House File 643 - Introduced HOUSE FILE 643 BY COMMITTEE ON WAYS AND MEANS (SUCCESSOR TO HSB 231) A BILL FOR An Act relating to the taxation of rate-regulated water 1 utilities by establishing a rate-regulated water utility 2 replacement tax, imposing a statewide rate-regulated water 3 utility property tax, providing for the administration of 4 the replacement tax and statewide property tax, providing 5 penalties, and including effective date and retroactive 6 applicability provisions. 7 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 8 TLSB 1427HV (2) 85 md/sc

H.F. 643 Section 1. Section 257.3, subsection 1, paragraph c, Code 1 2013, is amended to read as follows: 2 c. Replacement taxes under chapter 437A or chapter 437B 3 shall be regarded as property taxes for purposes of this 4 chapter . 5 Sec. 2. Section 331.604, subsection 4, Code 2013, is amended 6 to read as follows: 7 4. A county shall not be required to pay a fee to the 8 recorder for filing or recording instruments. However, a 9 county treasurer is required to pay recording fees pursuant to 10 section sections 437A.11 and 437B.7 . 11 Sec. 3. Section 421.10, Code 2013, is amended to read as 12 follows: 13 421.10 Appeal period —— applicability. 14 The appeal period for revision of assessment of tax, 15 interest, and penalties set out under section 422.28 , 423.37 , 16 437A.9 , 437A.22 , 437B.5, 437B.18, 452A.64 , 453A.29 , or 453A.46 17 applies to appeals to notices from the department denying 18 changes in filing methods, denying refund claims, and denying 19 portions of refund claims for the tax covered by that section, 20 and notices of any department action directed to a specific 21 taxpayer, other than licensing, which involves a calculation. 22 Sec. 4. Section 427A.1, subsection 1, paragraph h, Code 23 2013, is amended to read as follows: 24 h. Property assessed by the department of revenue pursuant 25 to sections 428.24 to 428.29 , or chapters 433 , 434 , 437 , 437A , 26 437B, and 438 . 27 Sec. 5. Section 427B.17, subsection 5, unnumbered paragraph 28 1, Code 2013, is amended to read as follows: 29 This section shall not apply to property assessed by the 30 department of revenue pursuant to sections 428.24 to 428.29 , or 31 chapters 433 , 434 , 437 , 437A , 437B, and 438 , and such property 32 shall not receive the benefits of this section . 33 Sec. 6. Section 428.24, Code 2013, is amended to read as 34 follows: 35 -1- LSB 1427HV (2) 85 md/sc 1/ 37

H.F. 643 428.24 Public utility plants. 1 The lands, buildings, machinery, and mains belonging to 2 individuals or corporations operating waterworks , other than 3 waterworks taxed under chapter 437B, or gasworks or pipelines, 4 except those natural gas pipelines permitted pursuant to 5 chapter 479 , shall be listed and assessed by the department of 6 revenue. In the making of assessments of waterworks plants, 7 the value of any interest in the property assessed, of the 8 municipal corporation where it is situated, shall be deducted, 9 whether the interest is evidenced by stock, bonds, contracts, 10 or otherwise. 11 Sec. 7. Section 428.26, Code 2013, is amended to read as 12 follows: 13 428.26 Personal property. 14 1. All the personal property of such individuals and 15 corporations used or purchased by them for the purposes of such 16 gas or waterworks, other than natural gas pipelines permitted 17 pursuant to chapter 479 and other than waterworks taxed under 18 chapter 437B , shall be listed and assessed by the department 19 of revenue. 20 2. In the making of any such assessment of waterworks 21 plants, the value of any interest in the property so assessed, 22 of the municipal corporation in which the waterworks is 23 situated, shall be deducted, whether such interest be evidenced 24 by stock, bonds, contracts, or otherwise. 25 Sec. 8. Section 428.28, Code 2013, is amended to read as 26 follows: 27 428.28 Annual report by utility. 28 1. Every individual, partnership, corporation, or 29 association operating for profit, waterworks , other than 30 waterworks taxed under chapter 437B, or gasworks or pipelines 31 other than natural gas pipelines permitted pursuant to 32 chapter 479 , annually on or before May 1 of each calendar 33 year, shall make a report on blanks to be provided by the 34 department of revenue of all of the property owned by such 35 -2- LSB 1427HV (2) 85 md/sc 2/ 37

