SF 2178 (LSB 5844XS (3) 84)

SENATE FILE 2178

BY  SENG

A BILL FOR

An Act authorizing certain special charter cities to impose a special charter city sales and services tax.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

    Section 1.  NEW SECTION.  423G.1  Special charter city sales and services tax.
   1.  Subject to the provisions of this chapter, a special charter city with a population greater than seventy-five thousand may impose by ordinance a special charter city sales and services tax at the rate of one percent on the sales price taxed by the state under chapter 423, subchapter II.
   a.  A special charter city sales and services tax shall be imposed on the same basis as the state sales and services tax or, in the case of the use of natural gas, natural gas service, electricity, or electric service, on the same basis as the state use tax.
   b.  A special charter city sales and services tax shall not be imposed on the sale of any property or on any service not taxed by the state, except the tax shall not be imposed on the sales price from the sale of motor fuel or special fuel as defined in chapter 452A which is consumed for highway use or in watercraft or aircraft if the fuel tax is paid on the transaction and a refund has not or will not be allowed, on the sales price from the sale of equipment by the state department of transportation, or on the sales price from the sale or use of natural gas, natural gas service, electricity, or electric service in a city where the sales price from the sale of natural gas or electric energy is subject to a franchise fee or user fee during the period the franchise or user fee is imposed.
   c.  A special charter city sales and services tax is applicable to transactions within the incorporated areas of the special charter city where it is imposed and shall be collected by all persons required to collect state sales taxes.
   d.  The amount of the sale, for purposes of determining the amount of the special charter city sales and services tax, does not include the amount of any state sales tax or other local option sales and services taxes.
   e.  A tax permit other than the state sales tax permit required under section 423.36 shall not be required by local authorities.
   2.  If a special charter city sales and services tax is imposed by a city pursuant to this chapter, a local excise tax at the same rate shall be imposed by the city on the purchase price of natural gas, natural gas service, electricity, or electric service subject to tax under chapter 423, subchapter III, and not exempted from tax by any provision of chapter 423, subchapter III. The local excise tax is applicable only to the use of natural gas, natural gas service, electricity, or electric service within the incorporated areas of the city where it is imposed and, except as otherwise provided in this chapter, shall be collected and administered in the same manner as the special charter city sales and services tax. For purposes of this chapter, “special charter city sales and services tax” shall also include the local excise tax.
   3.  A special charter city sales and services tax under this chapter may be imposed in addition to any local sales and services tax imposed under chapter 423B in an area of the city.
    Sec. 2.  NEW SECTION.  423G.2  Election —— imposition ——repeal.
   1.  Election requirement.  A special charter city sales and services tax shall be imposed pursuant to this chapter only after an election at which a majority of those voting on the question favors imposition and shall then be imposed until repealed as provided in this section.
   2.  Manner of election.  The question of whether a special charter city sales and services tax shall be imposed in a special charter city shall be submitted to the voters by one of the following methods:
   a.  Upon its own motion, the governing body of the city may within thirty days of adoption of the motion direct the county commissioner of elections to submit the question of the imposition of a special charter city sales and services tax to the registered voters of the city.

   b.  Upon the receipt of a petition signed by eligible electors of the city, the governing body of the city shall within thirty days direct the county commissioner of elections to submit the question of the imposition of a special charter city sales and services tax to the registered voters of the city. A petition requesting imposition of a special charter city sales and services tax shall be signed by a number of eligible electors of the city equal to five percent of the persons in the city who voted in the most recent general election.
   3.  Timing and ballot requirements.  
   a.  The county commissioner of elections shall submit the question of imposition of a special charter city sales and services tax at a special election held on a date specified in section 39.2, subsection 4, paragraph “b”, except that the election shall not be held sooner than sixty days after publication of notice of the ballot proposition.
   b.  The ballot proposition shall specify the date the tax will be imposed. The date of imposition shall be as provided in section 423G.3, subsection 1.
   c.  The ballot proposition shall contain a statement of the purposes for which the revenues shall be expended. Moneys collected from a special charter city sales and services tax shall be expended pursuant to section 423G.4, subsection 3.
   d.  When submitting the question of the imposition of a special charter city sales and services tax, the governing body of the city may direct that the ballot question contain a provision for the repeal, without election, of the tax on a specific date, which date shall be as provided in section 423G.3, subsection 1.
   e.  If a majority of those voting on the question of imposition of the special charter city sales and services tax favors imposition of the tax, the governing body of the city shall impose the tax at the rate specified in section 423G.1, subsection 1, for an unlimited period.

