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

H.F. _____ 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 1427YC (3) 85 md/sc 1/ 37

H.F. _____ 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 1427YC (3) 85 md/sc 2/ 37

H.F. _____ 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 water utilities with a system of taxation which 27 will remove fluctuations in property taxes by imposing a 28 system of taxation based on the delivery of water, to preserve 29 revenue neutrality and debt capacity for local governments 30 and taxpayers, to preserve neutrality in the allocation and 31 cost impact of any replacement tax among and upon consumers 32 of water utilities in this state, and to provide a system of 33 taxation which reduces existing administrative burdens on state 34 government. 35 -3- LSB 1427YC (3) 85 md/sc 3/ 37

H.F. _____ 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 to a 20 consumer for sale. Physical transfer to a consumer occurs when 21 transportation of water ends and such water becomes available 22 for use or consumption by a consumer. 23 4. “Director” means the director of revenue. 24 5. “Lease” means a contract between a lessor and lessee 25 pursuant to which the lessee obtains a present possessory 26 interest in tangible property without obtaining legal title in 27 such property. A contract to deliver water using operating 28 property within this state is not a lease. “Capital lease” 29 means a lease classified as a capital lease under generally 30 accepted accounting principles. 31 6. “Local taxing authority” means a city, county, community 32 college, school district, or other taxing authority located in 33 this state and authorized to certify a levy on property located 34 within such authority for the payment of bonds and interest or 35 -4- LSB 1427YC (3) 85 md/sc 4/ 37

H.F. _____ other obligations of such authority. 1 7. “Local taxing district” means a geographic area with a 2 common consolidated property tax rate. 3 8. a. “Major addition” means any acquisition on or after 4 January 1, 2013, by a taxpayer, by transfer of ownership, 5 self-construction, or capital lease of any interest in any of 6 the following: 7 (1) A building in this state where the acquisition cost of 8 all interests acquired exceeds ten million dollars. 9 (2) A water treatment plant where the acquisition cost 10 of all interests acquired exceeds ten million dollars. For 11 purposes of this paragraph, “water treatment plant” means 12 buildings and equipment used in that portion of the water 13 supply system which in some way alters the physical, chemical, 14 or bacteriological quality of the water. 15 (3) Water utility operating property within a local taxing 16 district where the acquisition cost of all interests acquired 17 exceeds one million dollars. 18 (4) Any water utility property in this state acquired by a 19 person not previously subject to taxation under this chapter 20 pursuant to section 437B.12. 21 b. For purposes of this chapter, the acquisition cost of 22 an asset acquired by capital lease is its capitalized value 23 determined under generally accepted accounting principles. 24 9. “Nonrevenue water” means the difference between the total 25 number of gallons of water carried through the water utility’s 26 distribution system and the number of gallons of water 27 delivered to consumers using the water utility’s distribution 28 system. 29 10. “Operating property” means all property owned by or 30 leased to a water utility, not otherwise taxed separately, 31 which is necessary to and without which the company could not 32 perform the activities of a water utility. 33 11. “Replacement tax” means the excise tax imposed on the 34 delivery of water under section 437B.3. 35 -5- LSB 1427YC (3) 85 md/sc 5/ 37

H.F. _____ 12. “Service area” means the geographical area within this 1 state to which the water utility delivers water and related 2 services. A water utility’s service area shall be that 3 area described in the water utility’s tariff filed with the 4 utilities board. 5 13. “Taxpayer” means a water utility or other person subject 6 to the replacement tax imposed under section 437B.3. 7 14. “Tax year” means a calendar year beginning January 1 and 8 ending December 31. 9 15. “Utilities board” means the utilities board created in 10 section 474.1. 11 16. “Water utility” means a person engaged primarily in the 12 production, delivery, service, or sale of water in a service 13 area, whether formed or organized under the laws of this state 14 or elsewhere, and subject to the rate and service regulation of 15 the utilities board pursuant to chapter 476. “Water utility” 16 does not include a cooperative, municipal utility, or other 17 entity engaged primarily in such activities that is not under 18 the jurisdiction of the utilities board. 19 Sec. 12. NEW SECTION . 437B.3 Replacement tax imposed on 20 delivery of water. 21 1. A replacement delivery tax is imposed on each water 22 utility that delivers water to a consumer within the water 23 utility’s service area. The replacement delivery tax imposed 24 by this section is equal to the number of gallons of water 25 delivered to consumers in the water utility’s service area by 26 the taxpayer during the tax year multiplied by the replacement 27 delivery tax rate in effect for the service area. 28 2. The replacement delivery tax rate for each service area 29 shall be calculated by the director as follows: 30 a. The director shall determine the average annual centrally 31 assessed property tax liability allocated to water delivery 32 for those water utilities operating within the service area 33 for the assessment years 2008 through 2012 based on property 34 tax amounts due and payable as the result of those assessment 35 -6- LSB 1427YC (3) 85 md/sc 6/ 37

