S.F. _____ H.F. _____ Section 1. Section 423.1, subsection 51, paragraph a, 1 subparagraph (2), Code Supplement 2011, is amended to read as 2 follows: 3 (2) The cost of materials used, labor or service cost, 4 interest, losses, all costs of transportation to the seller, 5 all taxes imposed on the seller except as provided in paragraph 6 “b” , subparagraphs (5) and (6) , and any other expenses of the 7 seller. 8 Sec. 2. Section 423.1, subsection 51, paragraph b, Code 9 Supplement 2011, is amended by adding the following new 10 subparagraphs: 11 NEW SUBPARAGRAPH . (5) Any state or local tax on a retail 12 sale that is imposed on the seller if the statute, rule, or 13 local ordinance imposing the tax provides that the seller may, 14 but is not required to, collect such tax from the consumer, and 15 if the tax is separately stated on the invoice, bill of sale, 16 or similar document given to the purchaser. 17 NEW SUBPARAGRAPH . (6) Any tribal tax on a retail sale that 18 is imposed on the seller if the tribal law imposing the tax 19 provides that the seller may but is not required to collect 20 such tax from the consumer, and if the tax is separately stated 21 on the invoice, bill of sale, or similar document given to the 22 purchaser. 23 Sec. 3. Section 423.1, subsection 51, Code Supplement 2011, 24 is amended by adding the following new paragraph: 25 NEW PARAGRAPH . 0d. “Sales price” shall include 26 consideration received by the seller from third parties if all 27 of the following apply: 28 (1) The seller actually receives consideration from a party 29 other than the purchaser and the consideration is directly 30 related to a price reduction or discount on the sale. 31 (2) The seller has an obligation to pass the price reduction 32 or discount through to the purchaser. 33 (3) The amount of the consideration attributable to the sale 34 is fixed and determinable by the seller at the time of the sale 35 -1- LSB 5302DP (3) 84 mm/sc 1/ 5

S.F. _____ H.F. _____ of the item to the purchaser. 1 (4) One of the following criteria is met: 2 (a) The purchaser presents a coupon, certificate, or other 3 documentation to the seller to claim a price reduction or 4 discount where the coupon, certificate, or documentation is 5 authorized, distributed, or granted by a third party with the 6 understanding that the third party will reimburse any seller to 7 whom the coupon, certificate, or documentation is presented. 8 (b) The purchaser is identified to the seller as a member 9 of a group or organization entitled to a price reduction or 10 discount. For purposes of this subparagraph division, a card 11 identifying the holder as a preferred customer, which card is 12 available to any patron, does not constitute membership in such 13 a group or organization. 14 (c) The price reduction or discount is identified as 15 a third-party price reduction or discount on the invoice 16 received by the purchaser or on a coupon, certificate, or other 17 documentation presented by the purchaser. 18 Sec. 4. Section 423.31, Code 2011, is amended by adding the 19 following new subsection: 20 NEW SUBSECTION . 8. Persons required to file a return under 21 this section may instead file a simplified electronic return 22 pursuant to section 423.49. 23 Sec. 5. Section 423.49, subsection 4, paragraph d, Code 24 2011, is amended to read as follows: 25 d. A model 4 seller , or a seller not registered under the 26 agreement who is otherwise registered in the state, may elect 27 to file a simplified return. Model 4 sellers , or sellers not 28 registered under the agreement who are otherwise registered in 29 the state, electing to do so shall file the first part of the 30 return each month. 31 Sec. 6. Section 423.49, subsection 4, paragraph e, 32 unnumbered paragraph 1, Code 2011, is amended to read as 33 follows: 34 A model 4 seller required to register in the state , or a 35 -2- LSB 5302DP (3) 84 mm/sc 2/ 5