H.F. 643 individual, partnership, corporation, or association within the 1 incorporated limits of any city in the state, and give such 2 other information as the director of revenue shall require. 3 2. Every individual, partnership, corporation, or 4 association which operates a public utility on a nonprofit 5 basis other than a utility subject to tax under chapter 437A 6 or chapter 437B , as defined in section 428.24 shall annually, 7 on or before May 1 of each calendar year, make a report on 8 blanks to be provided by the department of revenue of all of 9 the property owned by the individual, partnership, corporation, 10 or association within the incorporated limits of any city in 11 the state, and give other information the director of revenue 12 requires. 13 Sec. 9. Section 437A.15, subsection 7, paragraph b, Code 14 2013, is amended to read as follows: 15 b. The task force shall study the effects of the replacement 16 tax taxes under this chapter and chapter 437B on local taxing 17 authorities, local taxing districts, consumers, and taxpayers 18 through January 1, 2013 2016 . If the task force recommends 19 modifications to the replacement tax that will further the 20 purposes of tax neutrality for local taxing authorities, local 21 taxing districts, taxpayers, and consumers, consistent with the 22 stated purposes of this chapter , the department of management 23 shall transmit those recommendations to the general assembly. 24 Sec. 10. NEW SECTION . 437B.1 Purposes. 25 The purposes of this chapter are to replace property taxes 26 imposed on rate-regulated water utilities with a system of 27 taxation which will remove fluctuations in property taxes 28 by imposing a system of taxation based on the delivery of 29 water, to preserve revenue neutrality and debt capacity for 30 local governments and taxpayers, to preserve neutrality in the 31 allocation and cost impact of any replacement tax among and 32 upon consumers of rate-regulated water utilities in this state, 33 and to provide a system of taxation which reduces existing 34 administrative burdens on state government. 35 -3- LSB 1427HV (2) 85 md/sc 3/ 37

H.F. 643 Sec. 11. NEW SECTION . 437B.2 Definitions. 1 As used in this chapter, unless the context otherwise 2 requires: 3 1. “Centrally assessed property tax” means property tax 4 imposed with respect to the value of property determined by the 5 director pursuant to sections 428.24 to 428.29, Code 2013, and 6 allocated to water service. 7 2. “Consumer” means an end user of water used or consumed 8 within the service area of a water utility. “Consumer” includes 9 any master-metered facility even though the water delivered 10 to such facility may ultimately be used by another person. A 11 person to whom water is delivered by a master-metered facility 12 is not a consumer. A “master-metered facility” means any 13 multi-occupancy premises where units are separately rented or 14 owned and where individual metering is impractical, where the 15 facility is designated for elderly or handicapped persons and 16 utility costs constitute part of the operating cost and are not 17 apportioned to individual units, or where submetering or resale 18 of service was permitted prior to 1966. 19 3. “Delivery” means the physical transfer of water, 20 excluding nonrevenue water, to a consumer for sale. Physical 21 transfer to a consumer occurs when transportation of water ends 22 and such water becomes available for use or consumption by a 23 consumer. 24 4. “Director” means the director of revenue. 25 5. “Lease” means a contract between a lessor and lessee 26 pursuant to which the lessee obtains a present possessory 27 interest in tangible property without obtaining legal title in 28 such property. A contract to deliver water using operating 29 property within this state is not a lease. “Capital lease” 30 means a lease classified as a capital lease under generally 31 accepted accounting principles. 32 6. “Local taxing authority” means a city, county, community 33 college, school district, or other taxing authority located in 34 this state and authorized to certify a levy on property located 35 -4- LSB 1427HV (2) 85 md/sc 4/ 37

