SSB 1202 (LSB 2277XC (2) 85)

SENATE FILE _____

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

A BILL FOR

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

    Section 1.  Section 433.4, Code 2013, is amended to read as follows:
   433.4  Assessment.
   1.  The director of revenue shall on or before October 31 each year, proceed to find the actual value of the property of these companies in this state
 
used by the companies in the transaction of telegraph and telephone business, taking into consideration the information obtained from the statements required, and any further information the director can obtain, using the same as a means for determining the actual cash value of the property of these companies within this state. The director shall also take into consideration the valuation of all property of these companies, including franchises and the use of the property in connection with lines outside the state, and making these deductions as may be necessary on account of extra value of property outside the state as compared with the value of property in the state, in order that the actual cash value of the property of the company within this state may be ascertained. The assessment shall include all property of every kind and character whatsoever, real, personal, or mixed, used by the companies in the transaction of telegraph and telephone business; and the
 
The property so included in the assessment shall not be taxed in any other manner than as provided in this chapter.
   2.
  a.  Except as provided in paragraph “c”, for assessment years beginning on or after January 1, 2014, a company’s property, excluding the property identified in paragraph “b” as exempt from taxation, shall be subject to assessment and taxation under this chapter by the director of revenue in the same manner as property assessed and taxed as commercial property under chapters 427, 427A, 427B, 428, and 441.
   b.  All of the following is exempt from taxation and shall not be assessed for taxation under this chapter:
   (1)  Central office equipment.
   (2)  Qualified telephone company property. However, qualified telephone company property shall be valued and included in the company’s assessment for the assessment years, and to the extent specified, in paragraph “c”.
   c.  For assessment years beginning on or after January 1, 2014, the director of revenue shall include as part of the actual value determined under paragraph “a” for the applicable assessment year, the following:
   (1)  For the assessment year beginning January 1, 2014, an amount equal to the actual value of the company’s qualified telephone company property that exceeds four million dollars.
   (2)  For the assessment year beginning January 1, 2015, an amount equal to the actual value of the company’s qualified telephone company property that exceeds eight million dollars.
   (3)  For the assessment year beginning January 1, 2016, an amount equal to the actual value of the company’s qualified telephone company property that exceeds twelve million dollars.
   (4)  For the assessment year beginning January 1, 2017, an amount equal to the actual value of the company’s qualified telephone company property that exceeds sixteen million dollars.
   (5)  For the assessment year beginning January 1, 2018, and each assessment year thereafter, an amount equal to the actual value of the company’s qualified telephone company property that exceeds twenty million dollars.
    Sec. 2.  Section 433.12, Code 2013, is amended by adding the following new subsections:
   NEW SUBSECTION.  1A.  As used in this chapter, “central office equipment” means motor vehicles, aircraft, tools and other work equipment, furniture, office equipment, general purpose computers, central office switching equipment, nondigital switching equipment, digital electronic switching equipment, operator systems, central office transmission equipment, radio systems, circuit equipment, information origination and termination equipment, station apparatus, customer premises wiring, large private branch exchanges, public telephone terminal equipment, and other terminal equipment, within the meaning of the telecommunications companies account provisions of 47 C.F.R. pt. 32, in effect on the effective date of this Act.
   NEW SUBSECTION.  3.  As used in this chapter, “qualified telephone company property” means poles, aerial cable, underground cable, buried cable, submarine and deep sea cable, intrabuilding network cable, aerial wire, and conduit systems within the meaning of the telecommunications companies account provisions of 47 C.F.R. pt. 32, in effect on the effective date of this Act.
    Sec. 3.  Section 441.21, subsection 5, Code 2013, is amended to read as follows:
   5.  For valuations established as of January 1, 1979, commercial property and industrial property, excluding properties referred to in section 427A.1, subsection 8, shall be assessed as a percentage of the actual value of each class of property. The percentage shall be determined for each class of property by the director of revenue for the state in accordance with the provisions of this section. For valuations established as of January 1, 1979, the percentage shall be the quotient of the dividend and divisor as defined in this section. The dividend for each class of property shall be the total actual valuation for each class of property established for 1978, plus six percent of the amount so determined. The divisor for each class of property shall be the valuation for each class of property established for 1978, as reported by the assessors on the abstracts of assessment for 1978, plus the amount of value added to the total actual value by the revaluation of existing properties in 1979 as equalized by the director of revenue pursuant to section 441.49. For valuations established as of January 1, 1979, property valued by the department of revenue pursuant to chapters 428, 433, 437, and 438 shall be considered as one class of property and shall be assessed as a percentage of its actual value. The percentage shall be determined by the director of revenue in accordance with the provisions of this section. For valuations established as of January 1, 1979, the percentage shall be the quotient of the dividend and divisor as defined in this section. The dividend shall be the total actual valuation established for 1978 by the department of revenue, plus ten percent of the amount so determined. The divisor for property valued by the department of revenue pursuant to chapters 428, 433, 437, and 438 shall be the valuation established for 1978, plus the amount of value added to the total actual value by the revaluation of the property by the department of revenue as of January 1, 1979. For valuations established as of January 1, 1980, commercial property and industrial property, excluding properties referred to in section 427A.1, subsection 8, shall be assessed at a percentage of the actual value of each class of property. The percentage shall be determined for each class of property by the director of revenue for the state in accordance with the provisions of this section. For valuations established as of January 1, 1980, the percentage shall be the quotient of the dividend and divisor as defined in this section. The dividend for each class of property shall be the dividend as determined for each class of property for valuations established as of January 1, 1979, adjusted by the product obtained by multiplying the percentage determined for that year by the amount of any additions or deletions to actual value, excluding those resulting from the revaluation of existing properties, as reported by the assessors on the abstracts of assessment for 1979, plus four percent of the amount so determined. The divisor for each class of property shall be the total actual value of all such property in 1979, as equalized by the director of revenue pursuant to section 441.49, plus the amount of value added to the total actual value by the revaluation of existing properties in 1980. The director shall utilize information reported on the abstracts of assessment submitted pursuant to section 441.45 in determining such percentage. For valuations established as of January 1, 1980, property valued by the department of revenue pursuant to chapters 428, 433, 437, and 438 shall be assessed at a percentage of its actual value. The percentage shall be determined by the director of revenue in accordance with the provisions of this section. For valuations established as of January 1, 1980, the percentage shall be the quotient of the dividend and divisor as defined in this section. The dividend shall be the total actual valuation established for 1979 by the department of revenue, plus eight percent of the amount so determined. The divisor for property valued by the department of revenue pursuant to chapters 428, 433, 437, and 438 shall be the valuation established for 1979, plus the amount of value added to the total actual value by the revaluation of the property by the department of revenue as of January 1, 1980. For valuations established as of January 1, 1981, and each year thereafter, the percentage of actual value as equalized by the director of revenue as provided in section 441.49 at which commercial property and industrial property, excluding properties referred to in section 427A.1, subsection 8, shall be assessed shall be calculated in accordance with the methods provided herein, except that any references to six percent in this subsection shall be four percent. For valuations established as of January 1, 1981, and each year thereafter, the percentage of actual value at which property valued by the department of revenue pursuant to chapters 428, 433, 437, and 438 shall be assessed shall be calculated in accordance with the methods provided herein, except that any references to ten percent in this subsection shall be eight percent.

