House Study Bill 649 - Introduced SENATE/HOUSE FILE _____ BY (PROPOSED DEPARTMENT OF REVENUE BILL) A BILL FOR An Act relating to the technical administration of the tax and 1 related laws of the state, including administration by the 2 department of revenue of certain tax credits and refunds, 3 income taxes, sales and use taxes, hotel and motel taxes, 4 and equipment taxes, and modifying provisions relating 5 to the property assessment appeal board, and including 6 effective date and retroactive applicability provisions. 7 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 8 TLSB 5311XD (9) 85 mm/sc

S.F. _____ H.F. _____ DIVISION I 1 MISCELLANEOUS ADMINISTRATIVE CHANGES 2 Section 1. Section 421.17, Code 2014, is amended by adding 3 the following new subsection: 4 NEW SUBSECTION . 33. To adopt rules ensuring that the total 5 amount of transfers and disbursements in a fiscal year by the 6 department to a local government or other entity with respect 7 to projects under chapter 15J, chapter 418, or section 423B.10 8 does not exceed the amount of applicable taxes collected during 9 the same fiscal year within the geographic boundaries of the 10 reinvestment districts, governmental entities, or urban renewal 11 areas in which such projects are located. 12 Sec. 2. Section 441.37A, subsection 1, paragraph e, Code 13 2014, is amended to read as follows: 14 e. For the assessment year beginning January 1, 2014, the 15 The property assessment appeal board may, by rule, provide 16 for the filing of a notice of appeal and petition with the 17 secretary of the board by electronic means. All requirements 18 of this section for an appeal to the board shall apply to an 19 appeal filed electronically. 20 DIVISION II 21 TAX CREDITS AND REFUNDS 22 Sec. 3. Section 15.293A, subsection 2, paragraph b, 23 subparagraph (1), Code 2014, is amended to read as follows: 24 (1) To claim a redevelopment tax credit under this 25 section , a taxpayer must attach include one or more tax credit 26 certificates to with the taxpayer’s tax return. A tax credit 27 certificate shall not be used or attached to included with a 28 return filed for a taxable year beginning prior to July 1, 29 2009. 30 Sec. 4. Section 15.331C, subsection 2, Code 2014, is amended 31 to read as follows: 32 2. A third-party developer shall state under oath, on 33 forms provided by the department of revenue, the amount of 34 taxes paid as described in subsection 1 and shall submit such 35 -1- LSB 5311XD (9) 85 mm/sc 1/ 19

S.F. _____ H.F. _____ forms to the department of revenue. The taxes paid shall be 1 itemized to allow identification of the taxes attributable 2 to racks, shelving, and conveyor equipment to be used in a 3 warehouse or distribution center. After receiving the form 4 from the third-party developer, the department of revenue 5 shall issue a tax credit certificate to the eligible business 6 equal to the sales and use taxes paid by a third-party 7 developer under chapter 423 for gas, electricity, water, or 8 sewer utility services, goods, wares, or merchandise, or 9 on services rendered, furnished, or performed to or for a 10 contractor or subcontractor and used in the fulfillment of a 11 written contract relating to the construction or equipping 12 of a facility. The department of revenue shall also issue a 13 tax credit certificate to the eligible business equal to the 14 taxes paid and attributable to racks, shelving, and conveyor 15 equipment to be used in a warehouse or distribution center. 16 The aggregate combined total amount of tax refunds under 17 section 15.331A for taxes attributable to racks, shelving, and 18 conveyor equipment to be used in a warehouse or distribution 19 center and of tax credit certificates issued by the department 20 of revenue for the taxes paid and attributable to racks, 21 shelving, and conveyor equipment to be used in a warehouse or 22 distribution center shall not exceed five hundred thousand 23 dollars in a fiscal year. If an applicant for a tax credit 24 certificate does not receive a certificate for the taxes paid 25 and attributable to racks, shelving, and conveyor equipment to 26 be used in a warehouse or distribution center, the application 27 shall be considered in succeeding fiscal years. The eligible 28 business shall not claim a tax credit under this section 29 unless a tax credit certificate issued by the department of 30 revenue is attached to included with the taxpayer’s tax return 31 for the tax year for which the tax credit is claimed. A tax 32 credit certificate shall contain the eligible business’s 33 name, address, tax identification number, the amount of the 34 tax credit, and other information deemed necessary by the 35 -2- LSB 5311XD (9) 85 mm/sc 2/ 19