S.F. _____ H.F. _____ seller not registered under the agreement who is otherwise 1 registered in the state, may submit the information collected 2 in the second part of the return in one of the following ways: 3 Sec. 7. Section 423.52, subsection 1, Code 2011, is amended 4 to read as follows: 5 1. Sellers and certified service providers using 6 databases derived from zip codes or state or vendor provided 7 address-based databases are relieved from liability to this 8 state or its local taxing jurisdictions for having charged and 9 collected the incorrect amount of sales or use tax resulting 10 from the seller or certified service provider relying on 11 erroneous data provided by this state on tax rates, boundaries, 12 or taxing jurisdiction assignments. If this state provides an 13 address-based system for assigning taxing jurisdictions, the 14 director is not required to provide liability relief for errors 15 resulting from reliance on the information a database derived 16 from zip codes and provided by this state if the director has 17 given adequate notice, as determined by the governing board, to 18 affected parties of the decision to end this relief. 19 EXPLANATION 20 This bill relates to the administration of the sales and use 21 taxes under the streamlined sales tax agreement. 22 Iowa is a member of the streamlined sales and use tax 23 agreement, which is an effort to administer state sales and 24 use taxes in all participating states according to the same 25 simplified system. Under the agreement, Iowa must periodically 26 make changes in the administration of the sales and use taxes 27 in order to remain in compliance. 28 The bill amends the definition of “sales price” to exclude 29 any state or local tax on a retail sale that is imposed on the 30 seller if by law the seller may but is not required to collect 31 the tax from the consumer, and if the tax is separately stated 32 on the invoice, bill of sale, or similar document given to the 33 purchaser. 34 The bill further amends the definition of “sales price” to 35 -3- LSB 5302DP (3) 84 mm/sc 3/ 5

S.F. _____ H.F. _____ exclude any tribal tax on a retail sale that is imposed on the 1 seller if by law the seller may but is not required to collect 2 such tax from the consumer, and if the tax is separately stated 3 on the invoice, bill of sale, or similar document given to the 4 purchaser. 5 The bill also amends the definition of “sales price” to 6 include consideration received from third parties if four 7 criteria are met. First, the seller must actually receive 8 consideration from a party other than the purchaser and the 9 consideration must be directly related to a price reduction 10 or discount on the sale. Second, the seller must have an 11 obligation to pass the price reduction or discount through 12 to the purchaser. Third, the amount of the consideration 13 attributable to the sale must be fixed and determinable by the 14 seller at the time of the sale. Fourth, one of the following 15 must apply: the purchaser presents to the seller a coupon, 16 certificate, or other documentation acquired from a third party 17 to claim a discount; the purchaser is identified to the seller 18 as a member of a group or organization entitled to claim a 19 price reduction or discount; or the price reduction or discount 20 is identified as a third-party price reduction or discount 21 on the invoice received by the purchaser or on a coupon, 22 certificate, or other documentation presented by the purchaser. 23 The bill allows sellers that have not registered under the 24 streamlined sales and use tax agreement but that are otherwise 25 registered in the state and required to file sales tax returns 26 to elect to file using the simplified electronic return. 27 The bill amends Code section 423.52 relating to liability 28 relief for sellers and certified service providers. Under 29 current law, relief from liability is granted to sellers and 30 certified service providers who charge incorrect sales and 31 use tax after relying on erroneous tax rate, boundary, or 32 jurisdiction data provided by the state in databases derived 33 from zip codes or addresses. However, the state may deny 34 liability relief to a seller or certified service provider for 35 -4- LSB 5302DP (3) 84 mm/sc 4/ 5

S.F. _____ H.F. _____ reliance on either database as long as the state maintains an 1 address-based system for assigning taxing jurisdictions, and 2 provides adequate notice to the affected parties. The bill 3 provides that if the state maintains an address-based system 4 for assigning taxing jurisdictions, it may only deny liability 5 relief to sellers and certified service providers for errors 6 resulting from the seller’s or certified service provider’s 7 reliance on a database derived from zip codes. 8 -5- LSB 5302DP (3) 84 mm/sc 5/ 5