H.F. 643 within such authority for the payment of bonds and interest or 1 other obligations of such authority. 2 7. “Local taxing district” means a geographic area with a 3 common consolidated property tax rate. 4 8. a. “Major addition” means any acquisition on or after 5 January 1, 2012, by a taxpayer, by transfer of ownership, 6 self-construction, or capital lease of any interest in any of 7 the following: 8 (1) A building in this state where the acquisition cost of 9 all interests acquired exceeds ten million dollars. 10 (2) A water treatment plant where the acquisition cost 11 of all interests acquired exceeds ten million dollars. For 12 purposes of this paragraph, “water treatment plant” means 13 buildings and equipment used in that portion of the potable 14 water supply system which in some way alters the physical, 15 chemical, or bacteriological quality of the water. 16 (3) Water utility operating property within a local taxing 17 district where the acquisition cost of all interests acquired 18 exceeds one million dollars. 19 (4) Any water utility property in this state acquired by a 20 person not previously subject to taxation under this chapter 21 pursuant to section 437B.12. 22 b. For purposes of this chapter, the acquisition cost of 23 an asset acquired by capital lease is its capitalized value 24 determined under generally accepted accounting principles. 25 9. “Nonrevenue water” means the difference between the total 26 number of gallons of water carried through the water utility’s 27 distribution system and the number of gallons of water 28 delivered to consumers using the water utility’s distribution 29 system. 30 10. “Operating property” means all property owned by or 31 leased to a water utility, not otherwise taxed separately, 32 which is necessary to and without which the company could not 33 perform the activities of a water utility. 34 11. “Replacement tax” means the excise tax imposed on the 35 -5- LSB 1427HV (2) 85 md/sc 5/ 37

H.F. 643 delivery of water under section 437B.3. 1 12. “Service area” means the geographical area within this 2 state to which the water utility delivers water and related 3 services. A water utility’s service area shall be that 4 area described in the water utility’s tariff filed with the 5 utilities board. 6 12A. “Taxable value” means as defined in section 437B.15, 7 subsection 2, paragraph “e” . 8 13. “Taxpayer” means a water utility or other person subject 9 to the replacement tax imposed under section 437B.3. 10 14. “Tax year” means a calendar year beginning January 1 and 11 ending December 31. 12 15. “Utilities board” means the utilities board created in 13 section 474.1. 14 16. “Water utility” or “rate-regulated water utility” means a 15 person engaged primarily in the production, delivery, service, 16 or sale of water in a service area, whether formed or organized 17 under the laws of this state or elsewhere, and subject to the 18 rate and service regulation of the utilities board pursuant to 19 chapter 476. “Water utility” does not include a cooperative, 20 municipal utility, or other entity engaged primarily in such 21 activities that is not under the jurisdiction of the utilities 22 board. 23 Sec. 12. NEW SECTION . 437B.3 Replacement tax imposed on 24 delivery of water. 25 1. A replacement delivery tax is imposed on each water 26 utility that delivers water to a consumer within the water 27 utility’s service area. The replacement delivery tax imposed 28 by this section is equal to the number of gallons of water 29 delivered to consumers in the water utility’s service area by 30 the taxpayer during the tax year multiplied by the replacement 31 delivery tax rate in effect for the service area. 32 2. The replacement delivery tax rate for each service area 33 shall be calculated by the director as follows: 34 a. The director shall determine the centrally assessed 35 -6- LSB 1427HV (2) 85 md/sc 6/ 37

H.F. 643 property tax liability allocated to water delivery for those 1 water utilities operating within the service area for the 2 assessment year 2011 based on property tax amounts due and 3 payable as the result of that assessment year. 4 b. The director shall determine the number of gallons of 5 water delivered to consumers in the service area which would 6 have been subject to taxation under this section in calendar 7 year 2011, had such section been in effect for calendar year 8 2011. 9 c. The director shall determine a replacement delivery tax 10 rate for each service area by dividing the centrally assessed 11 property tax liability, as determined in paragraph “a” , by the 12 number of gallons of water delivered, as specified in paragraph 13 “b” . 14 3. a. If for any tax year after calendar year 2012, the 15 total number of gallons of water required to be reported by 16 a water utility pursuant to section 437B.4, subsection 1, 17 paragraph “a” , increases or decreases by more than the threshold 18 percentage from the average of the base year amounts for that 19 water utility for the immediately preceding five calendar 20 years, the replacement tax rate imposed under subsection 1 for 21 that tax year shall be recalculated by the director for that 22 water utility so that the total of the tentative replacement 23 delivery taxes required to be reported pursuant to section 24 437B.4, subsection 1, paragraph “b” , for that water utility 25 with respect to the tax imposed under subsection 1, shall be 26 as follows: 27 (1) If the number of gallons of water required to be 28 reported increased by more than the threshold percentage, one 29 hundred two percent of such taxes required to be reported by 30 the water utility for that water utility for the immediately 31 preceding tax year. 32 (2) If the number of gallons of water required to be 33 reported decreased by more than the threshold percentage, 34 ninety-eight percent of such taxes required to be reported by 35 -7- LSB 1427HV (2) 85 md/sc 7/ 37