H.F. _____ years. 1 b. The director shall determine the number of gallons of 2 water delivered to consumers in the service area which would 3 have been subject to taxation under this section in calendar 4 year 2013, had such sections been in effect for calendar year 5 2013. 6 c. The director shall determine a replacement delivery tax 7 rate for each service area by dividing average annual centrally 8 assessed property tax liability, as determined in paragraph 9 “a” , by the number of gallons of water delivered, as specified 10 in paragraph “b” . 11 3. a. If for any tax year after calendar year 2013, the 12 total number of gallons of water required to be reported by 13 a water utility pursuant to section 437B.4, subsection 1, 14 paragraph “a” , increases or decreases by more than the threshold 15 percentage from the base year amount for that water utility 16 during the immediately preceding five calendar years, the 17 replacement tax rate imposed under subsection 1 for that tax 18 year shall be recalculated by the director for that water 19 utility so that the total of the tentative replacement delivery 20 taxes required to be reported pursuant to section 437B.4, 21 subsection 1, paragraph “b” , for that water utility with respect 22 to the tax imposed under subsection 1, shall be as follows: 23 (1) If the number of gallons of water required to be 24 reported increased by more than the threshold percentage, one 25 hundred two percent of such taxes required to be reported by 26 the water utility for that water utility for the immediately 27 preceding tax year. 28 (2) If the number of gallons of water required to be 29 reported decreased by more than the threshold percentage, 30 ninety-eight percent of such taxes required to be reported by 31 the water utility for that water utility for the immediately 32 preceding tax year. 33 b. For purposes of paragraph “a” , subparagraphs (1) and 34 (2), in computing the tax rate under subsection 1, for tax 35 -7- LSB 1427YC (3) 85 md/sc 7/ 37

H.F. _____ year 2014, the director shall use the average annual centrally 1 assessed property tax liability allocated to water sales 2 computed pursuant to subsection 2, paragraph “a” , in lieu of the 3 taxes required to be reported for that water utility for the 4 immediately preceding tax year. 5 c. For purposes of this section, “base year amount” means 6 for calendar years prior to tax year 2014, the sum of the 7 gallons of water delivered to consumers by the water utility 8 which would have been subject to taxation under this section 9 had this section been in effect for those years; and for 10 tax years after calendar year 2013, the number of gallons of 11 water required to be reported by the water utility pursuant to 12 section 437B.4, subsection 1, paragraph “a” . 13 d. The threshold percentage shall be five percent. 14 4. The replacement delivery tax rate in effect for each 15 service area shall be published by the director in the Iowa 16 administrative bulletin on or before November 30, 2014, and 17 annually after that date, during the last quarter of the tax 18 year. 19 5. If recalculation of the replacement delivery tax rate 20 is required pursuant to subsection 3, the new rate shall be 21 published in the Iowa administrative bulletin by the director 22 by no later than May 31 following the end of the tax year. The 23 director shall adjust the tentative replacement tax imposed by 24 subsection 1 and required to be shown on any affected water 25 utility’s return pursuant to section 437B.4, subsection 1, 26 paragraph “b” , to reflect the adjusted replacement delivery 27 tax rate for the tax year, and report such adjustment to the 28 affected water utility on or before June 30 following the end 29 of the tax year. The new replacement delivery tax rate shall 30 apply prospectively, until such time as further adjustment is 31 required. 32 6. For a service area established as the result of the 33 formation or organization of a new water utility on or after 34 January 1, 2014, the director shall to the extent possible 35 -8- LSB 1427YC (3) 85 md/sc 8/ 37

