H.F. 2440 Section 1. Section 29C.1, subsection 3, Code 2016, is 1 amended to read as follows: 2 3. To provide for the rendering of mutual aid among the 3 political subdivisions of the state and with other states , 4 and to cooperate with the federal government with respect to 5 the carrying out of emergency management functions , and to 6 ensure the state government and its departments and agencies 7 facilitate the rapid response of businesses and workers in the 8 state and other states to a disaster . 9 Sec. 2. NEW SECTION . 29C.24 Facilitating business rapid 10 response to state-declared disasters Act. 11 1. Title. This section may be cited as the “Facilitating 12 Business Rapid Response to State-Declared Disasters Act” . 13 2. Definitions. For purposes of this section, unless the 14 context otherwise requires: 15 a. (1) “Critical infrastructure” means real and personal 16 property and equipment owned or used by any of the following 17 networks or systems, including related support facilities, 18 which network or system provides service to more than one 19 customer or person: 20 (a) Communication and video networks. 21 (b) Electric generation, transmission, and distribution 22 systems. 23 (c) Gas distribution systems. 24 (d) Water and wastewater pipeline systems. 25 (2) “Critical infrastructure” includes but is not limited 26 to buildings, structures, offices, lines, poles, pipes, and 27 equipment. 28 b. “Declared state disaster or emergency” means a disaster 29 or emergency event that meets at least one of the following 30 conditions: 31 (1) A disaster emergency proclamation has been issued by the 32 governor pursuant to section 29C.6 in relation to the event. 33 (2) A presidential declaration of a major disaster has been 34 issued in relation to the event. 35 -1- LSB 5105HV (2) 86 mm/sc 1/ 13

H.F. 2440 c. “Disaster or emergency-related work” means repairing, 1 renovating, installing, building, or rendering services 2 or other business activities, that relate to critical 3 infrastructure that has been damaged, impaired, or destroyed by 4 a declared state disaster or emergency. 5 d. “Disaster response period” means, with respect to 6 each declared state disaster or emergency, a period of time 7 that begins ten calendar days prior to the day the governor 8 proclaims a disaster emergency or the president declares a 9 major disaster, whichever occurs first, and extends for a 10 period of sixty calendar days after the end of the declared 11 state disaster or emergency. 12 e. (1) “Out-of-state business” means a business entity that 13 meets all of the following requirements: 14 (a) The business entity is requested to perform disaster or 15 emergency-related work in the state by a registered business or 16 by the state or a political subdivision of the state. 17 (b) Except for disaster and emergency-related work, the 18 business entity has no presence in the state and conducts no 19 business in the state. 20 (c) Except for disaster and emergency-related work, the 21 business entity had no registrations, tax filings, or nexus in 22 the state for the tax year immediately preceding the year in 23 which the relevant declared state disaster or emergency occurs. 24 (2) “Out-of-state business” may include a business entity 25 that is affiliated with a registered business solely through 26 common ownership. 27 f. “Out-of-state employee” means an employee who does 28 not work in this state except to perform disaster or 29 emergency-related work during a disaster response period. 30 g. “Registered business” means a business entity that is 31 registered to do business in the state prior to the declared 32 state disaster or emergency. 33 3. Business and employee status during disaster response 34 period. 35 -2- LSB 5105HV (2) 86 mm/sc 2/ 13