H.F. 643 the water utility for that water utility for the immediately 1 preceding tax year. 2 b. For purposes of paragraph “a” , subparagraphs (1) and 3 (2), in computing the tax rate under subsection 1, for tax year 4 2013, the director shall use the centrally assessed property 5 tax liability allocated to water sales computed pursuant to 6 subsection 2, paragraph “a” , or the water utility’s centrally 7 assessed property tax liability for the assessment year 2010, 8 whichever is greater, in lieu of the taxes required to be 9 reported for that water utility for the immediately preceding 10 tax year. In addition, notwithstanding the provisions of this 11 section to the contrary, for tax years 2013, 2014, and 2015, 12 if the total amount of replacement delivery taxes imposed on 13 the water utility in any of those tax years is less than the 14 utility’s centrally assessed property tax liability for the 15 assessment year 2010, the replacement tax rate imposed under 16 subsection 1 for that tax year shall be recalculated by the 17 director so that the total amount of replacement delivery taxes 18 imposed on the water utility for such tax year equals the water 19 utility’s centrally assessed property tax liability for the 20 assessment year 2010. 21 c. For purposes of this section, “base year amount” means 22 for calendar years prior to tax year 2013, the number of 23 gallons of water delivered to consumers by the water utility 24 which would have been subject to taxation under this section 25 had this section been in effect for such calendar year, and for 26 tax years after calendar year 2012, the number of gallons of 27 water required to be reported by the water utility pursuant to 28 section 437B.4, subsection 1. 29 d. The threshold percentage shall be five percent. 30 4. The replacement delivery tax rate in effect for each 31 service area shall be published by the director in the Iowa 32 administrative bulletin on or before May 31 of each year. 33 5. If recalculation of the replacement delivery tax rate 34 is required pursuant to subsection 3, the new rate shall be 35 -8- LSB 1427HV (2) 85 md/sc 8/ 37

H.F. 643 published in the Iowa administrative bulletin by the director 1 by no later than May 31 following the end of the tax year. The 2 director shall adjust the tentative replacement tax imposed by 3 subsection 1 and required to be shown on any affected water 4 utility’s return pursuant to section 437B.4, subsection 1, 5 paragraph “b” , to reflect the adjusted replacement delivery 6 tax rate for the tax year, and report such adjustment to the 7 affected water utility on or before June 30 following the end 8 of the tax year. The new replacement delivery tax rate shall 9 apply prospectively, until such time as further adjustment is 10 required. 11 6. For a service area established as the result of the 12 formation or organization of a new water utility on or after 13 January 1, 2013, the director shall to the extent possible 14 determine a replacement delivery tax rate for the new 15 service area using the procedures of this section and for the 16 information for the year that the water utility was first under 17 the jurisdiction of the utilities board. 18 Sec. 13. NEW SECTION . 437B.4 Return and payment 19 requirements. 20 1. Each taxpayer, on or before March 31 following a tax 21 year, shall file with the director a return including but not 22 limited to the following information: 23 a. The total taxable gallons of water delivered by the water 24 utility to consumers within the service area during the tax 25 year. 26 b. The tentative replacement taxes imposed by section 437B.3 27 due for the tax year. 28 2. A return shall be signed by an officer, or other person 29 duly authorized by the water utility, and must be certified as 30 correct and in accordance with forms and rules prescribed by 31 the director. 32 3. At the time of filing the return required by subsection 33 1 with the director, the taxpayer shall calculate the tentative 34 replacement tax due for the tax year. The director shall 35 -9- LSB 1427HV (2) 85 md/sc 9/ 37