H.F. _____ determine a replacement delivery tax rate for the new 1 service area using the procedures of this section and for the 2 information for the year that the water utility was first under 3 the jurisdiction of the utilities board. 4 Sec. 13. NEW SECTION . 437B.4 Return and payment 5 requirements. 6 1. Each taxpayer, on or before March 31 following a tax 7 year, shall file with the director a return including but not 8 limited to the following information: 9 a. The total taxable gallons of water delivered by the water 10 utility to consumers within the service area during the tax 11 year. 12 b. The tentative replacement taxes imposed by section 437B.3 13 due for the tax year. 14 2. A return shall be signed by an officer, or other person 15 duly authorized by the water utility, and must be certified as 16 correct and in accordance with forms and rules prescribed by 17 the director. 18 3. At the time of filing the return required by subsection 19 1 with the director, the taxpayer shall calculate the tentative 20 replacement tax due for the tax year. The director shall 21 compute any adjustments to the replacement tax required by 22 subsection 5 and by section 437B.3, subsection 3, and notify 23 the taxpayer of any such adjustments in accordance with the 24 requirements of section 437B.3, subsection 5. The director and 25 the department of management shall compute the allocation of 26 replacement taxes among local taxing districts and report such 27 allocations to county treasurers pursuant to section 437B.11. 28 Based on such allocations, the treasurer of each county shall 29 notify each taxpayer on or before August 31 following a tax 30 year of its replacement tax obligation to the county treasurer. 31 On or before September 30, 2015, and on or before September 32 30 of each subsequent year, the taxpayer shall remit to the 33 county treasurer of each county to which such replacement tax 34 is allocated pursuant to section 437B.11, one-half of the 35 -9- LSB 1427YC (3) 85 md/sc 9/ 37

H.F. _____ replacement tax so allocated, and on or before the succeeding 1 March 31, the taxpayer shall remit to the county treasurers the 2 remaining replacement tax so allocated. If notification of a 3 taxpayer’s replacement tax obligation is not mailed by a county 4 treasurer on or before August 31 following a tax year, such 5 taxpayer shall have thirty days from the date the notification 6 is mailed to remit one-half of the replacement tax otherwise 7 required by this subsection to be remitted to such county 8 treasurer on or before September 30. If a taxpayer fails to 9 timely remit replacement taxes as provided in this subsection, 10 the county treasurer of each affected county shall notify the 11 director of such failure. 12 4. Notwithstanding subsections 1 through 3, a taxpayer 13 shall not be required to file a return otherwise required by 14 this section or remit any replacement tax for any tax year in 15 which the taxpayer’s replacement tax liability before credits 16 is three hundred dollars or less, provided that all water 17 utilities shall file a return, regardless of the taxpayer’s 18 replacement tax liability. 19 5. Following the determination of replacement delivery tax 20 rates by the director pursuant to section 437B.3, subsection 21 2, if an adjustment resulting from a taxpayer appeal is made 22 to taxes levied and paid by a taxpayer with respect to any of 23 the assessment years 2008 through 2012 used in determining 24 such rates, the director shall recalculate the replacement 25 delivery tax rate for any affected water utility to reflect 26 the impact of such adjustment as if such adjustment had been 27 reflected in the initial determination of average annual 28 centrally assessed property tax liability allocated to water 29 service pursuant to section 437B.3, subsection 2, paragraph 30 “a” . Rate recalculations shall be made and published in the 31 Iowa administrative bulletin by the director on or before March 32 31 following the calendar year in which a final determination 33 of the adjustment is made. Taxpayers shall report to the 34 director any increase or decrease in the tentative replacement 35 -10- LSB 1427YC (3) 85 md/sc 10/ 37

H.F. _____ tax required to be shown to be due pursuant to subsection 1 1, paragraph “b” , for any tax year with the return for the 2 year in which the recalculated tax rates which gave rise 3 to the adjustment are published in the Iowa administrative 4 bulletin. The director and the department of management shall 5 redetermine the allocation of replacement taxes pursuant to 6 section 437B.11 for each affected tax year. If a taxpayer has 7 overpaid replacement taxes, the overpayment shall be reported 8 by the director to such taxpayer and to the appropriate county 9 treasurers and shall be a credit against the replacement taxes 10 owed by such taxpayer for the year in which the recalculated 11 rates which gave rise to the overpayment are published in the 12 Iowa administrative bulletin. If a taxpayer has overpaid 13 centrally assessed property taxes for assessment years prior 14 to tax year 2014, such overpayment shall be a credit against 15 replacement taxes owed by such taxpayer for the year in which 16 the overpayment is determined. Unused credits may be carried 17 forward and used to reduce future replacement tax liabilities 18 until exhausted. 19 Sec. 14. NEW SECTION . 437B.5 Failure to file return —— 20 incorrect return. 21 1. As soon as practicable after a return required by section 22 437B.4, subsection 1, is filed, and in any event within three 23 years after such return is filed, the director shall examine 24 the return, determine the tax due if the return is found to be 25 incorrect, and give notice to the taxpayer of the determination 26 as provided in subsection 2. The period for the examination 27 and determination of the correct amount of tax is unlimited in 28 the case of a false or fraudulent return made with the intent 29 to evade any tax or in the case of a failure to file a return. 30 2. If a return required by section 437B.4, subsection 31 1, is not filed, or if such return when filed is incorrect 32 or insufficient and the taxpayer fails to file a corrected 33 or sufficient return within twenty days after such return 34 is required by notice from the director, the director shall 35 -11- LSB 1427YC (3) 85 md/sc 11/ 37

