SENATE FILE _____

BY  (PROPOSED COMMITTEE ON WAYS AND MEANS BILL BY CHAIRPERSON BOLKCOM)

A BILL FOR

An Act relating to assessment of telecommunications company property for purposes of property taxation, and including effective date and retroactive applicability provisions.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

   Section 1.  Section 427A.1, subsection 1, paragraph h, Code 2011, is amended to read as follows:
   h.  Property assessed by the department of revenue pursuant to sections 428.24 to 428.29, or chapters 433, chapter 433 if such property was first assessed for taxation in this state before January 1, 1996, or chapters 434, 437, 437A, and 438.
   Sec. 2.  Section 427B.17, subsection 5, unnumbered paragraph 1, Code 2011, is amended to read as follows:
   This section shall not apply to property assessed by the department of revenue pursuant to sections 428.24 to 428.29, or chapters 433, chapter 433 if such property was first assessed for taxation in this state before January 1, 1996, or chapters 434, 437, 437A, and 438, and such property shall not receive the benefits of this section.
   Sec. 3.  Section 433.4, Code 2011, is amended to read as follows:
   433.4  Assessment.
   1.  The director of revenue shall on or before October 31 each year, proceed to find the actual value of the property of these companies in this state, taking into consideration the information obtained from the statements required, and any further information the director can obtain, using the same as a means for determining the actual cash value of the property of these companies within this state.
   2.  The For property of a company that was first assessed for taxation in this state before January 1, 1996, the director shallalso take into consideration the information described in subsection 1 and the valuation of all property of these companies, including franchises and the use of the property in connection with lines outside the state, and making these deductions as may be necessary on account of extra value of property outside the state as compared with the value of property in the state, in order that the actual cash value of the property of the company within this state may be ascertained. The assessment shall include all property of every kind and character whatsoever, real, personal, or mixed, used by the companies in the transaction of telegraph and telephone business; and the property so included in the assessment shall not be taxed in any other manner than as provided in this chapter.
   3.  For property of a company that was first assessed for taxation in this state on or after January 1, 1996, the director shall determine the value of the property of these companies within this state in the same manner as all other property assessed as commercial property by the local assessor under chapters 427, 427A, 427B, 428, and 441.
   4.  Property valued under this section that is not otherwise exempt shall be valued at an amount no greater than the cost of such property, reduced by accounting depreciation and by any appropriate adjustments for functional and economic obsolescence, and in determining said values the director shall not use any minimum amount or percentage of original cost as the base or minimum value for any item or class of property, regardless of whether the property is still in service.
   Sec. 4.  Section 476.1D, subsection 10, unnumbered paragraph 2, Code 2011, is amended by striking the unnumbered paragraph.
   Sec. 5.  EFFECTIVE UPON ENACTMENT AND RETROACTIVE APPLICABILITY.  This Act, being deemed of immediate importance, takes effect upon enactment and applies retroactively to January 1, 2011, for assessment years beginning on or after that date.
EXPLANATION
   This bill relates to the manner in which telecommunications company property is taxed.
   The assessment provisions of Code section 433.4 currently provide that in ascertaining the actual value of telecommunications company property the director of revenue shall include all property of every kind and character whatsoever, real, personal, or mixed, used by the company in the transaction of telegraph and telephone business.
   Under the bill, property of a telecommunications company that was first assessed for taxation before January 1, 1996, continues to be taxed in the manner provided under current Code section 433.4. However, the bill modifies the Code section to provide that the value of a company’s property that was first assessed for taxation on or after January 1, 1996, shall be determined in the same manner as all other property assessed as commercial property by the local assessor.
   The bill also provides that telecommunications company property, regardless of the date it was first assessed, that is not otherwise exempt shall be valued at an amount no greater than the cost of the property reduced by accounting depreciation with appropriate adjustments for functional and economic obsolescence, and that in determining the value the director shall not use any minimum amount or percentage of original cost as the base or minimum value for any item or class of property, regardless of whether the property is still in service.
   The bill provides that telecommunications company property that was first assessed for taxation on or after January 1, 1996, and classified as machinery used in manufacturing, and computers and related equipment, currently not subject to special valuation provisions conferring property tax exempt status, shall be made subject to those provisions and considered either exempt from property taxation or valued at 0 percent of their net acquisition cost. 
   The bill takes effect upon enactment and applies retroactively to assessment years beginning on or after January 1, 2011.