H.F. 643 compute any adjustments to the replacement tax required by 1 subsection 5 and by section 437B.3, subsection 3, and notify 2 the taxpayer of any such adjustments in accordance with the 3 requirements of section 437B.3, subsection 5. The director and 4 the department of management shall compute the allocation of 5 replacement taxes among local taxing districts and report such 6 allocations to county treasurers pursuant to section 437B.11. 7 Based on such allocations, the treasurer of each county shall 8 notify each taxpayer on or before August 31 following a tax 9 year of its replacement tax obligation to the county treasurer. 10 On or before September 30, 2014, and on or before September 11 30 of each subsequent year, the taxpayer shall remit to the 12 county treasurer of each county to which such replacement tax 13 is allocated pursuant to section 437B.11, one-half of the 14 replacement tax so allocated, and on or before the succeeding 15 March 31, the taxpayer shall remit to the county treasurers the 16 remaining replacement tax so allocated. If notification of a 17 taxpayer’s replacement tax obligation is not mailed by a county 18 treasurer on or before August 31 following a tax year, such 19 taxpayer shall have thirty days from the date the notification 20 is mailed to remit one-half of the replacement tax otherwise 21 required by this subsection to be remitted to such county 22 treasurer on or before September 30. If a taxpayer fails to 23 timely remit replacement taxes as provided in this subsection, 24 the county treasurer of each affected county shall notify the 25 director of such failure. 26 4. Notwithstanding subsections 1 through 3, a taxpayer 27 shall not be required to file a return otherwise required by 28 this section or remit any replacement tax for any tax year in 29 which the taxpayer’s replacement tax liability before credits 30 is three hundred dollars or less, provided that all water 31 utilities shall file a return, regardless of the taxpayer’s 32 replacement tax liability. 33 5. Following the determination of replacement delivery tax 34 rates by the director pursuant to section 437B.3, subsection 35 -10- LSB 1427HV (2) 85 md/sc 10/ 37

H.F. 643 2, if an adjustment resulting from a taxpayer appeal is made 1 to taxes levied and paid by a taxpayer with respect to the 2 assessment year 2011 used in determining such rates, the 3 director shall recalculate the replacement delivery tax rate 4 for any affected water utility to reflect the impact of such 5 adjustment as if such adjustment had been reflected in the 6 initial determination of the centrally assessed property tax 7 liability allocated to water service pursuant to section 8 437B.3, subsection 2, paragraph “a” . Rate recalculations shall 9 be made and published in the Iowa administrative bulletin by 10 the director on or before March 31 following the calendar year 11 in which a final determination of the adjustment is made. 12 Taxpayers shall report to the director any increase or decrease 13 in the tentative replacement tax required to be shown to be 14 due pursuant to subsection 1, paragraph “b” , for any tax year 15 with the return for the year in which the recalculated tax 16 rates which gave rise to the adjustment are published in the 17 Iowa administrative bulletin. The director and the department 18 of management shall redetermine the allocation of replacement 19 taxes pursuant to section 437B.11 for each affected tax year. 20 If a taxpayer has overpaid replacement taxes, the overpayment 21 shall be reported by the director to such taxpayer and to the 22 appropriate county treasurers and shall be a credit against the 23 replacement taxes owed by such taxpayer for the year in which 24 the recalculated rates which gave rise to the overpayment are 25 published in the Iowa administrative bulletin. If a taxpayer 26 has overpaid centrally assessed property taxes for assessment 27 years prior to tax year 2013, such overpayment shall be a 28 credit against replacement taxes owed by such taxpayer for the 29 year in which the overpayment is determined. Unused credits 30 may be carried forward and used to reduce future replacement 31 tax liabilities until exhausted. 32 Sec. 14. NEW SECTION . 437B.5 Failure to file return —— 33 incorrect return. 34 1. As soon as practicable after a return required by section 35 -11- LSB 1427HV (2) 85 md/sc 11/ 37