H.F. _____ determine the amount of tax due from information as the 1 director may be able to obtain and, if necessary, may estimate 2 the tax due on the basis of external indices. The director 3 shall give notice of the determination to the taxpayer liable 4 for the tax and to the county treasurers to whom the tax 5 is owed. The determination shall fix the tax unless the 6 taxpayer against whom it is levied, within sixty days after 7 notice of the determination, applies to the director for a 8 hearing. At the hearing evidence may be offered to support 9 the determination or to prove that it is incorrect. After the 10 hearing the director shall give notice of the decision to the 11 person liable for the tax and to the county treasurers to whom 12 the tax is owed. 13 3. The three-year period of limitation provided in 14 subsection 1 may be extended by the taxpayer by signing 15 a waiver agreement form provided by the department. The 16 agreement shall stipulate the period of extension and the 17 tax period to which the extension applies. The agreement 18 shall also provide that a claim for refund may be filed by the 19 taxpayer at any time during the period of extension. 20 Sec. 15. NEW SECTION . 437B.6 Judicial review. 21 1. Judicial review of the actions of the director may 22 be sought pursuant to chapter 17A, the Iowa administrative 23 procedure Act. 24 2. For cause and upon a showing by the director that 25 collection of the tax in dispute is in doubt, the court may 26 order the petitioner to file with the clerk of the district 27 court a bond for the use of the appropriate local taxing 28 authorities, with sureties approved by the clerk of the 29 district court, in the amount of the tax appealed from, 30 conditioned upon the performance by the petitioner of any 31 orders of the court. 32 3. An appeal may be taken by the taxpayer or the director to 33 the supreme court irrespective of the amount involved. 34 4. A person aggrieved by a decision of the chief financial 35 -12- LSB 1427YC (3) 85 md/sc 12/ 37

H.F. _____ officer of a city under this chapter may seek review by writ 1 of certiorari within thirty days of the decision sought to be 2 reviewed. 3 Sec. 16. NEW SECTION . 437B.7 Lien —— actions authorized. 4 1. Whenever a taxpayer who is liable to pay a replacement 5 tax imposed by this chapter refuses or neglects to pay such 6 tax, the amount, including any interest, penalty, or addition 7 to such tax, together with the costs that may accrue, shall be 8 a lien in favor of the chief financial officer of the city or 9 the county treasurer to which the tax is owed upon all property 10 and rights to property, whether real or personal, belonging to 11 the taxpayer. The lien shall be prior to and superior over all 12 subsequent liens upon any personal property within this state, 13 or right to such personal property, belonging to the taxpayer, 14 without the necessity of recording the lien. The requirement 15 for recording, as applied to the replacement tax imposed by 16 this chapter, shall apply only to a lien upon real property. 17 The lien may be preserved against subsequent mortgagees, 18 purchasers, or judgment creditors, for value and without notice 19 of the lien, on any real property situated in a county, by the 20 county treasurer to which replacement tax is owed by filing 21 with the recorder of the county in which the real property is 22 located a notice of the lien. For purposes of the replacement 23 tax collected by a city, the lien may be preserved against 24 subsequent mortgagees, purchasers, or judgment creditors, for 25 value and without notice of the lien, on any real property 26 situated in the county, by the chief financial officer of 27 the city to which replacement tax is owed by filing with the 28 recorder of the county in which the real property is located a 29 notice of the lien. 30 2. The county recorder of each county shall index each lien 31 showing the applicable entries specified in sections 558.49 32 and 558.52 and showing, under the names of taxpayers arranged 33 alphabetically, all of the following: 34 a. The name of the taxpayer. 35 -13- LSB 1427YC (3) 85 md/sc 13/ 37

