SENATE FILE 88

BY  KIBBIE

A BILL FOR

An Act relating to tax revenues by increasing sales and use tax rates, by diverting a certain amount from the revenues generated from the increased rates to the natural resources and outdoor recreation trust fund and by using the balance of the revenues to provide a commercial property tax credit and including applicability provisions.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

DIVISION I

SALES AND USE TAXES
   Section 1.  Section 423.2, subsection 1, unnumbered paragraph 1, Code 2011, is amended to read as follows:
   There is imposed a tax of six seven percent upon the sales price of all sales of tangible personal property, consisting of goods, wares, or merchandise, sold at retail in the state to consumers or users except as otherwise provided in this subchapter.
   Sec. 2.  Section 423.2, subsections 2 and 3, Code 2011, are amended to read as follows:
   2.  A tax of six seven percent is imposed upon the sales price of the sale or furnishing of gas, electricity, water, heat, pay television service, and communication service, including the sales price from such sales by any municipal corporation or joint water utility furnishing gas, electricity, water, heat, pay television service, and communication service to the public in its proprietary capacity, except as otherwise provided in this subchapter, when sold at retail in the state to consumers or users.
   3.  A tax of six seven percent is imposed upon the sales price of all sales of tickets or admissions to places of amusement, fairs, and athletic events except those of elementary and secondary educational institutions. A tax of six seven percent is imposed on the sales price of an entry fee or like charge imposed solely for the privilege of participating in an activity at a place of amusement, fair, or athletic event unless the sales price of tickets or admissions charges for observing the same activity are taxable under this subchapter. A tax of six seven percent is imposed upon that part of private club membership fees or charges paid for the privilege of participating in any athletic sports provided club members.
   Sec. 3.  Section 423.2, subsection 4, paragraph a, Code 2011, is amended to read as follows:
   a.  A tax of six seven percent is imposed upon the sales price derived from the operation of all forms of amusement devices and games of skill, games of chance, raffles, and bingo games as defined in chapter 99B, and card game tournaments conducted under section 99B.7B, that are operated or conducted within the state, the tax to be collected from the operator in the same manner as for the collection of taxes upon the sales price of tickets or admission as provided in this section. Nothing in this subsection shall legalize any games of skill or chance or slot-operated devices which are now prohibited by law.
   Sec. 4.  Section 423.2, subsection 5, Code 2011, is amended to read as follows:
   5.  There is imposed a tax of six seven percent upon the sales price from the furnishing of services as defined in section 423.1.
   Sec. 5.  Section 423.2, subsection 7, paragraph a, unnumbered paragraph 1, Code 2011, is amended to read as follows:
   A tax of six seven percent is imposed upon the sales price from the sales, furnishing, or service of solid waste collection and disposal service.
   Sec. 6.  Section 423.2, subsection 8, paragraph a, Code 2011, is amended to read as follows:
   a.  A tax of six seven percent is imposed on the sales price from sales of bundled transactions. For the purposes of this subsection, a“bundled transaction” is the retail sale of two or more distinct and identifiable products, except real property and services to real property, which are sold for one nonitemized price. A“bundled transaction” does not include the sale of any products in which the sales price varies, or is negotiable, based on the selection by the purchaser of the products included in the transaction.