H.F. 643 437B.4, subsection 1, is filed, and in any event within three 1 years after such return is filed, the director shall examine 2 the return, determine the tax due if the return is found to be 3 incorrect, and give notice to the taxpayer of the determination 4 as provided in subsection 2. The period for the examination 5 and determination of the correct amount of tax is unlimited in 6 the case of a false or fraudulent return made with the intent 7 to evade any tax or in the case of a failure to file a return. 8 2. If a return required by section 437B.4, subsection 9 1, is not filed, or if such return when filed is incorrect 10 or insufficient and the taxpayer fails to file a corrected 11 or sufficient return within twenty days after such return 12 is required by notice from the director, the director shall 13 determine the amount of tax due from information as the 14 director may be able to obtain and, if necessary, may estimate 15 the tax due on the basis of external indices. The director 16 shall give notice of the determination to the taxpayer liable 17 for the tax and to the county treasurers to whom the tax 18 is owed. The determination shall fix the tax unless the 19 taxpayer against whom it is levied, within sixty days after 20 notice of the determination, applies to the director for a 21 hearing. At the hearing evidence may be offered to support 22 the determination or to prove that it is incorrect. After the 23 hearing the director shall give notice of the decision to the 24 person liable for the tax and to the county treasurers to whom 25 the tax is owed. 26 3. The three-year period of limitation provided in 27 subsection 1 may be extended by the taxpayer by signing 28 a waiver agreement form provided by the department. The 29 agreement shall stipulate the period of extension and the 30 tax period to which the extension applies. The agreement 31 shall also provide that a claim for refund may be filed by the 32 taxpayer at any time during the period of extension. 33 Sec. 15. NEW SECTION . 437B.6 Judicial review. 34 1. Judicial review of the actions of the director may 35 -12- LSB 1427HV (2) 85 md/sc 12/ 37

H.F. 643 be sought pursuant to chapter 17A, the Iowa administrative 1 procedure Act. 2 2. For cause and upon a showing by the director that 3 collection of the tax in dispute is in doubt, the court may 4 order the petitioner to file with the clerk of the district 5 court a bond for the use of the appropriate local taxing 6 authorities, with sureties approved by the clerk of the 7 district court, in the amount of the tax appealed from, 8 conditioned upon the performance by the petitioner of any 9 orders of the court. 10 3. An appeal may be taken by the taxpayer or the director to 11 the supreme court irrespective of the amount involved. 12 4. A person aggrieved by a decision of the chief financial 13 officer of a city under this chapter may seek review by writ 14 of certiorari within thirty days of the decision sought to be 15 reviewed. 16 Sec. 16. NEW SECTION . 437B.7 Lien —— actions authorized. 17 1. Whenever a taxpayer who is liable to pay a replacement 18 tax imposed by this chapter refuses or neglects to pay such 19 tax, the amount, including any interest, penalty, or addition 20 to such tax, together with the costs that may accrue, shall be 21 a lien in favor of the chief financial officer of the city or 22 the county treasurer to which the tax is owed upon all property 23 and rights to property, whether real or personal, belonging to 24 the taxpayer. The lien shall be prior to and superior over all 25 subsequent liens upon any personal property within this state, 26 or right to such personal property, belonging to the taxpayer, 27 without the necessity of recording the lien. The requirement 28 for recording, as applied to the replacement tax imposed by 29 this chapter, shall apply only to a lien upon real property. 30 The lien may be preserved against subsequent mortgagees, 31 purchasers, or judgment creditors, for value and without notice 32 of the lien, on any real property situated in a county, by the 33 county treasurer to which replacement tax is owed by filing 34 with the recorder of the county in which the real property is 35 -13- LSB 1427HV (2) 85 md/sc 13/ 37