S.F. _____ H.F. _____ department of revenue. 1 Sec. 5. Section 15E.44, subsection 4, Code 2014, is amended 2 to read as follows: 3 4. After verifying the eligibility of a qualifying 4 business, the authority shall issue a tax credit certificate to 5 be attached to included with the equity investor’s tax return. 6 The tax credit certificate shall contain the taxpayer’s name, 7 address, tax identification number, the amount of credit, the 8 name of the qualifying business, and other information required 9 by the department of revenue. The tax credit certificate, 10 unless rescinded by the authority, shall be accepted by the 11 department of revenue as payment for taxes imposed pursuant 12 to chapter 422, divisions II, III, and V , and in chapter 13 432 , and for the moneys and credits tax imposed in section 14 533.329 , subject to any conditions or restrictions placed by 15 the authority upon the face of the tax credit certificate and 16 subject to the limitations of section 15E.43 . 17 Sec. 6. Section 15E.45, subsection 4, Code 2014, is amended 18 to read as follows: 19 4. After verifying the eligibility of the community-based 20 seed capital fund, the authority shall issue a tax credit 21 certificate to be attached to included with the taxpayer’s 22 tax return. The tax credit certificate shall contain the 23 taxpayer’s name, address, tax identification number, the amount 24 of the tax credit, the name of the community-based seed capital 25 fund, and other information required by the department of 26 revenue. The tax credit certificate, unless rescinded by the 27 authority, shall be accepted by the department of revenue or 28 a local taxing district, as applicable, as payment for taxes 29 imposed pursuant to chapter 422, divisions II, III, and V , and 30 chapter 432 , and as payment for the moneys and credits tax 31 imposed pursuant to section 533.329 , subject to any conditions 32 or restrictions placed by the authority on the face of the tax 33 credit certificate and subject to the limitations of section 34 15E.43 . 35 -3- LSB 5311XD (9) 85 mm/sc 3/ 19

S.F. _____ H.F. _____ Sec. 7. Section 15E.193B, subsection 6, paragraph a, Code 1 2014, is amended to read as follows: 2 a. An eligible housing business may claim a tax credit 3 up to a maximum of ten percent of the new investment which 4 is directly related to the building or rehabilitating of a 5 minimum of four single-family homes located in that part of 6 a city or county in which there is a designated enterprise 7 zone or one multiple dwelling unit building containing three 8 or more individual dwelling units located in that part of a 9 city or county in which there is a designated enterprise zone. 10 The new investment that may be used to compute the tax credit 11 shall not exceed the new investment used for the first one 12 hundred forty thousand dollars of value for each single-family 13 home or for each unit of a multiple dwelling unit building 14 containing three or more units. The tax credit may be used to 15 reduce the tax liability liabilities imposed under chapter 422, 16 division divisions II, III, or and V , or and chapter 432 . Any 17 credit in excess of the tax liability for the tax year may be 18 credited to the tax liability for the following seven years or 19 until depleted, whichever occurs earlier. If the business is 20 a partnership, S corporation, limited liability company, or 21 estate or trust electing to have the income taxed directly to 22 the individual, an individual may claim the tax credit allowed. 23 The amount claimed by the individual shall be based upon the 24 pro rata share of the individual’s earnings of the partnership, 25 S corporation, limited liability company, or estate or trust 26 except as allowed for under subsection 8 when low-income 27 housing tax credits authorized under section 42 of the Internal 28 Revenue Code are used to assist in the financing of the housing 29 development. 30 Sec. 8. Section 15E.193B, subsection 8, Code 2014, is 31 amended to read as follows: 32 8. a. The amount of the tax credits determined pursuant 33 to subsection 6 , paragraph “a” , for each project shall be 34 approved by the economic development authority. The authority 35 -4- LSB 5311XD (9) 85 mm/sc 4/ 19

