House Study Bill 531 - Introduced HOUSE FILE _____ BY (PROPOSED COMMITTEE ON WAYS AND MEANS BILL BY CHAIRPERSON SANDS) A BILL FOR An Act relating to assessment and taxation of 1 telecommunications company property and including effective 2 date and applicability provisions. 3 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 4 TLSB 5504YC (4) 84 md/sc

H.F. _____ Section 1. Section 433.4, Code 2011, is amended to read as 1 follows: 2 433.4 Assessment. 3 1. The director of revenue shall on or before October 31 4 each year, proceed to find the actual value of the property 5 of these companies in this state used by the companies in the 6 transaction of telegraph and telephone business , taking into 7 consideration the information obtained from the statements 8 required, and any further information the director can obtain, 9 using the same as a means for determining the actual cash value 10 of the property of these companies within this state. The 11 director shall also take into consideration the valuation of 12 all property of these companies, including franchises and the 13 use of the property in connection with lines outside the state, 14 and making these deductions as may be necessary on account of 15 extra value of property outside the state as compared with 16 the value of property in the state, in order that the actual 17 cash value of the property of the company within this state 18 may be ascertained. The assessment shall include all property 19 of every kind and character whatsoever, real, personal, or 20 mixed, used by the companies in the transaction of telegraph 21 and telephone business; and the The property so included in 22 the assessment shall not be taxed in any other manner than as 23 provided in this chapter . 24 2. a. Except as provided in paragraph “c ”, for assessment 25 years beginning on or after January 1, 2013, a company’s 26 property, excluding the property identified in paragraph “b” 27 as exempt from taxation, shall be subject to assessment and 28 taxation under this chapter by the director of revenue in 29 the same manner as property assessed and taxed as commercial 30 property under chapters 427, 427A, 427B, 428, and 441. 31 b. A company’s property that is any of the following is 32 exempt from taxation and shall not be assessed for taxation: 33 (1) Central office equipment. 34 (2) Transmission equipment. 35 -1- LSB 5504YC (4) 84 md/sc 1/ 4

H.F. _____ (3) Qualified telephone company property. However, 1 qualified telephone company property shall be valued and 2 included in the company’s assessment for the assessment years, 3 and to the extent specified, in paragraph “c” . 4 c. For assessment years beginning on or after January 1, 5 2013, but before January 1, 2017, the director of revenue shall 6 add to the actual value determined under paragraph “a” for the 7 applicable assessment year, the following: 8 (1) For the assessment year beginning January 1, 2013, an 9 amount equal to the actual value of the company’s qualified 10 telephone company property that exceeds five million dollars. 11 (2) For the assessment year beginning January 1, 2014, an 12 amount equal to the actual value of the company’s qualified 13 telephone company property that exceeds fifty million dollars. 14 (3) For the assessment year beginning January 1, 2015, an 15 amount equal to the actual value of the company’s qualified 16 telephone company property that exceeds one hundred million 17 dollars. 18 (4) For the assessment year beginning January 1, 2016, an 19 amount equal to the actual value of the company’s qualified 20 telephone company property that exceeds one hundred fifty 21 million dollars. 22 Sec. 2. Section 433.12, Code 2011, is amended by adding the 23 following new subsections: 24 NEW SUBSECTION . 1A. As used in this chapter, “central 25 office equipment” means equipment owned or leased by a company 26 and used in initiating, amplifying, switching, or monitoring 27 telecommunications services, including such ancillary equipment 28 necessary for the support, regulation, control, repair, or 29 testing of such equipment. 30 NEW SUBSECTION . 3. As used in this chapter, “qualified 31 telephone company property” means telephone wire, telephone 32 cable, fiber optic cable, conduit systems, poles, or other 33 equipment owned or leased by a company and used by the company 34 to transmit sound or data. 35 -2- LSB 5504YC (4) 84 md/sc 2/ 4

H.F. _____ NEW SUBSECTION . 4. As used in this chapter, “transmission 1 equipment” means equipment owned or leased by a company and 2 used in the process of sending information from one location to 3 another location, including such ancillary equipment necessary 4 for the support, regulation, control, repair, or testing of 5 such equipment. 6 Sec. 3. Section 476.1D, subsection 10, Code Supplement 7 2011, is amended by striking the subsection. 8 Sec. 4. EFFECTIVE DATE. 9 1. Except as provided in subsection 2, this Act takes effect 10 July 1, 2012. 11 2. The section of this Act amending section 476.1D takes 12 effect July 1, 2016. 13 Sec. 5. APPLICABILITY. 14 1. Except as provided in subsection 2, this Act applies to 15 assessment years beginning on or after January 1, 2013. 16 2. The section of this Act amending section 476.1D applies 17 to assessment years beginning on or after January 1, 2017. 18 EXPLANATION 19 This bill relates to the manner in which the property of 20 telecommunications companies is assessed and taxed. 21 The assessment provisions of current Code section 22 433.4 provide that in ascertaining the actual value of 23 telecommunications company property the director of revenue 24 shall include all property of every kind and character 25 whatsoever, real, personal, or mixed, used by the company in 26 the transaction of telegraph and telephone business. 27 The bill strikes the provisions that included all kinds and 28 character of property in the determination of actual value 29 of a company’s property. Instead, the bill provides that 30 for assessment years beginning on or after January 1, 2013, 31 a company’s property, excluding central office equipment, 32 transmission equipment, and qualified telephone company 33 property, all as defined in the bill, shall be subject to 34 assessment and taxation under Code chapter 433 by the director 35 -3- LSB 5504YC (4) 84 md/sc 3/ 4

H.F. _____ of revenue in the same manner as property assessed and taxed 1 as commercial property. The bill provides, however, that for 2 assessment years beginning on or after January 1, 2013, but 3 before January 1, 2017, the director of revenue shall add to 4 the actual value so determined for that assessment year a 5 specified amount of actual value of the company’s qualified 6 telephone company property. The bill defines “qualified 7 telephone company property” as telephone wire, telephone 8 cable, fiber optic cable, conduit systems, poles, or other 9 equipment owned or leased by a company and used by the company 10 to transmit sound or data. 11 The bill strikes a provision in Code section 476.1D that 12 allowed certain specified long-distance telephone company 13 property to be assessed for taxation as commercial property by 14 the local assessor. 15 Except for the section of the bill amending Code section 16 476.1D, the bill takes effect July 1, 2012, and applies to 17 assessment years beginning on or after January 1, 2013. The 18 section of the bill amending Code section 476.1D takes effect 19 July 1, 2016, and applies to assessment years beginning on or 20 after January 1, 2017. 21 -4- LSB 5504YC (4) 84 md/sc 4/ 4