H.F. 643 located a notice of the lien. For purposes of the replacement 1 tax collected by a city, the lien may be preserved against 2 subsequent mortgagees, purchasers, or judgment creditors, for 3 value and without notice of the lien, on any real property 4 situated in the county, by the chief financial officer of 5 the city to which replacement tax is owed by filing with the 6 recorder of the county in which the real property is located a 7 notice of the lien. 8 2. The county recorder of each county shall index each lien 9 showing the applicable entries specified in sections 558.49 10 and 558.52 and showing, under the names of taxpayers arranged 11 alphabetically, all of the following: 12 a. The name of the taxpayer. 13 b. The name of the county treasurer and county or the name 14 of the chief financial officer and city as claimant. 15 c. Time the notice of lien was filed for recording. 16 d. Date of notice. 17 e. Amount of lien then due. 18 f. Date of assessment. 19 g. Date when the lien is satisfied. 20 3. The recorder shall endorse on each notice of lien the 21 day, hour, and minute when filed for recording and the document 22 reference number, shall preserve such notice, shall index the 23 notice in the index, and shall promptly record the lien in the 24 manner provided for recording real estate mortgages. The lien 25 is effective from the time of the indexing of the lien. 26 4. The county treasurer or chief financial officer of the 27 city shall pay recording fees as provided in section 331.604, 28 for the recording of the lien, or for its satisfaction. 29 5. Upon the payment of the replacement tax as to which 30 a county treasurer has filed notice with a county recorder, 31 the county treasurer shall promptly file with the recorder a 32 satisfaction of the replacement tax. The recorder shall record 33 the notice of satisfaction showing the applicable entries 34 specified in sections 558.49 and 558.52. 35 -14- LSB 1427HV (2) 85 md/sc 14/ 37

H.F. 643 6. Section 445.3 applies with respect to the replacement 1 taxes and special utility property tax levies and penalties and 2 interest imposed by this chapter, except for the provisions 3 limiting the commencement of actions. In addition, at the 4 county treasurer’s discretion, chapters 446, 447, and 448 apply 5 in the enforcement of the special utility property tax levies, 6 but any tax deed issued shall not extinguish a tax lien or 7 judgment lien for replacement taxes that has attached to the 8 property. 9 Sec. 17. NEW SECTION . 437B.8 Service of notice. 10 1. A notice authorized or required under this chapter may 11 be given by mailing the notice to the taxpayer, addressed to 12 the taxpayer at the address given in the last return filed by 13 the taxpayer pursuant to this chapter, or if no return has 14 been filed, then to the most recent address of the taxpayer 15 obtainable. The mailing of the notice is presumptive evidence 16 of the receipt of the notice by the taxpayer to whom the notice 17 is addressed. A period of time within which some action must 18 be taken for which notice is provided under this section 19 commences to run from the date of mailing of the notice. 20 2. There is no limitation for the enforcement of a civil 21 remedy pursuant to any proceeding or action taken to levy, 22 appraise, assess, determine, or enforce the collection of any 23 tax or penalty due under this chapter. 24 Sec. 18. NEW SECTION . 437B.9 Penalties —— offenses —— 25 limitation. 26 1. A taxpayer is subject to the penalty provisions in 27 section 421.27 with respect to any replacement tax due under 28 this chapter. A taxpayer shall also pay interest on the 29 delinquent replacement tax at the rate in effect under section 30 421.7 for each month computed from the date the payment was 31 due, counting each fraction of a month as an entire month. The 32 penalty and interest shall be paid to the county treasurer, or 33 in the case of penalty and interest associated with a municipal 34 transfer replacement tax to the city financial officer, and 35 -15- LSB 1427HV (2) 85 md/sc 15/ 37

H.F. 643 shall be disposed of in the same manner as other receipts under 1 this chapter. Unpaid penalties and interest may be enforced in 2 the same manner as provided for unpaid replacement tax under 3 this chapter. 4 2. A taxpayer, or officer, member, or employee of the 5 taxpayer, who willfully attempts to evade the replacement tax 6 imposed or the payment of the replacement tax is guilty of a 7 class “D” felony. 8 3. The issuance of a certificate by the director or a county 9 treasurer stating that a replacement tax has not been paid, 10 that a return has not been filed, or that information has not 11 been supplied pursuant to this chapter is prima facie evidence 12 of such failure. 13 4. A taxpayer, or officer, member, or employee of the 14 taxpayer, required to pay a replacement tax, or required to 15 make, sign, or file an annual return or supplemental return, 16 who willfully makes a false or fraudulent annual return, or 17 who willfully fails to pay at least ninety percent of the 18 replacement tax or willfully fails to make, sign, or file the 19 annual return, as required, is guilty of a fraudulent practice. 20 5. For purposes of determining the place of trial for a 21 violation of this section, the situs of an offense is in the 22 county of the residence of the taxpayer, officer, member, or 23 employee of the taxpayer charged with the offense, unless 24 the taxpayer, officer, member, or employee of the taxpayer 25 is a nonresident of this state or the residence cannot be 26 established, in which event the situs of the offense is in Polk 27 county. 28 6. Prosecution for an offense specified in this section 29 shall be commenced within six years after the commission of the 30 offense. 31 Sec. 19. NEW SECTION . 437B.10 Correction of errors —— 32 refunds or credits of replacement tax paid —— information 33 confidential —— penalty. 34 1. a. If an amount of replacement tax, penalty, or interest 35 -16- LSB 1427HV (2) 85 md/sc 16/ 37