S.F. _____ H.F. _____ shall utilize the financial information required to be provided 1 under subsection 5 , paragraph “e” , to determine the tax credits 2 allowed for each project. In determining the amount of tax 3 credits to be allowed for a project, the authority shall not 4 include the portion of the project cost financed through 5 federal, state, and local government tax credits, grants, 6 and forgivable loans. Upon approving the amount of the tax 7 credit, the economic development authority shall issue a tax 8 credit certificate to the eligible housing business except 9 when low-income housing tax credits authorized under section 10 42 of the Internal Revenue Code are used to assist in the 11 financing of the housing development in which case the tax 12 credit certificate may be issued to a partner if the business 13 is a partnership, a shareholder if the business is an S 14 corporation, or a member if the business is a limited liability 15 company in the amounts designated by the eligible partnership, 16 S corporation, or limited liability company. An eligible 17 housing business or the designated partner if the business is 18 a partnership, designated shareholder if the business is an S 19 corporation, or designated member if the business is a limited 20 liability company, or transferee shall not claim the tax credit 21 unless a tax credit certificate is attached to included with 22 the taxpayer’s return for the tax year for which the tax 23 credit is claimed. The tax credit certificate shall contain 24 the taxpayer’s name, address, tax identification number, the 25 amount of the tax credit, and other information required by 26 the department of revenue. The tax credit certificate shall 27 be transferable if the housing development is located in a 28 brownfield site as defined in section 15.291 , if the housing 29 development is located in a blighted area as defined in section 30 403.17 , or if low-income housing tax credits authorized under 31 section 42 of the Internal Revenue Code are used to assist in 32 the financing of the housing development. Not more than three 33 million dollars worth of tax credits for housing developments 34 that are located in a brownfield site as defined in section 35 -5- LSB 5311XD (9) 85 mm/sc 5/ 19

S.F. _____ H.F. _____ 15.291 or housing developments located in a blighted area as 1 defined in section 403.17 shall be transferred in one calendar 2 year. The three million dollar annual limit does not apply 3 to tax credits awarded to an eligible housing business having 4 low-income housing tax credits authorized under section 42 of 5 the Internal Revenue Code to assist in the financing of the 6 housing development. The authority may approve an application 7 for tax credit certificates for transfer from an eligible 8 housing business located in a brownfield site as defined in 9 section 15.291 or in a blighted area as defined in section 10 403.17 that would result in the issuance of more than three 11 million dollars of tax credit certificates for transfer, 12 provided the authority, through negotiation with the eligible 13 business, allocates those tax credit certificates for transfer 14 over more than one calendar year. The authority shall not 15 approve more than one million five hundred thousand dollars 16 in tax credit certificates for transfer to any one eligible 17 housing business located in a brownfield site as defined in 18 section 15.291 or in a blighted area as defined in section 19 403.17 in a calendar year. If three million dollars in tax 20 credit certificates for transfer have not been issued at the 21 end of a calendar year, the remaining tax credit certificates 22 for transfer may be issued in advance to an eligible housing 23 business scheduled to receive a tax credit certificate for 24 transfer in a later calendar year. Any time the authority 25 approves a tax credit certificate for transfer which has not 26 been allocated at the end of a calendar year, the authority may 27 prorate the remaining certificates to more than one eligible 28 applicant. If the entire three million dollars of tax credit 29 certificates for transfer is not issued in a given calendar 30 year, the remaining amount may be carried over to a succeeding 31 calendar year. Tax credit certificates issued under this 32 chapter may be transferred to any person or entity. The 33 economic development authority shall notify the department 34 of revenue of the tax credit certificates which have been 35 -6- LSB 5311XD (9) 85 mm/sc 6/ 19