   f.  If the question of whether to impose a special charter city sales and services tax fails to gain approval by the required percentage of votes, a question of whether to impose a special charter city sales and services tax that proposes to use the receipts in substantially the same manner shall not be submitted to the registered voters again for a period of at least four years following the date of the election at which the question was defeated.
   4.  Repeal by election.  
   a.  A special charter city sales and services tax may be repealed after an election at which a majority of those voting on the question of repeal favors the repeal. The date on which the repeal takes effect shall not be earlier than ninety days following the election.
   b.  The election at which the question of a repeal of the special charter city sales and services tax is submitted to the registered voters shall be called and held in the same manner and under the same conditions as provided in subsections 2 and 3.
   c.  An election to repeal a special charter city sales and services tax shall not be submitted to the registered voters of a city more than once every four years.
   5.  Notice to the director of revenue.  Within ten days of the election at which a majority of those voting on the question favors the imposition or repeal of a special charter city sales and services tax, the county auditor shall give written notice of the result of the election by sending a copy of the abstract of the votes from the election to the director of revenue. The director shall have the authority to waive the notice requirement.
    Sec. 3.  NEW SECTION.  423G.3  Administration.
   1.
  a.  A special charter city sales and services tax shall be imposed either January 1 or July 1 following the notification of the director of revenue but not sooner than ninety days following the passage of the ordinance and not sooner than sixty days following notice to sellers, as defined in section 423.1.
   b.  A special charter city sales and services tax shall be repealed only on June 30 or December 31, but not sooner than ninety days following the repeal of the ordinance. However, the sales and services tax shall not be repealed before the tax has been in effect for one year.
   c.  At least forty days before the imposition or repeal of the tax, a city shall provide notice of the action by certified mail to the director of revenue.
   d.  The imposition of a special charter city sales and services tax shall not be applied to purchases from a printed catalog wherein a purchaser computes the local tax based on rates published in the catalog unless a minimum of one hundred twenty days’ notice of the imposition has been given to the seller and the first day of a calendar quarter has occurred on or after the one hundred twentieth day.
   2.
  a.  The director of revenue shall administer a special charter city sales and services tax as nearly as possible in conjunction with the administration of state sales tax laws. The director shall provide appropriate forms or provide space on the regular state tax forms for reporting special charter city sales and services tax liability.
   b.  The ordinance of a city imposing a special charter city sales and services tax shall adopt by reference the applicable provisions of the appropriate sections of chapter 423. All powers and requirements of the director to administer the state sales tax law and use tax law are applicable to the administration of a special charter city sales and services tax law and the local excise tax, including but not limited to the provisions of section 422.25, subsection 4, sections 422.30, 422.67, and 422.68, section 422.69, subsection 1, sections 422.70 to 422.75, section 423.14, subsection 1 and subsection 2, paragraphs “b” through “e”, and sections 423.15, 423.23, 423.24, 423.25, 423.31 to 423.35, 423.37 to 423.42, 423.46, and 423.47. Local officials shall confer with the director of revenue for assistance in drafting the ordinance imposing a special charter city sales and services tax. A certified copy of the ordinance shall be filed with the director as soon as possible after passage of the ordinance.
   c.  Frequency of deposits and quarterly reports of a special charter city sales and services tax with the department of revenue are governed by the tax provisions in section 423.31. Local tax collections shall not be included in computation of the total tax to determine frequency of filing under section 423.31.
   d.  The director shall apply a boundary change of a city imposing or collecting the special charter city sales and services tax to the imposition or collection of that tax only on the first day of a calendar quarter which occurs sixty days or more after the director has given notice of the boundary change to sellers.
   3.
  a.  The director, in consultation with local officials, shall collect and account for a special charter city sales and services tax. The director shall certify each quarter the amount of sales and services tax receipts and any interest and penalties to be credited to a special charter city sales and services tax fund of that city established in the office of the treasurer of state. All taxes collected under this chapter by a retailer or any individual are deemed to be held in trust for the state of Iowa and the local jurisdictions imposing the taxes.
