Senate Study Bill 1204 - Introduced SENATE FILE _____ BY (PROPOSED COMMITTEE ON TRANSPORTATION BILL BY CHAIRPERSON BOWMAN) A BILL FOR An Act concerning vehicle registration fees, including matters 1 relating to evasion of fees and to fees for electric 2 vehicles, providing penalties, and including applicability 3 provisions. 4 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 5 TLSB 2470XC (3) 85 dea/nh

S.F. _____ Section 1. Section 321.55, Code 2013, is amended to read as 1 follows: 2 321.55 Registration and financial liability coverage required 3 for certain vehicles owned or operated by nonresidents. 4 1. A nonresident owner or operator engaged in remunerative 5 employment within the this state or carrying on business 6 within the this state and owning or operating a motor vehicle, 7 trailer, or semitrailer within the this state shall register 8 and maintain financial liability coverage as required under 9 section 321.20B for each vehicle and pay the same fees for 10 registration as are paid for like vehicles owned by residents 11 of this state. However, this paragraph subsection does not 12 apply to a person commuting from the person’s residence in 13 another state or whose employment is seasonal or temporary, not 14 exceeding ninety days. 15 2. a. A nonresident owner of a motor vehicle operated 16 within the this state by a resident of the this state shall 17 register the vehicle and shall maintain financial liability 18 coverage as required under section 321.20B for the vehicle. 19 The nonresident owner shall pay the same fees for registration 20 as are paid for like vehicles owned by residents of this state. 21 However, registration under this paragraph is not required for 22 vehicles being operated by residents temporarily , not exceeding 23 for not more than ninety days. For purposes of this paragraph, 24 a vehicle is not operated in the state temporarily, and is 25 therefore subject to registration and the owner is required 26 to pay the applicable fees, if the vehicle is located in Iowa 27 for more than ninety consecutive or nonconsecutive days and is 28 operated on an Iowa highway by an Iowa resident during that 29 time. It is unlawful for a resident to operate within the 30 state an unregistered motor vehicle required to be registered 31 under this paragraph. The ninety-day temporary period of 32 operation provided for under this paragraph does not apply to a 33 vehicle owned by a shell business as provided in paragraph “b” . 34 b. On or after July 1, 2013, if the department, in 35 -1- LSB 2470XC (3) 85 dea/nh 1/ 6

S.F. _____ consultation with the department of revenue, determines that 1 the nonresident owner of a vehicle is a partnership, limited 2 liability company, or corporation that is a shell business, it 3 shall be rebuttably presumed that the Iowa resident in control 4 of the vehicle is the actual owner of the vehicle, that the 5 vehicle is subject to registration in this state, and that 6 payment of the fee for new registration for the vehicle is owed 7 by the Iowa resident. 8 (1) Factors which indicate that a partnership, limited 9 liability company, or corporation is a shell business include 10 but are not limited to the following: 11 (a) The partnership, limited liability company, or 12 corporation lacks a specific business activity or purpose. 13 (b) The partnership, limited liability company, or 14 corporation fails to maintain a physical location in the 15 foreign state. 16 (c) The partnership, limited liability company, or 17 corporation fails to employ individual persons and provide 18 those persons with internal revenue service form W-2 wage and 19 tax statements. 20 (d) The partnership, limited liability company, or 21 corporation fails to file federal tax returns, or fails to file 22 a required state tax return in the foreign state. 23 (2) Factors which indicate that a person is in control of a 24 vehicle include but are not limited to the following: 25 (a) The person was the initial purchaser of the vehicle. 26 (b) The person operated or stored the vehicle in Iowa for 27 any period of time. 28 (c) The person is a partner, member, or shareholder of 29 the nonresident partnership, limited liability company, or 30 corporation that purports to be the owner of the vehicle. 31 (d) The person is insured to drive the vehicle. 32 (3) If the department determines that the nonresident owner 33 of a vehicle is a shell business, the department shall notify 34 the Iowa resident in control of the vehicle in writing that 35 -2- LSB 2470XC (3) 85 dea/nh 2/ 6