S.F. _____ H.F. _____ approved for transfer. Within ninety days of transfer, the 1 transferee must submit the transferred tax credit certificate 2 to the department of revenue along with a statement containing 3 the transferee’s name, tax identification number, and 4 address, and the denomination that each replacement tax credit 5 certificate is to carry and any other information required by 6 the department of revenue. Within thirty days of receiving 7 the transferred tax credit certificate and the transferee’s 8 statement, the department of revenue shall issue one or more 9 replacement tax credit certificates to the transferee. Each 10 replacement certificate must contain the information required 11 to receive the original certificate and must have the same 12 expiration date that appeared in the transferred tax credit 13 certificate. Tax credit certificate amounts of less than the 14 minimum amount established by rule of the economic development 15 authority shall not be transferable. A tax credit shall not be 16 claimed by a transferee under subsection 6 , paragraph “a” , until 17 a replacement tax credit certificate identifying the transferee 18 as the proper holder has been issued. 19 b. The transferee may use the amount of the tax credit 20 transferred against the taxes imposed under chapter 422, 21 divisions II, III, and V , and chapter 432 for any tax year the 22 original transferor could have claimed the tax credit. Any 23 consideration received for the transfer of the tax credit shall 24 not be included as income under chapter 422, divisions II, III, 25 and V . Any consideration paid for the transfer of the tax 26 credit shall not be deducted from income under chapter 422, 27 divisions II, III, and V . 28 Sec. 9. Section 16.211, subsection 2, paragraphs a and b, 29 Code 2014, are amended to read as follows: 30 a. To claim a disaster recovery housing project tax 31 credit under this section , a taxpayer must attach include one 32 or more tax credit certificates to with the taxpayer’s tax 33 return. The tax credit certificate or certificates attached 34 to included with the taxpayer’s tax return shall be issued in 35 -7- LSB 5311XD (9) 85 mm/sc 7/ 19

S.F. _____ H.F. _____ the taxpayer’s name, expire on or after the last day of the 1 taxable year for which the taxpayer is claiming the tax credit, 2 and show a tax credit amount equal to or greater than the tax 3 credit claimed on the taxpayer’s tax return. 4 b. After verifying the eligibility of a taxpayer for a tax 5 credit pursuant to this section , the authority shall issue a 6 disaster recovery housing project tax credit certificate to be 7 attached to included with the taxpayer’s tax return. The tax 8 credit certificate shall contain the taxpayer’s name, address, 9 tax identification number; the amount of the credit; and any 10 other information required by the department of revenue. 11 Sec. 10. Section 175.37, subsection 7, unnumbered paragraph 12 1, Code 2014, is amended to read as follows: 13 A taxpayer shall not claim a tax credit under this section 14 unless a tax credit certificate issued by the authority is 15 attached to included with the taxpayer’s tax return for the 16 tax year for which the tax credit is claimed. The authority 17 must review and approve an application for a tax credit as 18 provided by rules adopted by the authority. The application 19 must include a copy of the agricultural assets transfer 20 agreement. The authority may approve an application and issue 21 a tax credit certificate to a taxpayer who has previously been 22 allowed a tax credit under this section . The authority may 23 require that the parties to an agricultural assets transfer 24 agreement provide additional information as determined relevant 25 by the authority. The authority shall review an application 26 for a tax credit which includes the renewal of an agricultural 27 assets transfer agreement to determine that the parties to the 28 renewed agreement meet the same qualifications as required for 29 an original application. The authority shall not approve an 30 application or issue a tax credit certificate to a taxpayer for 31 an amount in excess of fifty thousand dollars. In addition, 32 the authority shall not approve an application or issue a 33 certificate to a taxpayer if any of the following applies: 34 Sec. 11. Section 175.38, subsection 10, unnumbered 35 -8- LSB 5311XD (9) 85 mm/sc 8/ 19

