October 1 of the current calendar year, or at the time the major addition is put into service, whichever time is later, on forms prescribed by the director, the cost of the major addition and, if not previously reported, shall report the estimated replacement taxes which that asset will generate in the current calendar year. For the purposes of computing the taxable value of property in a taxing district, the taxing district’s share of the estimated replacement tax liability shall be the taxing district’s percentage share of the “assessed value allocated by property tax equivalent” multiplied by the total estimated replacement tax. “Assessed value allocated by property tax equivalent” shall be determined by dividing the taxpayer’s current year assessed valuation in a taxing district by one thousand, and then multiplying by the prior year’s consolidated tax rate.
   Sec. 11.  REPEAL.  Section 437A.16A, Code 2011, is repealed.
EXPLANATION
   This bill deletes provisions relating to the imposition of a replacement tax on electricity and natural gas providers which were enacted during the 2010 Legislative Session in Senate File 2373.
   The deleted provisions include adding a definition of a new cogeneration facility and providing a means for allocating the assessed value of a new cogeneration facility between property of the facility that is subject to local assessment and the property of the facility that is subject to the replacement tax, and to exempt from property tax the value of the property subject to the replacement tax by applying a credit representing the value of such exempt property against the total value of the facility. The deleted provisions also include provisions relating to determination of the natural gas delivery rate applicable to new cogeneration facilities, and provisions in Code section 437A.18 applying the statewide property tax to property of a new cogeneration facility.
   Additionally, the bill deletes a provision in the definition of an electric power generating plant that such a plant may be owned by or leased to “any other taxpayer”, in addition to an electric company, electric cooperative, or municipal utility. Also deleted is a mechanism for refunding or crediting excess replacement taxes, penalties, and interest paid into the property tax relief fund established in Code section 426B.1 by a new electric power generating plant, a provision applying existing provisions regarding claims for refunds and credits contained in Code section 437A.14 and stating that the director of revenue shall have sole discretion regarding whether a refund will be paid versus a credit granted.
   Further, the bill deletes outdated provisions establishing a utility replacement tax task force, a requirement that taxpayers report to the director any gas or transmission property that had been acquired at a cost of more than $1 million and disposed of in the preceding calendar year, and a provision, with reference to determining and reporting the taxable value of property subject to the replacement tax, that calculations will utilize the current fiscal year’s consolidated taxing district rate for the taxing district where the property is located, rather than the prior fiscal year’s rate.