H.F. 2440 a. Notwithstanding any other provision of law to the 1 contrary, an out-of-state business that conducts operations 2 within the state solely for the purpose of performing disaster 3 or emergency-related work during a disaster response period 4 shall not be considered to have established a level of presence 5 that would subject the out-of-state business to any of the 6 following: 7 (1) The requirement to complete or obtain any state or local 8 registration, license, or similar authorization as a condition 9 of doing business in this state or engaging in an occupation 10 in this state, or to pay any related fee, including but not 11 limited to the requirement to register with the secretary of 12 state or a political subdivision. This subparagraph (1) does 13 not apply to the notification requirement in subsection 5. 14 (2) (a) The requirement to collect and remit any tax 15 imposed upon another person or file any related tax return or 16 obtain any related tax permit. This subparagraph division (a) 17 does not apply to an out-of-state business for the collection 18 and remittance of sales and use taxes under chapter 423 if the 19 out-of-state business is registered voluntarily as a seller 20 under the streamlined sales and use tax agreement. 21 (b) Subparagraph division (a) shall not be construed to 22 protect or otherwise exempt any person liable for the payment 23 of a tax, other than the out-of-state business, from the 24 responsibility to pay such tax. 25 (3) The imposition of income taxes under chapter 422, 26 divisions II and III, including the requirement to file tax 27 returns under sections 422.13 through 422.15 or 422.36, as 28 applicable, and including the requirement to withhold and remit 29 income tax from out-of-state employees under section 422.16. 30 In addition, the performance of disaster or emergency-related 31 work during a disaster response period by an out-of-state 32 business or out-of-state employee shall not require an 33 out-of-state business to be included in a consolidated return 34 under section 422.37, and shall not increase the amount of net 35 -3- LSB 5105HV (2) 86 mm/sc 3/ 13

H.F. 2440 income of the out-of-state business allocated and apportioned 1 to the state under sections 422.8 or 422.33, as applicable. 2 (4) The employment security requirements under chapter 3 96, including but not limited to the payment of employer 4 contributions under section 96.7. 5 (5) The use tax under chapter 423, subchapter III, or 6 the equipment tax under chapter 423D, on tangible personal 7 property or equipment purchased outside the state and brought 8 into the state to aid in the performance of disaster or 9 emergency-related work during a disaster response period if 10 such tangible personal property or equipment does not remain in 11 the state after the conclusion of the disaster response period. 12 (6) The assessment of property taxes by the department 13 of revenue under sections 428.24 through 428.26, 428.28, and 14 428.29, or chapters 433, 434, 435, and 437 through 438, or by 15 a local assessor under another provision of law, on property 16 brought into the state to aid in the performance of disaster 17 or emergency-related work during a disaster period if such 18 property does not remain in the state after the conclusion of 19 the disaster response period. 20 b. Notwithstanding any other provision of law to the 21 contrary, the performance of disaster or emergency-related 22 work during a disaster response period by an out-of-state 23 employee shall not be used as the basis to determine that the 24 out-of-state employee has established residency or a level of 25 presence that would subject the out-of-state employee to any 26 of the following: 27 (1) The requirement to complete or obtain any state or local 28 registration, license, or similar authorization as a condition 29 of doing business in this state or engaging in an occupation 30 in this state, or to pay any related fee, including but not 31 limited to the requirement to register with the secretary of 32 state or a political subdivision. 33 (2) The imposition of income taxes under chapter 422, 34 division II, including the requirement to file tax returns 35 -4- LSB 5105HV (2) 86 mm/sc 4/ 13

H.F. 2440 under section 422.13 and the requirement to be subject to 1 withholding of income tax under section 422.16. In addition, 2 the performance of disaster or emergency-related work during a 3 disaster response period by an out-of-state employee shall not 4 increase the amount of net income of the out-of-state employee 5 allocated and apportioned to the state under section 422.8. 6 (3) The use tax under chapter 423, subchapter III, or the 7 equipment tax under chapter 423D, on tangible personal property 8 or equipment purchased outside the state and used in the state 9 to aid in the performance of disaster or emergency-related work 10 during a disaster response period if such tangible personal 11 property or equipment does not remain in the state after the 12 conclusion of the disaster response period. 13 c. During a disaster response period, an out-of-state 14 business or an out-of-state employee shall be subject to all 15 taxes and fees not included in paragraphs “a” and “b” , and this 16 subsection shall not be construed to provide protection or 17 exemption during a disaster response period or any other period 18 from taxes or taxable events not included in paragraphs “a” and 19 “b” . 20 4. Business and employee status after a disaster response 21 period. An out-of-state business or out-of-state employee 22 that remains in the state after the conclusion of the disaster 23 response period for which the disaster or emergency-related 24 work was performed shall be fully subject to the state’s 25 standards for establishing presence, residency, or doing 26 business as otherwise provided by law, and shall be responsible 27 for any resulting taxes, fees, licensing, registration, filing, 28 or other requirements. 29 5. Notification of out-of-state business during disaster 30 response period. 31 a. An out-of-state business that enters the state to perform 32 disaster and emergency-related work during a disaster response 33 period shall provide notification to the secretary of state, 34 which notification shall contain all the following information 35 -5- LSB 5105HV (2) 86 mm/sc 5/ 13