   Sec. 7.  Section 423.2, subsection 9, Code 2011, is amended to read as follows:
   9.  A tax of six seven percent is imposed upon the sales price from any mobile telecommunications service which this state is allowed to tax by the provisions of the federal Mobile Telecommunications Sourcing Act, Pub. L. No. 106-252, 4 U.S.C. § 116 et seq. For purposes of this subsection, taxes on mobile telecommunications service, as defined under the federal Mobile Telecommunications Sourcing Act that are deemed to be provided by the customer’s home service provider, shall be paid to the taxing jurisdiction whose territorial limits encompass the customer’s place of primary use, regardless of where the mobile telecommunications service originates, terminates, or passes through and shall in all other respects be taxed in conformity with the federal Mobile Telecommunications Sourcing Act. All other provisions of the federal Mobile Telecommunications Sourcing Act are adopted by the state of Iowa and incorporated into this subsection by reference. With respect to mobile telecommunications service under the federal Mobile Telecommunications Sourcing Act, the director shall, if requested, enter into agreements consistent with the provisions of the federal Act.
   Sec. 8.  Section 423.2, subsection 11, paragraph b, Code 2011, is amended to read as follows:
   b.  Subsequent to the deposit into the general fund of the state and after the transfer of such pursuant to paragraph “a”, the department shall do the following in the order prescribed:
   (1)  Transfer the revenues collected under chapter 423B, the department shall transfer one-sixth of such.
   (2)  Transfer one-seventh of the remaining revenues to the secure an advanced vision for education fund created in section 423F.2. This paragraph subparagraph is repealed December 31, 2029.
   (3)  Transfer one-seventh of the remaining revenues in the following manner:
   (a)  To the natural resources and outdoor recreation fund created pursuant to Article VII, sec. 10, of the Iowa Constitution, an amount equal to the amount generated by a sales tax rate equal to three-eights of one percent.
   (b)  To the commercial property tax relief fund created pursuant to section 426C.2, the remaining revenues after transfer of the revenues pursuant to subparagraph division (a).
   (c)  The amount transferred under this subparagraph (3) shall be reduced to one-sixth of such remaining revenues on January 1, 2030.
   Sec. 9.  Section 423.2, subsection 13, Code 2011, is amended to read as follows:
   13.  The sales tax rate of six seven percent is reduced to five six percent on January 1, 2030.
   Sec. 10.  Section 423.5, unnumbered paragraph 1, Code 2011, is amended to read as follows:
   Except as provided in subsection 3, an excise tax at the rate of six seven percent of the purchase price or installed purchase price is imposed on the following:
   Sec. 11.  Section 423.5, subsection 9, Code 2011, is amended to read as follows:
   9.  The use tax rate of six seven percent is reduced to five six percent on January 1, 2030.
   Sec. 12.  Section 423.43, subsection 1, paragraph b, Code 2011, is amended to read as follows:
   b.  Subsequent to the deposit into the general fund of the state and after the transfer of such pursuant to paragraph “a”, the department shall do the following in the order prescribed:
   (1)  Transfer the revenues collected under chapter 423B, the department shall transfer one-sixth of such.
   (2)  Transfer one-seventh of the remaining revenues to the secure an advanced vision for education fund created in section 423F.2. This paragraph subparagraph is repealed December 31, 2029.
   (3)  Transfer one-seventh of the remaining revenues to the commercial property tax relief fund created pursuant to section 426C.2. The amount transferred under this subparagraph (3) shall be reduced to one-sixth of such remaining revenues on January 1, 2030.