For assessment years beginning on or after January 1, 2014, the percentage of actual value at which property valued by the department of revenue pursuant to chapters 428, 433, 437, and 438 shall be assessed shall be calculated using property valuations for the applicable assessment years that include the total value of property exempt from taxation under section 433.4, subsection 2, paragraph “b”, notwithstanding section 433.4, subsection 2, paragraph “c”. Beginning with valuations established as of January 1, 1979, and each year thereafter, property valued by the department of revenue pursuant to chapter 434 shall also be assessed at a percentage of its actual value which percentage shall be equal to the percentage determined by the director of revenue for commercial property, industrial property, or property valued by the department of revenue pursuant to chapters 428, 433, 437, and 438, whichever is lowest.
    Sec. 4.  Section 476.1D, subsection 10, Code 2013, is amended by striking the subsection.
    Sec. 5.  PROPERTY TAXATION OF TELECOMMUNICATIONS COMPANIES —— REPORT.  The department of revenue, in consultation with the department of management, representatives of the telecommunications industry, and other interested stakeholders, shall study the current system of assessing telecommunications property and levying property tax against telecommunications companies and make recommendations for changes. The department of revenue shall prepare and file a report detailing recommendations for changes to the current system of assessing telecommunications property and levying property tax against telecommunications companies. The report shall be filed by the department of revenue with the chairpersons and ranking members of the ways and means committees of the senate and the house of representatives and with the legislative services agency by January 13, 2014.
    Sec. 6.  SAVINGS PROVISION.  This Act, pursuant to section 4.13, does not affect the operation of, or prohibit the application of, prior provisions of chapter 433, or rules adopted under chapter 17A to administer prior provisions of chapter 433, for assessment years beginning before January 1, 2014, and for duties, powers, protests, appeals, proceedings, actions, or remedies attributable to an assessment year beginning before January 1, 2014.
    Sec. 7.  IMPLEMENTATION.  Section 25B.7 shall not apply to this Act.
    Sec. 8.  EFFECTIVE DATE.
   1.  Except as provided in subsection 2, this Act takes effect July 1, 2013.
   2.  The section of this Act amending section 476.1D takes effect July 1, 2017.
    Sec. 9.  APPLICABILITY.
   1.  Except as provided in subsection 2, this Act applies to assessment years beginning on or after January 1, 2014.
   2.  The section of this Act amending section 476.1D applies to assessment years beginning on or after January 1, 2018.
EXPLANATION
   This bill relates to the manner in which the property of telecommunications companies is assessed and taxed.
   The assessment provisions of current Code section 433.4 provide that in ascertaining the actual value of telecommunications company property the director of revenue shall include all property of every kind and character whatsoever, real, personal, or mixed, used by the company in the transaction of telegraph and telephone business.
   The bill strikes the provisions that included all kinds and character of property in the determination of actual value of a company’s property. Instead, the bill provides that for assessment years beginning on or after January 1, 2014, a company’s property, excluding central office equipment and qualified telephone company property, both as defined in the bill, shall be subject to assessment and taxation under Code chapter 433 by the director of revenue in the same manner as property assessed and taxed as commercial property. The bill provides, however, that for assessment years beginning on or after January 1, 2014, the director of revenue shall include as part of the actual value so determined for that assessment year a specified amount of actual value of the company’s qualified telephone company property.
   The bill also modifies the provision relating to the calculation of the assessment limitation for property valued by the department of revenue pursuant to Code chapters 428, 433, 437, and 438 by specifying that for assessment years beginning on or after January 1, 2014, such assessment limitation shall be calculated using property valuations for the applicable assessment years that include the total value of specified telecommunications company property exempted from taxation under new Code section 433.4(2)(b).
   The bill strikes a provision in Code section 476.1D that allowed certain specified long-distance telephone company property to be assessed for taxation as commercial property by the local assessor. 
   The bill establishes a study to be facilitated by the department of revenue, in consultation with applicable stakeholders, regarding property tax on telecommunications companies. The department of revenue will study the current system of assessing property and levying property tax for telecommunications companies. A report detailing any recommended changes will be filed with the chairperson and ranking members of the ways and means committees of the senate and the house of representatives and with the legislative services agency by January 13, 2014.
   The bill provides that the provisions in Code section 25B.7, relating to the obligation of the state to reimburse local jurisdictions for property tax credits and exemptions, do not apply to the exemption in the bill.
   Except for the section of the bill amending Code section 476.1D, the bill takes effect July 1, 2013, and applies to assessment years beginning on or after January 1, 2014. The section of the bill amending Code section 476.1D takes effect July 1, 2017, and applies to assessment years beginning on or after January 1, 2018.
   The bill, pursuant to Code section 4.13, does not affect the application of Code chapter 433 to assessment years beginning before January 1, 2014.