H.F. _____ b. The name of the county treasurer and county or the name 1 of the chief financial officer and city as claimant. 2 c. Time the notice of lien was filed for recording. 3 d. Date of notice. 4 e. Amount of lien then due. 5 f. Date of assessment. 6 g. Date when the lien is satisfied. 7 3. The recorder shall endorse on each notice of lien the 8 day, hour, and minute when filed for recording and the document 9 reference number, shall preserve such notice, shall index the 10 notice in the index, and shall promptly record the lien in the 11 manner provided for recording real estate mortgages. The lien 12 is effective from the time of the indexing of the lien. 13 4. The county treasurer or chief financial officer of the 14 city shall pay recording fees as provided in section 331.604, 15 for the recording of the lien, or for its satisfaction. 16 5. Upon the payment of the replacement tax as to which 17 a county treasurer has filed notice with a county recorder, 18 the county treasurer shall promptly file with the recorder a 19 satisfaction of the replacement tax. The recorder shall record 20 the notice of satisfaction showing the applicable entries 21 specified in sections 558.49 and 558.52. 22 6. Section 445.3 applies with respect to the replacement 23 taxes and special utility property tax levies and penalties and 24 interest imposed by this chapter, except for the provisions 25 limiting the commencement of actions. In addition, at the 26 county treasurer’s discretion, chapters 446, 447, and 448 apply 27 in the enforcement of the special utility property tax levies, 28 but any tax deed issued shall not extinguish a tax lien or 29 judgment lien for replacement taxes that has attached to the 30 property. 31 Sec. 17. NEW SECTION . 437B.8 Service of notice. 32 1. A notice authorized or required under this chapter may 33 be given by mailing the notice to the taxpayer, addressed to 34 the taxpayer at the address given in the last return filed by 35 -14- LSB 1427YC (3) 85 md/sc 14/ 37

H.F. _____ the taxpayer pursuant to this chapter, or if no return has 1 been filed, then to the most recent address of the taxpayer 2 obtainable. The mailing of the notice is presumptive evidence 3 of the receipt of the notice by the taxpayer to whom the notice 4 is addressed. A period of time within which some action must 5 be taken for which notice is provided under this section 6 commences to run from the date of mailing of the notice. 7 2. There is no limitation for the enforcement of a civil 8 remedy pursuant to any proceeding or action taken to levy, 9 appraise, assess, determine, or enforce the collection of any 10 tax or penalty due under this chapter. 11 Sec. 18. NEW SECTION . 437B.9 Penalties —— offenses —— 12 limitation. 13 1. A taxpayer is subject to the penalty provisions in 14 section 421.27 with respect to any replacement tax due under 15 this chapter. A taxpayer shall also pay interest on the 16 delinquent replacement tax at the rate in effect under section 17 421.7 for each month computed from the date the payment was 18 due, counting each fraction of a month as an entire month. The 19 penalty and interest shall be paid to the county treasurer, or 20 in the case of penalty and interest associated with a municipal 21 transfer replacement tax to the city financial officer, and 22 shall be disposed of in the same manner as other receipts under 23 this chapter. Unpaid penalties and interest may be enforced in 24 the same manner as provided for unpaid replacement tax under 25 this chapter. 26 2. A taxpayer, or officer, member, or employee of the 27 taxpayer, who willfully attempts to evade the replacement tax 28 imposed or the payment of the replacement tax is guilty of a 29 class “D” felony. 30 3. The issuance of a certificate by the director or a county 31 treasurer stating that a replacement tax has not been paid, 32 that a return has not been filed, or that information has not 33 been supplied pursuant to this chapter is prima facie evidence 34 of such failure. 35 -15- LSB 1427YC (3) 85 md/sc 15/ 37