DIVISION II

COMMERCIAL PROPERTY TAX RELIEF
   Sec. 13.  NEW SECTION.  426C.1  Definitions.
   For purposes of this chapter, unless the context otherwise requires:
   1.  “Department” means the department of revenue.
   2.  “Eligible taxpayer” means a taxpayer meeting the requirements of section 426C.3.
   3.  “Fund” means the commercial property tax relief fund created in section 426C.2.
   Sec. 14.  NEW SECTION.  426C.2  Commercial property tax relief fund.
   1.  A commercial property tax relief fund is created in the state treasury. The fund shall consist of the moneys transferred pursuant to section 423.2, subsection 11, paragraph “b”, subparagraph (3), subparagraph division (b) and section 423.43, subsection 1, paragraph “b”, subparagraph (3).
   2.  Moneys in the fund are appropriated to the department for purposes of providing a commercial property tax credit pursuant to this chapter.
   3.  Notwithstanding section 12C.7, subsection 2, interest or earnings on moneys in the fund shall be credited to the fund. Notwithstanding section 8.33, moneys remaining in the fund at the end of a fiscal year shall not revert to the general fund of the state.
   Sec. 15.  NEW SECTION.  426C.3  Eligibility —— annual claims.
   1.  A taxpayer who is liable for the payment of property tax on property assessed as commercial property pursuant to section 441.21 shall be eligible for a credit toward property taxes due in an amount not to exceed the taxpayer’s annual property tax liability.
   2.  The taxpayer shall annually file a claim for the credit. The claim shall be filed not later than March 1 immediately preceding the fiscal year during which the property taxes are due.
   Sec. 16.  NEW SECTION.  426C.4  Computation of taxes —— certification to the department.
   On or before April 1 of each year, the county auditor shall compute the total amount of property taxes to be levied on, or estimated to be levied on, all commercial property eligible for a credit pursuant to this chapter, and which are due and payable in the ensuing fiscal year, and on or before April 1 the county auditor shall certify the total amount to the department of revenue.
   Sec. 17.  NEW SECTION.  426C.5  Apportionment of fund moneys —— issuance of warrants.
   1.  The moneys in the fund shall be apportioned each year to provide a property tax credit to commercial property taxpayers as follows:
   a.  If the moneys in the fund equal or exceed the combined property tax liability of all eligible taxpayers, each eligible taxpayer shall receive a credit in an amount equal to the taxpayer’s property tax liability.
   b.  If the moneys in the fund are insufficient to cover the combined property tax liability of the eligible businesses, the moneys in the fund shall be apportioned in a pro rata amount to each eligible taxpayer. The department shall notify the county auditors of the pro rata percentage on or before June 15 of each year.
   2.  Upon receipt of the pro rata percentage from the director of revenue, the county auditor shall determine the amount to be credited to each eligible taxpayer and shall enter the amount upon the tax lists as a credit against the tax levied on each eligible business on which there has been made an allowance of credit before delivering the tax lists to the county treasurer.
   3.  After receiving the certified amounts from the county auditors pursuant to section 426C.4, the director of revenue shall authorize the department of administrative services to issue warrants on the fund payable to the county treasurers in the amount certified by the county auditor of each county or the pro rata amount, as applicable. The department of administrative services shall mail the warrants to the county auditors on July 15 of each year.
   4.  The county treasurer, pursuant to section 445.5, subsection 1, shall show on each tax statement the amount of tax credit received by the eligible taxpayer.
   Sec. 18.  NEW SECTION.  426C.6  Rules.
   The director of revenue shall prescribe forms and adopt rules as necessary to carry out the purposes of this chapter.
   Sec. 19.  APPLICABILITY DATE.  This division of this Act applies to property taxes due and payable in fiscal years beginning on or after July 1, 2012.
EXPLANATION
   This bill increases the sales and use taxes and uses the increased revenues to fund the natural resources and outdoor recreation trust fund and to provide a commercial property tax credit.
   Currently, the sales and use taxes are imposed at the rate of 6 percent. Division I of the bill amends the several provisions imposing these taxes by increasing the rate to 7 percent.
   In November 2010, Iowa voters ratified an amendment to the Iowa Constitution. The amendment creates a natural resources and outdoor recreation trust fund in the state treasury for purposes of funding certain environmental and natural resource programs and diverts an amount equal to a sales tax rate of three-eighths of 1 percent into the fund. Moneys are not credited to the fund until the state sales tax rate is increased. The amendment also directs the general assembly to provide for the implementation of the fund. 
   Since division I increases the state sales tax rate, the division provides for the required transfer of moneys into the fund. However, the division increases the sales tax rate by more than the amount required to be transferred, so the division also provides for the transfer of the balance of the revenues plus the moneys from the increased use tax into a commercial property tax relief fund.
   Division II of the bill creates the commercial property tax relief fund and provides a tax credit for commercial property taxpayers. 
   The property tax relief fund is created in the state treasury consisting of the moneys from the increased sales and use taxes not transferred to the natural resources and outdoor recreation trust fund. Moneys in the fund are appropriated to the department of revenue for purposes of providing a commercial property tax credit. Interest and earnings on moneys in the fund are credited to the fund, and moneys in the fund do not revert to the general fund of the state.
   The division provides that all commercial property taxpayers are eligible for a tax credit in an amount not to exceed their annual property tax liability and requires each taxpayer to file a claim for credit annually by March 1 immediately preceding the fiscal year during which the property taxes are due.
   The division provides that on or before April 1 of each year, the county auditors must provide to the department of revenue a report of the total amount of taxes levied or to be levied on the taxpayers eligible for a credit. The department determines whether there are sufficient moneys in the fund to cover the combined tax liability of all the eligible taxpayers and apportions the moneys accordingly. If the moneys in the fund are sufficient, each eligible business receives an amount equal to its tax liability. If the moneys in the fund are not sufficient, each eligible taxpayer receives a pro rata share of the moneys in the fund.
   The division directs the director of revenue to authorize the department of administrative services to issue warrants on the fund payable to the county treasurers in the amount certified as the amount of credits to which businesses in that county are entitled. The county auditor determines the amount to be credited to each eligible taxpayer. The county treasurer must show on the tax statement the amount of tax credit for the eligible taxpayer.
   Division II of the bill applies to property taxes due and payable in fiscal years beginning on or after July 1, 2012.