Senate Study Bill 1200 - Introduced SENATE FILE _____ BY (PROPOSED COMMITTEE ON WAYS AND MEANS BILL BY CHAIRPERSON BOLKCOM) A BILL FOR An Act relating to assessment of telecommunications company 1 property for purposes of property taxation, and including 2 effective date and retroactive applicability provisions. 3 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 4 TLSB 2725XC (6) 84 md/sc

S.F. _____ Section 1. Section 427A.1, subsection 1, paragraph h, Code 1 2011, is amended to read as follows: 2 h. Property assessed by the department of revenue pursuant 3 to sections 428.24 to 428.29 , or chapters 433 , chapter 433 if 4 such property was first assessed for taxation in this state 5 before January 1, 1996, or chapters 434 , 437 , 437A , and 438 . 6 Sec. 2. Section 427B.17, subsection 5, unnumbered paragraph 7 1, Code 2011, is amended to read as follows: 8 This section shall not apply to property assessed by the 9 department of revenue pursuant to sections 428.24 to 428.29 , or 10 chapters 433 , chapter 433 if such property was first assessed 11 for taxation in this state before January 1, 1996, or chapters 12 434 , 437 , 437A , and 438 , and such property shall not receive 13 the benefits of this section . 14 Sec. 3. Section 433.4, Code 2011, is amended to read as 15 follows: 16 433.4 Assessment. 17 1. The director of revenue shall on or before October 31 18 each year, proceed to find the actual value of the property 19 of these companies in this state, taking into consideration 20 the information obtained from the statements required , and any 21 further information the director can obtain , using the same as 22 a means for determining the actual cash value of the property 23 of these companies within this state . 24 2. The For property of a company that was first assessed 25 for taxation in this state before January 1, 1996, the director 26 shall also take into consideration the information described 27 in subsection 1 and the valuation of all property of these 28 companies, including franchises and the use of the property 29 in connection with lines outside the state, and making these 30 deductions as may be necessary on account of extra value 31 of property outside the state as compared with the value 32 of property in the state, in order that the actual cash 33 value of the property of the company within this state may 34 be ascertained. The assessment shall include all property 35 -1- LSB 2725XC (6) 84 md/sc 1/ 3

S.F. _____ of every kind and character whatsoever, real, personal, or 1 mixed, used by the companies in the transaction of telegraph 2 and telephone business; and the property so included in the 3 assessment shall not be taxed in any other manner than as 4 provided in this chapter . 5 3. For property of a company that was first assessed 6 for taxation in this state on or after January 1, 1996, the 7 director shall determine the value of the property of these 8 companies within this state in the same manner as all other 9 property assessed as commercial property by the local assessor 10 under chapters 427, 427A, 427B, 428, and 441. 11 4. Property valued under this section that is not otherwise 12 exempt shall be valued at an amount no greater than the cost 13 of such property, reduced by accounting depreciation and 14 by any appropriate adjustments for functional and economic 15 obsolescence, and in determining said values the director shall 16 not use any minimum amount or percentage of original cost as 17 the base or minimum value for any item or class of property, 18 regardless of whether the property is still in service. 19 Sec. 4. Section 476.1D, subsection 10, unnumbered paragraph 20 2, Code 2011, is amended by striking the unnumbered paragraph. 21 Sec. 5. EFFECTIVE UPON ENACTMENT AND RETROACTIVE 22 APPLICABILITY. This Act, being deemed of immediate importance, 23 takes effect upon enactment and applies retroactively to 24 January 1, 2011, for assessment years beginning on or after 25 that date. 26 EXPLANATION 27 This bill relates to the manner in which telecommunications 28 company property is taxed. 29 The assessment provisions of Code section 433.4 30 currently provide that in ascertaining the actual value of 31 telecommunications company property the director of revenue 32 shall include all property of every kind and character 33 whatsoever, real, personal, or mixed, used by the company in 34 the transaction of telegraph and telephone business. 35 -2- LSB 2725XC (6) 84 md/sc 2/ 3

S.F. _____ Under the bill, property of a telecommunications company 1 that was first assessed for taxation before January 1, 1996, 2 continues to be taxed in the manner provided under current Code 3 section 433.4. However, the bill modifies the Code section to 4 provide that the value of a company’s property that was first 5 assessed for taxation on or after January 1, 1996, shall be 6 determined in the same manner as all other property assessed as 7 commercial property by the local assessor. 8 The bill also provides that telecommunications company 9 property, regardless of the date it was first assessed, that 10 is not otherwise exempt shall be valued at an amount no 11 greater than the cost of the property reduced by accounting 12 depreciation with appropriate adjustments for functional and 13 economic obsolescence, and that in determining the value the 14 director shall not use any minimum amount or percentage of 15 original cost as the base or minimum value for any item or 16 class of property, regardless of whether the property is still 17 in service. 18 The bill provides that telecommunications company property 19 that was first assessed for taxation on or after January 1, 20 1996, and classified as machinery used in manufacturing, 21 and computers and related equipment, currently not subject 22 to special valuation provisions conferring property tax 23 exempt status, shall be made subject to those provisions and 24 considered either exempt from property taxation or valued at 0 25 percent of their net acquisition cost. 26 The bill takes effect upon enactment and applies 27 retroactively to assessment years beginning on or after January 28 1, 2011. 29 -3- LSB 2725XC (6) 84 md/sc 3/ 3