H.F. _____ 4. A taxpayer, or officer, member, or employee of the 1 taxpayer, required to pay a replacement tax, or required to 2 make, sign, or file an annual return or supplemental return, 3 who willfully makes a false or fraudulent annual return, or 4 who willfully fails to pay at least ninety percent of the 5 replacement tax or willfully fails to make, sign, or file the 6 annual return, as required, is guilty of a fraudulent practice. 7 5. For purposes of determining the place of trial for a 8 violation of this section, the situs of an offense is in the 9 county of the residence of the taxpayer, officer, member, or 10 employee of the taxpayer charged with the offense, unless 11 the taxpayer, officer, member, or employee of the taxpayer 12 is a nonresident of this state or the residence cannot be 13 established, in which event the situs of the offense is in Polk 14 county. 15 6. Prosecution for an offense specified in this section 16 shall be commenced within six years after the commission of the 17 offense. 18 Sec. 19. NEW SECTION . 437B.10 Correction of errors —— 19 refunds or credits of replacement tax paid —— information 20 confidential —— penalty. 21 1. a. If an amount of replacement tax, penalty, or interest 22 has been paid which was not due under this chapter, a county 23 treasurer to whom such erroneous payment was made shall do one 24 of the following: 25 (1) Credit the amount of the erroneous payment against any 26 replacement tax due, or to become due, from the taxpayer on the 27 books of the city or county. 28 (2) Refund the amount of the erroneous payment to the 29 taxpayer. 30 b. Claims for refund or credit of replacement taxes paid 31 shall be filed with the director. A claim for refund or credit 32 that is not filed with the director within three years after 33 the replacement tax payment upon which a refund or credit 34 is claimed became due, or one year after the replacement 35 -16- LSB 1427YC (3) 85 md/sc 16/ 37

H.F. _____ tax payment was made, whichever time is later, shall not be 1 allowed. A claim for refund or credit of tax alleged to be 2 unconstitutional not filed with the director within ninety days 3 after the replacement tax payment upon which a refund or credit 4 is claimed became due shall not be allowed. As a precondition 5 for claiming a refund or credit of alleged unconstitutional 6 taxes, such taxes must be paid under written protest which 7 specifies the particulars of the alleged unconstitutionality. 8 Claims for refund or credit may only be made by, and refunds or 9 credits may only be made to, the person responsible for paying 10 the replacement tax, or such person’s successors. The director 11 shall notify affected county treasurers of the acceptance or 12 denial of any refund claim. Section 421.10 applies to claims 13 denied by the director. 14 2. a. It is unlawful for any present or former officer or 15 employee of the state to divulge or to make known in any manner 16 to any person the gallons of water delivered by a water utility 17 disclosed on a tax return, return information, or investigative 18 or audit information. A person who violates this section is 19 guilty of a serious misdemeanor. If the offender is an officer 20 or employee of the state, such person, in addition to any other 21 penalty, shall also be dismissed from office or discharged from 22 employment. This section does not prohibit turning over to 23 duly authorized officers of the United States or tax officials 24 of other states such information pursuant to agreement between 25 the director and the secretary of the treasury of the United 26 States or the secretary’s delegate or pursuant to a reciprocal 27 agreement with another state. 28 b. Local taxing authority employees are deemed to be 29 officers and employees of the state for purposes this of 30 subsection. 31 3. Unless otherwise expressly permitted by a section 32 referencing this chapter, the gallons of water delivered by a 33 taxpayer in a service area shall not be divulged to any person 34 or entity, other than the taxpayer, the department of revenue, 35 -17- LSB 1427YC (3) 85 md/sc 17/ 37

H.F. _____ or the internal revenue service for use in a matter unrelated 1 to tax administration. This prohibition precludes persons or 2 entities other than the taxpayer, the department of revenue, or 3 the internal revenue service from obtaining such information 4 from the department of revenue. A subpoena, order, or process 5 which requires the department of revenue to produce such 6 information to a person or entity, other than the taxpayer, the 7 department of revenue, or internal revenue service, for use in 8 a nontax proceeding is void. 9 4. Notwithstanding subsections 2 and 3, the chief financial 10 officer of any local taxing authority and any designee of such 11 officer shall have access to any computations made by the 12 director pursuant to the provisions of this chapter, and any 13 tax return or other information used by the director in making 14 such computations, which affect the replacement tax owed by any 15 such taxpayer. 16 5. Claims for refund or credit of special utility property 17 tax levies shall be filed with the appropriate county 18 treasurer. Subsection 1 applies with respect to the special 19 utility property tax levy and the county treasurer shall have 20 the same authority as is granted to the director under this 21 section. 22 Sec. 20. NEW SECTION . 437B.11 Allocation of revenue. 23 1. The director and the department of management shall 24 compute the allocation of all replacement tax revenues among 25 the local taxing districts in accordance with this section and 26 shall report such allocation by local taxing districts to the 27 county treasurers on or before August 15 following a tax year. 28 2. The director shall determine and report to the department 29 of management the total replacement taxes to be collected from 30 each taxpayer for the tax year on or before July 30 following 31 such tax year. 32 3. a. All replacement taxes owed by a taxpayer shall 33 be allocated among the local taxing districts in which such 34 taxpayer’s property is located in accordance with a general 35 -18- LSB 1427YC (3) 85 md/sc 18/ 37