H.F. 2440 related to the out-of-state business: 1 (1) Name. 2 (2) State of domicile. 3 (3) Principal business address. 4 (4) Federal employer identification number. 5 (5) The date the out-of-state business entered the state. 6 (6) Contact information. 7 (7) A statement that the out-of-state business is in 8 the state for the purpose of responding to a declared state 9 disaster or emergency. 10 b. For an out-of-state business that enters this state to 11 perform disaster and emergency-related work during a disaster 12 response period as an affiliate of a registered business, the 13 registered business shall provide, on behalf of the affiliate 14 out-of-state business, the notification required in paragraph 15 “a” , which notification shall also include contact information 16 for the registered business. 17 c. The secretary of state shall transmit notification 18 information to the department, department of revenue, and other 19 appropriate state and local government agencies and officials. 20 6. Powers and duties not created. This Act shall not be 21 construed to place any new mandates or duties upon a local 22 emergency management commission or create any new authority or 23 power for a local emergency management commission not already 24 expressly granted in another provision of this chapter. 25 7. Rules. The department, the secretary of state, and 26 the department of revenue shall each adopt rules pursuant to 27 chapter 17A to jointly administer this section. 28 Sec. 3. Section 422.8, subsection 2, paragraph a, Code 2016, 29 is amended to read as follows: 30 a. Nonresident’s net income allocated to Iowa is the net 31 income, or portion of net income, which is derived from a 32 business, trade, profession, or occupation carried on within 33 this state or income from any property, trust, estate, or 34 other source within Iowa. However, income derived from a 35 -6- LSB 5105HV (2) 86 mm/sc 6/ 13

H.F. 2440 business, trade, profession, or occupation carried on within 1 this state and income from any property, trust, estate, or 2 other source within Iowa shall not include distributions from 3 pensions, including defined benefit or defined contribution 4 plans, annuities, individual retirement accounts, and deferred 5 compensation plans or any earnings attributable thereto so long 6 as the distribution is directly related to an individual’s 7 documented retirement and received while the individual is a 8 nonresident of this state. If a business, trade, profession, 9 or occupation is carried on partly within and partly without 10 the state, only the portion of the net income which is fairly 11 and equitably attributable to that part of the business, trade, 12 profession, or occupation carried on within the state is 13 allocated to Iowa for purposes of section 422.5, subsection 1 , 14 paragraph “j” , and section 422.13 and income from any property, 15 trust, estate, or other source partly within and partly without 16 the state is allocated to Iowa in the same manner, except that 17 annuities, interest on bank deposits and interest-bearing 18 obligations, and dividends are allocated to Iowa only to the 19 extent to which they are derived from a business, trade, 20 profession, or occupation carried on within the state. Net 21 income described in section 29C.24, subsection 3, paragraph 22 “a” , subparagraph (3), and paragraph “b” , subparagraph (2), 23 shall not be allocated and apportioned to the state, as 24 provided in section 29C.24. 25 Sec. 4. Section 422.13, Code 2016, is amended by adding the 26 following new subsection: 27 NEW SUBSECTION . 6. Notwithstanding subsections 1 through 5 28 and sections 422.14 and 422.15, a return is not required by a 29 taxpayer as provided in section 29C.24. 30 Sec. 5. Section 422.16, subsection 1, Code 2016, is amended 31 by adding the following new paragraph: 32 NEW PARAGRAPH . g. Individuals described in section 29C.24 33 are not subject to withholding, as provided in that section. 34 Sec. 6. Section 422.33, subsection 2, paragraph a, 35 -7- LSB 5105HV (2) 86 mm/sc 7/ 13