S.F. _____ the Iowa resident is required to obtain an Iowa certificate of 1 title and registration for the vehicle and pay the fee for new 2 registration owed for the vehicle not later than thirty days 3 from the date of the notice. 4 Sec. 2. Section 321.105A, subsection 7, Code 2013, is 5 amended to read as follows: 6 7. Penalty for false statement or evasion of fee . 7 a. A person who willfully makes a false statement in 8 regard to the purchase price of a vehicle subject to a fee 9 for new registration or willfully attempts in any manner to 10 evade payment of the fee required by this section is guilty 11 of a fraudulent practice. A person who willfully makes a 12 false statement in regard to the purchase price of such a 13 vehicle with the intent to evade payment of the fee for new 14 registration or willfully attempts in any manner to evade 15 payment of the fee required by this section shall be assessed 16 a penalty of seventy-five percent of the amount of the fee 17 unpaid and required to be paid on the actual purchase price 18 less trade-in allowance. 19 b. An Iowa resident found to be in control of a vehicle 20 which is owned by a shell business and for which the fee for new 21 registration has not been paid, as provided in section 321.55, 22 subsection 2, is guilty of a fraudulent practice. An Iowa 23 resident found to be in control of a vehicle which is owned by 24 a shell business and for which the fee for new registration 25 has not been paid, as provided in section 321.55, subsection 26 2, shall be assessed a penalty of seventy-five percent of the 27 amount of the fee unpaid and required to be paid on the actual 28 purchase price less trade-in allowance. 29 Sec. 3. REPEAL. Section 321.116, Code 2013, is repealed. 30 Sec. 4. APPLICABILITY —— PRIOR ELECTRIC VEHICLE 31 REGISTRATIONS. 32 1. Except as provided in subsection 2, the section of this 33 Act that repeals section 321.116 applies to the registration of 34 electric motor vehicles for registration years beginning on or 35 -3- LSB 2470XC (3) 85 dea/nh 3/ 6

S.F. _____ after January 1, 2014. 1 2. For an annual renewal of registration for an electric 2 motor vehicle which was registered to the same owner for a 3 registration year beginning prior to January 1, 2014, the 4 annual registration fee shall be according to the terms of 5 section 321.116, Code 2013. 6 EXPLANATION 7 This bill contains provisions relating to collection of 8 the fee for new registration from vehicle owners who attempt 9 to evade payment of the fee, including resident owners who 10 establish a shell business in another state. In addition, 11 the bill provides for annual registration fees for electric 12 vehicles based on the weight and value of the vehicle. 13 Under current law, the nonresident owner of a motor vehicle 14 which is operated within this state by a resident of this 15 state must register the vehicle in Iowa and pay the same fees 16 required for registration of a vehicle by a resident owner. 17 However, registration is not required for a vehicle owned by 18 a nonresident and operated in this state by an Iowa resident 19 for a temporary period of not more than 90 days. The bill 20 provides that if a vehicle owned by a nonresident is located in 21 Iowa for more than 90 consecutive or nonconsecutive days and is 22 operated by an Iowa resident during that time, the vehicle is 23 not considered to be in the state temporarily. 24 The bill provides that on or after July 1, 2013, if the 25 department of transportation, in consultation with the 26 department of revenue, determines that the nonresident owner 27 of a vehicle is a partnership, limited liability company, or 28 corporation that is a shell business, there is a rebuttable 29 presumption that the Iowa resident in control of the vehicle 30 is the actual owner of the vehicle, that the vehicle is 31 subject to registration in this state, and that the fee for 32 new registration for the vehicle is owed by the Iowa resident. 33 The 90-day grace period does not apply to such a vehicle, 34 and the department of transportation shall notify the Iowa 35 -4- LSB 2470XC (3) 85 dea/nh 4/ 6

S.F. _____ resident in control of the vehicle of the requirement to obtain 1 a certificate of title and registration for the vehicle and 2 pay the applicable fee for registration within 30 days of the 3 date of the notice. The bill lists factors that identify a 4 shell business, including but not limited to lacking a specific 5 business activity or purpose, failing to maintain a physical 6 location in the foreign jurisdiction, failing to employ 7 individuals and issue federal W-2 forms, and failing to file 8 federal or state tax returns. Factors used to identify the 9 person in control of the vehicle include that the person was 10 the original purchaser of the vehicle; that the person operated 11 or stored the vehicle in Iowa for any period of time; that the 12 person is a partner, member, or shareholder of the nonresident 13 partnership, limited liability company, or corporation that 14 purports to be the owner of the vehicle; or that the person is 15 insured to operate the vehicle. 16 The bill provides that a person who willfully attempts to 17 evade payment of the fee for new registration is guilty of 18 a fraudulent practice. The bill also provides that a person 19 who is found to be in control of a vehicle that is owned by a 20 shell business and for which the fee for new registration is 21 unpaid is guilty of a fraudulent practice. In addition to any 22 criminal penalty, the person shall be assessed a penalty of 23 75 percent of the amount of the fee unpaid and required to be 24 paid. These are the same penalties that apply for making a 25 false statement in regard to the purchase price of a vehicle 26 subject to the fee for new registration. 27 Code section 321.116, which establishes an annual 28 registration fee of $25 for an electric motor vehicle up to 29 five model years old and a fee of $15 thereafter, is repealed. 30 As a result, electric motor vehicles will be subject to 31 registration fees based on the weight and value of the vehicle. 32 The change applies for registration years beginning on or after 33 January 1, 2014. However, current fees will continue to apply 34 to registration renewals for electric motor vehicles registered 35 -5- LSB 2470XC (3) 85 dea/nh 5/ 6

S.F. _____ to the same owner for a registration year beginning prior to 1 January 1, 2014. 2 -6- LSB 2470XC (3) 85 dea/nh 6/ 6