SSB 3209 (LSB 5572XC (2) 85)

SENATE FILE _____

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

A BILL FOR

An Act exempting from the state sales tax the sales price from the sale or furnishing of metered water to residential customers and creating state and local residential metered water excise taxes.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

    Section 1.  Section 423.3, Code 2014, is amended by adding the following new subsection:
   NEW SUBSECTION.  101.  The sales price from the sale or furnishing of metered water to residential customers for use at residential dwellings and units of apartment and condominium complexes used for human occupancy.
    Sec. 2.  NEW SECTION.  423G.1  Short title.

   This chapter may be cited as the “Residential Metered Water Tax Act”.
    Sec. 3.  NEW SECTION.  423G.2  Definitions.

   All words and phrases used in this chapter and defined in section 423.1 have the same meaning given them by section 423.1 for purposes of this chapter.
    Sec. 4.  NEW SECTION.  423G.3  State-imposed residential metered water tax.
   1.  A tax at the rate specified in subsection 2 is imposed on the sales price from the sale or furnishing of metered water to residential customers for use at residential dwellings and units of apartment and condominium complexes used for human occupancy.
   2.  a.  If the date of the utility billing or meter reading cycle of the residential customer for the sale or furnishing of metered water is on or after July 1, 2014, but before July 1, 2015, or if the sale or furnishing of the water and the delivery of the water occurs on or after July 1, 2014, but before July 1, 2015, the rate of tax is six percent.
   b.  If the date of the utility billing or meter reading cycle of the residential customer for the sale or furnishing of metered water is on or after July 1, 2015, but before July 1, 2016, or if the sale or furnishing of the water and the delivery of the water occurs on or after July 1, 2015, but before July 1, 2016, the rate of tax is five percent.
   c.  If the date of the utility billing or meter reading cycle of the residential customer for the sale or furnishing of metered water is on or after July 1, 2016, but before July 1, 2017, or if the sale or furnishing of the water and the delivery of the water occurs on or after July 1, 2016, but before July 1, 2017, the rate of tax is four percent.
   d.  If the date of the utility billing or meter reading cycle of the residential customer for the sale or furnishing of metered water is on or after July 1, 2017, but before July 1, 2018, or if the sale or furnishing of the water and the delivery of the water occurs on or after July 1, 2017, but before July 1, 2018, the rate of tax is three percent.
   e.  If the date of the utility billing or meter reading cycle of the residential customer for the sale or furnishing of metered water is on or after July 1, 2018, but before July 1, 2019, or if the sale or furnishing of the water and the delivery of the water occurs on or after July 1, 2018, but before July 1, 2019, the rate of tax is two percent.
   f.  If the date of the utility billing or meter reading cycle of the residential customer for the sale or furnishing of metered water is on or after July 1, 2019, but before January 1, 2030, or if the sale or furnishing of the water and the delivery of the water occurs on or after July 1, 2019, but before January 1, 2030, the rate of tax is one percent.
   g.  If the date of the utility billing or meter reading cycle of the residential customer for the sale or furnishing of metered water, or the date of the sale or furnishing of the water and the delivery of the water, is on or after January 1, 2030, the rate of tax is zero percent.
   3.  This section is repealed June 30, 2030.
    Sec. 5.  NEW SECTION.  423G.4  Locally imposed residential metered water tax.
   1.  a.  A county that is not subject to subsection 2 may impose a local residential metered water tax at a rate of not more than one percent of the sales price from the sale or furnishing of metered water to residential customers for use at residential dwellings and units of apartment and condominium complexes used for human occupancy. The tax shall be imposed, collected, and administered in the same manner as the local sales and services tax in chapter 423B and sections 423B.1, 423B.5, 423B.6, 423B.7, 423B.8, 423B.9, and 423B.10, consistent with the provisions of this chapter, shall apply with respect to the tax authorized under this subsection, in the same manner and with the same effect as if the local residential metered water tax was a local sales and services tax within the meaning of those statutes.
   b.  The question of the imposition of a local residential metered water tax may be submitted at the same election as the local option taxes authorized under chapter 423B.
   c.  This subsection shall not be construed to require a county to impose a local residential metered water tax if the county imposes a local sales and services tax.
   2.  a.  If a city or county has in effect a local sales and services tax under chapter 423B on the effective date of this Act, that city or county shall impose on and after the effective date of this Act a local residential metered water tax at the same rate as the local sales and services tax on the sales price from the sale or furnishing of metered water to residential customers for use at residential dwellings and units of apartment and condominium complexes used for human occupancy. The local residential metered water tax shall be imposed, collected, and administered in the same manner and with the same effect as the city’s or county’s local sales and services tax under chapter 423B and sections 423B.1, 423B.5, 423B.6, 423B.7, 423B.8, 423B.9, and 423B.10, consistent with the provisions of this chapter, shall apply with respect to the tax imposed under this subsection, in the same manner and with the same effect as if the local residential metered water tax was a local sales and services tax within the meaning of chapter 423B.
   b.  The city or county shall within 60 days of the effective date of this Act amend its local sales and services tax ordinance to reflect the imposition of the local residential metered water tax under this subsection.
   c.  The city or county shall continue to collect the local residential metered water tax imposed under this subsection until such time as the local sales and services tax in effect on the effective date of this Act is repealed by the city or county.
    Sec. 6.  NEW SECTION.  423G.5  Exemptions.

