Senate File 2330 - Introduced SENATE FILE 2330 BY COMMITTEE ON WAYS AND MEANS (SUCCESSOR TO SF 2309) (SUCCESSOR TO SSB 3178) A BILL FOR An Act relating to retailers maintaining a place of business 1 in this state for purposes of the collection of sales and 2 use taxes, agreements relating to the collection of sales 3 and use taxes in the state, and sales of tangible personal 4 property and services to the state. 5 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 6 TLSB 5408SZ (3) 84 mm/sc

S.F. 2330 Section 1. Section 423.1, subsection 47, Code Supplement 1 2011, is amended to read as follows: 2 47. “Retailer” means and includes every person engaged in 3 the business of selling tangible personal property or taxable 4 services at retail, or the furnishing of gas, electricity, 5 water, or communication service, and tickets or admissions 6 to places of amusement and athletic events or operating 7 amusement devices or other forms of commercial amusement from 8 which revenues are derived and includes but is not limited to 9 every retailer maintaining a place of business in this state . 10 However, when in the opinion of the director it is necessary 11 for the efficient administration of this chapter to regard 12 any salespersons, representatives, truckers, peddlers, or 13 canvassers as agents of the dealers, distributors, supervisors, 14 employers, or persons under whom they operate or from whom they 15 obtain tangible personal property sold by them irrespective of 16 whether or not they are making sales on their own behalf or on 17 behalf of such dealers, distributors, supervisors, employers, 18 or persons, the director may so regard them, and may regard 19 such dealers, distributors, supervisors, employers, or persons 20 as retailers for the purposes of this chapter . “Retailer” 21 includes a seller obligated to collect sales or use tax. 22 Sec. 2. Section 423.1, subsection 48, Code Supplement 2011, 23 is amended to read as follows: 24 48. a. “Retailer maintaining a place of business in this 25 state” or any like term includes any retailer having or 26 maintaining within this state, directly or by a subsidiary, 27 an office, distribution house, sales house, warehouse, or 28 other place of business, or any representative operating 29 within this state under the authority of the retailer or its 30 subsidiary, irrespective of whether that place of business or 31 representative is located here permanently or temporarily, or 32 whether the retailer or subsidiary is admitted to do business 33 within this state pursuant to chapter 490 . 34 b. (1) A retailer shall be presumed to be maintaining a 35 -1- LSB 5408SZ (3) 84 mm/sc 1/ 5

S.F. 2330 place of business in this state, as defined in paragraph “a” , if 1 any person that has substantial nexus in this state, other than 2 a person acting in its capacity as a common carrier, does any 3 of the following: 4 (a) Sells a similar line of products as the retailer and 5 does so under the same or similar business name. 6 (b) Maintains an office, distribution facility, warehouse, 7 storage place, or similar place of business in this state to 8 facilitate the delivery of property or services sold by the 9 retailer to the retailer’s customers. 10 (c) Uses trademarks, service marks, or trade names in this 11 state that are the same or substantially similar to those used 12 by the retailer. 13 (d) Delivers, installs, assembles, or performs maintenance 14 services for the retailer’s customers. 15 (e) Facilitates the retailer’s delivery of property to 16 customers in this state by allowing the retailer’s customers to 17 take delivery of property sold by the retailer at an office, 18 distribution facility, warehouse, storage place, or similar 19 place of business maintained by the person in this state. 20 (f) Conducts any other activities in this state that 21 are significantly associated with the retailer’s ability 22 to establish and maintain a market in this state for the 23 retailer’s sales. 24 (2) The presumption established in this paragraph may be 25 rebutted by a showing of proof that the person’s activities in 26 this state are not significantly associated with the retailer’s 27 ability to establish or maintain a market in this state for the 28 retailer’s sales. 29 Sec. 3. NEW SECTION . 423.13A Administration —— 30 effectiveness of agreements with retailers. 31 1. Notwithstanding any provision of this chapter to the 32 contrary, any ruling, agreement, or contract, whether written 33 or oral, express or implied, entered into after the effective 34 date of this Act between a retailer and a state agency which 35 -2- LSB 5408SZ (3) 84 mm/sc 2/ 5

S.F. 2330 provides that a retailer is not required to collect sales and 1 use tax in this state despite the presence in this state of 2 a warehouse, distribution center, or fulfillment center that 3 is owned and operated by the retailer or an affiliate of the 4 retailer shall be null and void unless such ruling, agreement, 5 or contract is approved by a majority vote of both houses of 6 the general assembly. 7 2. For purposes of this section, “state agency” means 8 the executive branch, including any executive department, 9 commission, board, institution, division, bureau, office, 10 agency, or other entity of state government. “State agency” 11 does not mean the general assembly, or the judicial branch as 12 provided in section 602.1102. 13 Sec. 4. Section 423.36, Code 2011, is amended by adding the 14 following new subsection: 15 NEW SUBSECTION . 1A. a. Notwithstanding subsection 1, 16 if any person will make taxable sales of tangible personal 17 property or furnish services to any state agency, that person 18 shall, prior to the sale, apply for and receive a permit 19 to collect sales or use tax pursuant to this section. A 20 state agency shall not purchase tangible personal property 21 or services from any person unless that person has a valid, 22 unexpired permit issued pursuant to this section and is in 23 compliance with all other requirements in this chapter imposed 24 upon retailers, including but not limited to the requirement to 25 collect and remit sales and use tax and file sales tax returns. 26 b. For purposes of this subsection, “state agency” means 27 any executive, judicial, or legislative department, commission, 28 board, institution, division, bureau, office, agency, or other 29 entity of state government. 30 EXPLANATION 31 This bill relates to the collection of sales and use taxes 32 by retailers maintaining a place of business in this state, 33 agreements relating to the collection of sales and use taxes, 34 and sales of tangible personal property and services to state 35 -3- LSB 5408SZ (3) 84 mm/sc 3/ 5

S.F. 2330 agencies. 1 A retailer located in this state, or maintaining a place of 2 business in this state, must collect and remit sales and use 3 taxes to the department of revenue. Currently, as defined in 4 Code section 423.1, the term “retailer maintaining a place of 5 business in this state” includes certain places of business, 6 and representatives operating under the authority of the 7 retailer. 8 The bill provides that a retailer will be presumed to be 9 maintaining a place of business in this state if any person 10 that has substantial nexus in this state, other than a common 11 carrier, engages in any of six activities specified in the 12 bill. The presumption may be rebutted by a showing of proof 13 that the person’s activities are not significantly associated 14 with the retailer’s ability to establish or maintain a market 15 in this state for the retailer’s sales. 16 The bill amends the definition of “retailer” in Code section 17 423.1 to specify that it includes a retailer maintaining a 18 place of business in this state. 19 The bill provides that any ruling, agreement, or contract 20 entered into after the effective date of the bill between a 21 retailer and a state agency which provides that a retailer is 22 not required to collect sales and use tax in this state despite 23 the presence in this state of a warehouse, distribution center, 24 or fulfillment center owned and operated by the retailer or 25 an affiliate shall be null and void unless it is specifically 26 approved by a majority vote of both houses of the general 27 assembly. For purposes of this provision of the bill, “state 28 agency” does not include the general assembly or the judicial 29 branch. 30 The bill provides that no person shall make taxable sales or 31 furnish taxable services to a state agency unless that person 32 obtains a sales tax permit. Also, the state is prohibited 33 from purchasing taxable property or services from any person 34 unless that person has a valid, unexpired sales tax permit and 35 -4- LSB 5408SZ (3) 84 mm/sc 4/ 5