H.F. 643 has been paid which was not due under this chapter, a county 1 treasurer to whom such erroneous payment was made shall do one 2 of the following: 3 (1) Credit the amount of the erroneous payment against any 4 replacement tax due, or to become due, from the taxpayer on the 5 books of the city or county. 6 (2) Refund the amount of the erroneous payment to the 7 taxpayer. 8 b. Claims for refund or credit of replacement taxes paid 9 shall be filed with the director. A claim for refund or credit 10 that is not filed with the director within three years after 11 the replacement tax payment upon which a refund or credit 12 is claimed became due, or one year after the replacement 13 tax payment was made, whichever time is later, shall not be 14 allowed. A claim for refund or credit of tax alleged to be 15 unconstitutional not filed with the director within ninety days 16 after the replacement tax payment upon which a refund or credit 17 is claimed became due shall not be allowed. As a precondition 18 for claiming a refund or credit of alleged unconstitutional 19 taxes, such taxes must be paid under written protest which 20 specifies the particulars of the alleged unconstitutionality. 21 Claims for refund or credit may only be made by, and refunds or 22 credits may only be made to, the person responsible for paying 23 the replacement tax, or such person’s successors. The director 24 shall notify affected county treasurers of the acceptance or 25 denial of any refund claim. Section 421.10 applies to claims 26 denied by the director. 27 2. a. It is unlawful for any present or former officer or 28 employee of the state to divulge or to make known in any manner 29 to any person the gallons of water delivered by a water utility 30 disclosed on a tax return, return information, or investigative 31 or audit information. A person who violates this section is 32 guilty of a serious misdemeanor. If the offender is an officer 33 or employee of the state, such person, in addition to any other 34 penalty, shall also be dismissed from office or discharged from 35 -17- LSB 1427HV (2) 85 md/sc 17/ 37

H.F. 643 employment. This section does not prohibit turning over to 1 duly authorized officers of the United States or tax officials 2 of other states such information pursuant to agreement between 3 the director and the secretary of the treasury of the United 4 States or the secretary’s delegate or pursuant to a reciprocal 5 agreement with another state. 6 b. Local taxing authority employees are deemed to be 7 officers and employees of the state for purposes this of 8 subsection. 9 3. Unless otherwise expressly permitted by a section 10 referencing this chapter, the gallons of water delivered by a 11 taxpayer in a service area shall not be divulged to any person 12 or entity, other than the taxpayer, the department of revenue, 13 or the internal revenue service for use in a matter unrelated 14 to tax administration. This prohibition precludes persons or 15 entities other than the taxpayer, the department of revenue, or 16 the internal revenue service from obtaining such information 17 from the department of revenue. A subpoena, order, or process 18 which requires the department of revenue to produce such 19 information to a person or entity, other than the taxpayer, the 20 department of revenue, or internal revenue service, for use in 21 a nontax proceeding is void. 22 4. Notwithstanding subsections 2 and 3, the chief financial 23 officer of any local taxing authority and any designee of such 24 officer shall have access to any computations made by the 25 director pursuant to the provisions of this chapter, and any 26 tax return or other information used by the director in making 27 such computations, which affect the replacement tax owed by any 28 such taxpayer. 29 5. Claims for refund or credit of special utility property 30 tax levies shall be filed with the appropriate county 31 treasurer. Subsection 1 applies with respect to the special 32 utility property tax levy and the county treasurer shall have 33 the same authority as is granted to the director under this 34 section. 35 -18- LSB 1427HV (2) 85 md/sc 18/ 37