   The sales price from transactions exempt from state sales tax under section 423.3, except section 423.3, subsection 101, is also exempt from the tax imposed by this chapter.
    Sec. 7.  NEW SECTION.  423G.6  Administration by director.
   1.  The director of revenue shall administer the state and local residential metered water tax as nearly as possible in conjunction with the administration of the state sales and use tax law, except that portion of the law which implements the streamlined sales and use tax agreement. The director shall provide appropriate forms, or provide on the regular state tax forms, for reporting state and local residential metered water tax liability.
   2.  The director may require all persons who are engaged in the business of deriving any sales price or purchase price subject to tax under this chapter to register with the department. The director may also require a tax permit applicable only to this chapter for any retailer not collecting, or any user not paying, taxes under chapter 423.
   3.  Section 422.25, subsection 4, sections 422.30, 422.67, and 422.68, section 422.69, subsection 1, sections 422.70, 422.71, 422.72, 422.74, and 422.75, section 423.14, subsection 1, and sections 423.23, 423.24, 423.25, 423.31 through 423.35, 423.37 through 423.42, and 423.47, consistent with the provisions of this chapter, shall apply with respect to the taxes authorized under this chapter, in the same manner and with the same effect as if the excise taxes on the sale or furnishing of metered water to residential customers were retail sales taxes within the meaning of those statutes. Notwithstanding this paragraph, the director shall provide for quarterly filing of returns and for other than quarterly filing of returns both as prescribed in section 423.31. All taxes collected under this chapter by a retailer or any user are deemed to be held in trust for the state of Iowa.
    Sec. 8.  NEW SECTION.  423G.7  Deposit of revenues.
   1.  All moneys received and all refunds shall be deposited in or withdrawn from the general fund of the state.
   2.  The director, in consultation with local officials, shall collect and account for a local residential metered water tax and shall credit all revenues in the same manner as provided in section 423B.7. Local authorities shall not require any tax permit not required by the director of revenue.
   3.  Subsequent to the deposit in the general fund of the state, the department shall do the following in the order prescribed:
   a.  Transfer the revenues collected under section 423G.3 in the manner prescribed in section 423B.7.
   b.  (1)  Transfer from the remaining revenues the following amounts to the secure an advanced vision for education fund created in section 423F.2:
   (a)  For revenues collected on or after July 1, 2014, but before August 1, 2015, one-sixth of the remaining revenues.
   (b)  For revenues collected on or after August 1, 2015, but before August 1, 2016, one-fifth of the remaining revenues.
   (c)  For revenues collected on or after August 1, 2016, but before August 1, 2017, one-fourth of the remaining revenues.
   (d)  For revenues collected on or after August 1, 2017, but before August 1, 2018, one-third of the remaining revenues.
   (e)  For revenues collected on or after August 1, 2018, but before August 1, 2019, one-half of the remaining revenues.
   (f)  For revenues collected on or after August 1, 2019, one hundred percent of the remaining revenues.
   (2)  This paragraph is repealed June 30, 2030.
EXPLANATION
The inclusion of this explanation does not constitute agreement with

the explanation’s substance by the members of the general assembly.
   This bill relates to the sale of metered water to residential customers.
   The bill exempts from the sales tax the sales price from the sale or furnishing of metered water to residential customers for use at residential dwellings and units of apartment and condominium complexes used for human occupancy. By operation of Code section 423.6, an item exempt from the imposition of the sales tax is also exempt from the use tax imposed in Code section 423.5.
   The bill creates a state excise tax on the sales price from the sale or furnishing of metered water to residential customers for use at residential dwellings and units of apartment and condominium complexes used for human occupancy. The rate of the excise tax begins at 6 percent for fiscal year 2014-2015, which is the same rate as the state sales tax, and is reduced one percentage point each fiscal year for the next four fiscal years until it is set at 1 percent for July 1, 2019, through December 31, 2029. The remaining 1 percent state residential metered water tax will no longer be collected on or after January 1, 2030, which is the same date the state sales tax rate is reduced to 5 percent from 6 percent because of the repeal of the 1 percent secure an advanced vision for education tax rate.
   The bill requires that a certain percentage of the state residential metered water tax revenues collected each year be transferred to the secure an advanced vision for education fund created in Code section 423F.2 in order to ensure that the fund receives an amount of revenue approximating one percentage point of the total tax rate imposed.
   The bill also creates a locally imposed residential metered water tax of up to 1 percent that may, at the option of a county, be imposed, collected, and administered by a county in the same manner as the local sales and services tax in Code chapter 423B. The bill incorporates by reference many of the provisions of Code chapter 423B. The bill allows an election for the imposition of a local residential metered water tax to occur at the same election as for a local option tax authorized under Code chapter 423B. A county will not be required to impose a local residential metered water tax if the county imposes a local sales and services tax.
   The bill provides that a city or county that has a local sales and services tax in effect on the effective date of the bill is required to impose a local residential metered water tax at the same rate and in the same manner as the city’s or county’s local sales and services tax. The city or county is required to amend its local sales and services tax ordinance within 60 days of the effective date of the bill to reflect the imposition of the local residential metered water tax. The city or county shall continue to collect the required local residential metered water tax until the city’s or county’s sales and services tax in effect on the effective date of the bill is repealed.
   The director of revenue is required to administer the state and local residential metered water tax as nearly as possible in conjunction with the administration of the state sales and use tax law and to that end the bill incorporates by reference numerous Code sections that relate to general tax administration and the sales and use tax laws.
   Revenues collected from the local option residential metered water tax are credited to local governments in the same manner as local option taxes under Code chapter 423B.