S.F. _____ H.F. _____ paragraph 1, Code 2014, is amended to read as follows: 1 A taxpayer shall not claim a custom farming contract tax 2 credit unless a tax credit certificate issued by the authority 3 under this section is attached to included with the taxpayer’s 4 tax return for the tax year for which the tax credit is 5 claimed. The authority must review and approve an application 6 for a tax credit certificate as provided by rules adopted 7 by the authority. The application must include a copy of 8 the custom farming contract. The authority may approve an 9 application and issue a tax credit certificate to a taxpayer 10 who has previously been allowed a tax credit under this 11 section . The authority may require that the parties to the 12 contract provide additional information as determined relevant 13 by the authority. The authority shall review an application 14 for a tax credit certificate which includes the renewal of a 15 contract to determine that the parties to the renewed contract 16 meet the same qualifications as required for an original 17 application. The authority shall not approve an application or 18 issue a tax credit certificate to a taxpayer for an amount in 19 excess of fifty thousand dollars. In addition, the authority 20 shall not approve an application or issue a tax credit 21 certificate to a taxpayer if any of the following applies: 22 Sec. 12. Section 404A.1, subsection 1, paragraph a, Code 23 2014, is amended to read as follows: 24 a. A historic preservation and cultural and entertainment 25 district tax credit, subject to the availability of the credit, 26 is granted against the tax taxes imposed under chapter 422, 27 division divisions II, III, or and V , or and chapter 432 , for 28 the substantial rehabilitation of eligible property located in 29 this state as provided in this chapter . 30 Sec. 13. Section 404A.4, subsection 2, unnumbered paragraph 31 1, Code 2014, is amended to read as follows: 32 After verifying the eligibility for the tax credit, the 33 state historic preservation office shall issue a historic 34 preservation and cultural and entertainment district tax credit 35 -9- LSB 5311XD (9) 85 mm/sc 9/ 19

S.F. _____ H.F. _____ certificate to be attached to included with the person’s 1 tax return. The tax credit certificate shall contain the 2 taxpayer’s name, address, tax identification number, the date 3 of project completion, the amount of credit, other information 4 required by the department of revenue, and a place for the name 5 and tax identification number of a transferee and the amount of 6 the tax credit being transferred. Of the amount of tax credits 7 that may be approved in a fiscal year pursuant to subsection 8 4 , paragraph “a” : 9 Sec. 14. Section 422.11S, subsection 7, paragraph a, Code 10 2014, is amended to read as follows: 11 a. In order for the taxpayer to claim the school tuition 12 organization tax credit under subsection 1 , a tax credit 13 certificate issued by the school tuition organization to which 14 the contribution was made shall be attached to included with 15 the person’s tax return. The tax credit certificate shall 16 contain the taxpayer’s name, address, tax identification 17 number, the amount of the contribution, the amount of the 18 credit, and other information required by the department. 19 Sec. 15. Section 437A.17B, Code 2014, is amended to read as 20 follows: 21 437A.17B Reimbursement for renewable energy. 22 A person in possession of a wind energy tax credit 23 certificate issued pursuant to chapter 476B or a renewable 24 energy tax credit certificate issued pursuant to chapter 476C 25 may apply to the director for a reimbursement of the amount of 26 taxes imposed and paid by the person pursuant to this chapter 27 in an amount not more than the person received in wind energy 28 tax credit certificates pursuant to chapter 476B or renewable 29 energy tax credit certificates pursuant to chapter 476C . To 30 obtain the reimbursement, the person shall attach to include 31 with the return required under section 437A.8 the wind energy 32 tax credit certificates issued to the person pursuant to 33 chapter 476B , or the renewable energy tax credit certificates 34 issued to the person pursuant to chapter 476C , and provide any 35 -10- LSB 5311XD (9) 85 mm/sc 10/ 19

S.F. _____ H.F. _____ other information the director may require. The director shall 1 direct a warrant to be issued to the person for an amount equal 2 to the tax imposed and paid by the person pursuant to this 3 chapter but for not more than the amount of the wind energy tax 4 credit certificates or renewable energy tax credit certificates 5 attached to included with the return. 6 Sec. 16. Section 476B.6, subsection 8, Code 2014, is amended 7 to read as follows: 8 8. A tax credit certificate shall not be used or attached 9 to included with a return filed for a taxable year beginning 10 prior to July 1, 2006. 11 Sec. 17. Section 476B.8, Code 2014, is amended to read as 12 follows: 13 476B.8 Use of tax credit certificates. 14 To claim a wind energy production tax credit under this 15 chapter , a taxpayer must attach include one or more tax credit 16 certificates to with the taxpayer’s tax return, or if used 17 against taxes imposed under chapter 423 , the taxpayer shall 18 comply with section 423.4, subsection 4 , or if used against 19 taxes imposed under chapter 437A , the taxpayer shall comply 20 with section 437A.17B . A tax credit certificate shall not 21 be used or attached to included with a return filed for a 22 taxable year beginning prior to July 1, 2006. The tax credit 23 certificate or certificates attached to included with the 24 taxpayer’s tax return shall be issued in the taxpayer’s name, 25 expire on or after the last day of the taxable year for which 26 the taxpayer is claiming the tax credit, and show a tax credit 27 amount equal to or greater than the tax credit claimed on 28 the taxpayer’s tax return. Any tax credit in excess of the 29 taxpayer’s tax liability for the taxable year may be credited 30 to the taxpayer’s tax liability for the following seven taxable 31 years or until depleted, whichever is the earlier. If the tax 32 credit is applied against the taxes imposed under chapter 423 33 or 437A , any credit in excess of the taxpayer’s tax liability 34 is carried over and can be filed with the refund claim for 35 -11- LSB 5311XD (9) 85 mm/sc 11/ 19