   b.  All local tax moneys and interest and penalties received or refunded one hundred eighty days or more after the date on which the city repeals its special charter city sales and services tax shall be deposited in or withdrawn from the general fund of the state.
    Sec. 4.  NEW SECTION.  423G.4  Payment to the city —— use of receipts.
   1.  The director shall credit the special charter city sales and services tax receipts and interest and penalties from a city-imposed tax to the city’s special charter city sales and services tax fund.
   2.
  a.  The director of revenue by August 15 of each fiscal year shall send to the city where the special charter city tax is imposed an estimate of the amount of tax moneys the city will receive for the year and for each month of the year. At the end of each month, the director may revise the estimates for the year and remaining months.
   b.  The director of revenue shall remit ninety-five percent of the estimated tax receipts for the city to the city on or before August 31 of the fiscal year and on or before the last day of each following month.
   c.  The director of revenue shall remit a final payment of the remainder of tax moneys due the city for the fiscal year before November 10 of the next fiscal year. If an overpayment has resulted during the previous fiscal year, the November payment shall be adjusted to reflect any overpayment.
   3.  All special charter city sales and services tax revenues received by the city under this chapter shall be deposited in a special fund of the city and shall be used as follows:
   a.  Ninety percent of the moneys shall be used to provide financial assistance to the following:
   (1)  Resident students of the special charter city graduating from a public or nonpublic school located in the special charter city who have enrolled in an institution of higher education. For purposes of this subparagraph, “financial assistance” includes loans, forgivable loans, grants, and scholarships, and “institution of higher education” includes a four-year college or university, a community college, or a technical or vocational school.
   (2)  Eligible members of the armed forces of the United States for the purchase of residences or the establishment or expansion of businesses located in the special charter city. For purposes of this subparagraph, “eligible member of the armed forces of the United States” means a person who is or was a member of the national guard, reserve, or regular component of the armed forces of the United States who has served at least ninety days of active duty service beginning on or after September 11, 2001. “Eligible member of the armed forces of the United States” also means a former member of the national guard, reserve, or regular component of the armed forces of the United States who was honorably discharged due to injuries incurred while on active federal service beginning on or after September 11, 2001, that precluded completion of a minimum aggregate of ninety days of active federal service.
   b.  Ten percent of the moneys shall be used to hire additional public safety personnel.
EXPLANATION
   This bill authorizes special charter cities of 75,000 or more in population to impose a 1-percent special charter city sales and services tax on the same basis as the state sales tax or in the case of the use of natural gas, natural gas service, electricity, or electric service on the same basis as the state use tax.
   The tax cannot be imposed unless approved at an election. The issue can be submitted either upon a motion by the governing body of a city or by petition of eligible electors equal in number to 5 percent of voters at the most recent general election.
   The question of the imposition of the tax must be submitted at a special election. The ballot proposition for the tax must include certain information including the type and rate of the tax, the date it will be imposed, and the purposes for which the revenues shall be expended.
   The tax can be repealed at election by a majority vote, or a repeal date can be included on the ballot at the election where its imposition is proposed. A vote to repeal the tax must be conducted in the same manner as the election imposing the tax. An election to repeal a special charter city sales and services tax shall not be submitted to voters more than once every four years. The bill requires that the county auditor provide written notice to the director of revenue within 10 days following a favorable vote to impose or repeal such a tax.
   All revenues collected from the special charter city sales and services tax must be spent by the city as follows: 90 percent for providing scholarships to graduating high school students in the city who are enrolling in college and for eligible veterans purchasing a residence in the city or establishing or expanding a business in the city and 10 percent for hiring additional public safety personnel.