S.F. _____ H.F. _____ the following seven tax years or until depleted, whichever is 1 earlier. However, the certificate shall not be used to reduce 2 tax liability for a tax period ending after the expiration date 3 of the certificate. 4 Sec. 18. Section 476C.6, subsection 2, Code 2014, is amended 5 to read as follows: 6 2. To claim a renewable energy tax credit under this 7 chapter , a taxpayer must attach include one or more tax credit 8 certificates to with the taxpayer’s tax return, or if used 9 against taxes imposed under chapter 423 , the taxpayer shall 10 comply with section 423.4, subsection 4 , or if used against 11 taxes imposed under chapter 437A , the taxpayer shall comply 12 with section 437A.17B . A tax credit certificate shall not 13 be used or attached to included with a return filed for a 14 taxable year beginning prior to July 1, 2006. The tax credit 15 certificate or certificates attached to included with the 16 taxpayer’s tax return shall be issued in the taxpayer’s name, 17 expire on or after the last day of the taxable year for which 18 the taxpayer is claiming the tax credit, and show a tax credit 19 amount equal to or greater than the tax credit claimed on 20 the taxpayer’s tax return. Any tax credit in excess of the 21 taxpayer’s tax liability for the taxable year may be credited 22 to the taxpayer’s tax liability for the following seven tax 23 years or until the credit is depleted, whichever is earlier. 24 If the tax credit is applied against the taxes imposed under 25 chapter 423 or 437A , any credit in excess of the taxpayer’s 26 tax liability is carried over and can be filed with the refund 27 claim for the following seven tax years or until depleted, 28 whichever is earlier. However, the certificate shall not be 29 used to reduce tax liability for a tax period ending after the 30 expiration date of the certificate. 31 DIVISION III 32 INCOME TAXES 33 Sec. 19. Section 422.7, subsection 2, paragraph i, Code 34 2014, is amended by striking the paragraph. 35 -12- LSB 5311XD (9) 85 mm/sc 12/ 19

S.F. _____ H.F. _____ Sec. 20. Section 422.13, Code 2014, is amended to read as 1 follows: 2 422.13 Return by individual. 3 1. Except as provided in subsection 2 , a A resident or 4 nonresident of this state shall make a return, signed in 5 accordance with forms and rules prescribed by the director, if 6 any of the following are applicable: 7 a. The individual has net income of more than nine thousand 8 dollars for the tax year from sources taxable under this 9 division . 10 b. a. The individual is claimed as a dependent on another 11 person’s return and has net income of five thousand dollars or 12 more for the tax year from sources taxable under this division . 13 c. b. However, if that part of the The net income of a 14 nonresident which is allocated to Iowa pursuant to section 15 422.8, subsection 2 , is less than one thousand dollars the 16 nonresident is not required to make and sign a return except 17 when the or more for the tax year from sources taxable under 18 this division, unless the nonresident’s total net income, 19 as determined under section 422.5, subsection 3 or 3B, does 20 not exceed the appropriate dollar amount listed in section 21 422.5, subsection 3 or 3B, upon which tax is not imposed. The 22 portion of a lump sum distribution that is allocable to Iowa 23 is included in net income for purposes of determining if the 24 nonresident’s net income allocable to Iowa is one thousand 25 dollars or more. 26 c. A nonresident is subject to the state alternative minimum 27 tax imposed pursuant to section 422.5, subsection 2 . 28 2. d. Notwithstanding any other provision in this section , 29 The total net income, as determined under section 422.5, 30 subsection 3 or 3B, of a resident or nonresident of this state 31 is not required to make and file a return if the person’s net 32 income is equal to or less more than the appropriate dollar 33 amount listed in section 422.5, subsection 3 or 3B , upon 34 which tax is not imposed. A nonresident of this state is 35 -13- LSB 5311XD (9) 85 mm/sc 13/ 19

S.F. _____ H.F. _____ not required to make and file a return if the person’s total 1 net income in section 422.5, subsection 1 , paragraph “j” , is 2 equal to or less than the appropriate dollar amount provided 3 in section 422.5, subsection 3 , upon which tax is not imposed. 4 For purposes of this subsection , the amount of a lump sum 5 distribution subject to separate federal tax shall be included 6 in net income for purposes of determining if a resident is 7 required to file a return and the portion of the lump sum 8 distribution that is allocable to Iowa is included in total net 9 income for purposes of determining if a nonresident is required 10 to make and file a return. 11 3. 2. For purposes of determining the requirement for 12 filing a return under subsection 1 , the combined net income of 13 a husband and wife from sources taxable under this division 14 shall be considered. 15 4. 3. If the taxpayer is unable to make the return, 16 the return shall be made by a duly authorized agent or by a 17 guardian or other person charged with the care of the person or 18 property of the taxpayer. 19 5. 4. A nonresident taxpayer shall file a copy of the 20 taxpayer’s federal income tax return for the current tax year 21 with the return required by this section . 22 6. 5. a. Notwithstanding subsections 1 through 5 4 23 and sections 422.15 and 422.36 , a partnership, a limited 24 liability company whose members are taxed on the company’s 25 income under provisions of the Internal Revenue Code, trust, or 26 corporation whose stockholders are taxed on the corporation’s 27 income under the provisions of the Internal Revenue Code may, 28 not later than the due date for filing its return for the 29 taxable year, including any extension thereof, elect to file 30 a composite return for the nonresident partners, members, 31 beneficiaries, or shareholders. Nonresident trusts or estates 32 which are partners, members, beneficiaries, or shareholders 33 in partnerships, limited liability companies, trusts, or S 34 corporations may also be included on a composite return. The 35 -14- LSB 5311XD (9) 85 mm/sc 14/ 19

S.F. _____ H.F. _____ director may require that a composite return be filed under the 1 conditions deemed appropriate by the director. A partnership, 2 limited liability company, trust, or corporation filing a 3 composite return is liable for tax required to be shown due on 4 the return. 5 b. Notwithstanding subsections 1 through 5 4 and sections 6 422.15 and 422.36 , if the director determines that it is 7 necessary for the efficient administration of this chapter , 8 the director may require that a composite return be filed 9 for nonresidents other than nonresident partners, members, 10 beneficiaries or shareholders in partnerships, limited 11 liability companies, trusts, or S corporations. 12 c. All powers of the director and requirements of the 13 director apply to returns filed under this subsection including 14 but not limited to the provisions of this division and division 15 VI of this chapter . 16 Sec. 21. RETROACTIVE APPLICABILITY. This division of this 17 Act applies retroactively to January 1, 2014, for tax years 18 beginning on or after that date. 19 DIVISION IV 20 SALES AND USE TAXES 21 Sec. 22. Section 423.3, subsection 18, paragraph e, Code 22 2014, is amended to read as follows: 23 e. Community health Health centers as defined in 42 U.S.C. 24 § 254c and migrant health centers as defined in 42 U.S.C. 25 §254b. 26 DIVISION V 27 HOTEL AND MOTEL TAXES 28 Sec. 23. Section 423A.6, Code 2014, is amended to read as 29 follows: 30 423A.6 Administration by director. 31 1. The director of revenue shall administer the state and 32 local hotel and motel tax as nearly as possible in conjunction 33 with the administration of the state sales tax law, except 34 that portion of the law which implements the streamlined sales 35 -15- LSB 5311XD (9) 85 mm/sc 15/ 19

S.F. _____ H.F. _____ and use tax agreement. The director shall provide appropriate 1 forms, or provide on the regular state tax forms, for reporting 2 state and local hotel and motel tax liability. All moneys 3 received or refunded one hundred eighty days after the date on 4 which a city or county terminates its local hotel and motel 5 tax and all moneys received from the state hotel and motel tax 6 shall be deposited in or withdrawn from the general fund of the 7 state. Beginning 8 2. If a reinvestment district is established under chapter 9 15J, beginning the first day of the calendar quarter beginning 10 on the reinvestment district’s commencement date, the director 11 of revenue shall, subject to remittance limitations established 12 by the economic development authority board pursuant to section 13 15J.4, subsection 3 , transfer from the general fund of the 14 state to a district account created in the state reinvestment 15 district fund for each reinvestment district established 16 under chapter 15J , the new state hotel and motel tax revenue, 17 determined in section 15J.5, subsection 2 , paragraph “b” , in 18 the district. Such transfers shall cease pursuant to section 19 15J.8 . 20 2. 3. The director, in consultation with local officials, 21 shall collect and account for a local hotel and motel tax and 22 shall credit all revenues to the local transient guest tax fund 23 created in section 423A.7 . Local authorities shall not require 24 any tax permit not required by the director of revenue. 25 3. 4. Section 422.25, subsection 4 , sections 422.30 , 26 422.67 , and 422.68 , section 422.69, subsection 1 , sections 27 422.70 , 422.71 , 422.72 , 422.74 , and 422.75 , section 423.14, 28 subsection 1 , and sections 423.23 , 423.24 , 423.25 , 423.31 , 29 423.33 , 423.35 , 423.37 through 423.42 , and 423.47 , consistent 30 with the provisions of this chapter , apply with respect to 31 the taxes authorized under this chapter , in the same manner 32 and with the same effect as if the state and local hotel and 33 motel taxes were retail sales taxes within the meaning of 34 those statutes. Notwithstanding this subsection, the director 35 -16- LSB 5311XD (9) 85 mm/sc 16/ 19

S.F. _____ H.F. _____ shall provide for quarterly filing of returns and for other 1 than quarterly filing of returns both as prescribed in section 2 423.31 . The director may require all persons who are engaged 3 in the business of deriving any sales price subject to tax 4 under this chapter to register with the department. All taxes 5 collected under this chapter by a retailer or any individual 6 are deemed to be held in trust for the state of Iowa and the 7 local jurisdictions imposing the taxes. 8 DIVISION VI 9 EQUIPMENT TAXES 10 Sec. 24. Section 423D.3, Code 2014, is amended to read as 11 follows: 12 423D.3 Exemption. 13 The sales price on the lease or rental of equipment to 14 contractors for direct and primary use in construction is 15 exempt from the tax imposed by this chapter . The sales price 16 from transactions exempt from state sales tax under section 17 423.3 is also exempt from the tax imposed by this chapter . 18 Sec. 25. EFFECTIVE UPON ENACTMENT. This division of this 19 Act, being deemed of immediate importance, takes effect upon 20 enactment. 21 Sec. 26. RETROACTIVE APPLICABILITY. This division of this 22 Act applies retroactively to July 1, 2008, for all sales or 23 uses of equipment on or after that date. 24 EXPLANATION 25 The inclusion of this explanation does not constitute agreement with 26 the explanation’s substance by the members of the general assembly. 27 This bill relates to the technical administration of the tax 28 and related laws by the department of revenue. 29 DIVISION I —— MISCELLANEOUS ADMINISTRATIVE CHANGES. 30 Division I gives the director of revenue the power and duty to 31 adopt rules ensuring that the total amount of transfers by the 32 department of revenue to local governments or other entities 33 with respect to flood mitigation program projects, local option 34 tax urban renewal projects, and Iowa reinvestment Act projects 35 -17- LSB 5311XD (9) 85 mm/sc 17/ 19