H.F. 2440 subparagraph (2), Code 2016, is amended by adding the following 1 new subparagraph division: 2 NEW SUBPARAGRAPH DIVISION . (0f) Notwithstanding 3 subparagraph division (c), income described in section 29C.24, 4 subsection 3, paragraph “a” , subparagraph (3), shall not be 5 allocated and apportioned to the state, as provided in section 6 29C.24. 7 Sec. 7. Section 422.36, Code 2016, is amended by adding the 8 following new subsection: 9 NEW SUBSECTION . 7. Notwithstanding subsection 1, a return 10 is not required by a taxpayer as provided in section 29C.24. 11 Sec. 8. Section 422.37, subsection 2, Code 2016, is amended 12 to read as follows: 13 2. All members of the affiliated group shall join in the 14 filing of an Iowa consolidated return to the extent they 15 are subject to the tax imposed by section 422.33 , except as 16 otherwise provided in section 29C.24 . 17 Sec. 9. Section 423.6, Code 2016, is amended by adding the 18 following new subsection: 19 NEW SUBSECTION . 17. Tangible personal property exempt from 20 the use tax as provided in section 29C.24. 21 Sec. 10. Section 423.33, subsection 1, Code 2016, is amended 22 to read as follows: 23 1. Liability of purchaser for sales tax. If a purchaser 24 fails to pay sales tax to the retailer required to collect the 25 tax, then in addition to all of the rights, obligations, and 26 remedies provided, the tax is payable by the purchaser directly 27 to the department, and sections 423.31 , 423.32 , 423.37 , 423.38 , 28 423.39 , 423.40 , 423.41 , and 423.42 apply to the purchaser. For 29 failure to pay, the retailer and purchaser are liable, unless 30 the circumstances described in section 29C.24, subsection 3, 31 paragraph “a” , subparagraph (2), section 421.60, subsection 2 , 32 paragraph “m” , section 423.34A , or section 423.45, subsection 33 4 , paragraph “b” or “e” , or subsection 5 , paragraph “c” or “e” , 34 are applicable. 35 -8- LSB 5105HV (2) 86 mm/sc 8/ 13

H.F. 2440 Sec. 11. NEW SECTION . 423.58 Collection, permit, and tax 1 return exemption for certain out-of-state businesses. 2 Notwithstanding sections 423.14, 423.29, 423.31, 423.32, and 3 423.36, a person meeting the requirements of section 29C.24 is 4 not required to obtain a sales or use tax permit, collect and 5 remit sales and use tax, or make and file applicable sales or 6 use tax returns, as provided in section 29C.24, subsection 3, 7 paragraph “a” , subparagraph (2). 8 Sec. 12. Section 423D.3, Code 2016, is amended to read as 9 follows: 10 423D.3 Exemption. 11 There is exempted from tax imposed by this chapter the 12 following: 13 1. The sales price on the lease or rental of equipment 14 to contractors for direct and primary use in construction is 15 exempt from the tax imposed by this chapter . 16 2. The sales price or purchase price of equipment exempt 17 from the equipment tax as provided in section 29C.24. 18 Sec. 13. Section 427.1, Code 2016, is amended by adding the 19 following new subsection: 20 NEW SUBSECTION . 41. Property described in and meeting the 21 requirements of section 29C.24, subsection 3, paragraph “a” , 22 subparagraph (6). 23 Sec. 14. EFFECTIVE UPON ENACTMENT. This Act, being deemed 24 of immediate importance, takes effect upon enactment. 25 Sec. 15. RETROACTIVE APPLICABILITY. The following 26 provision or provisions of this Act apply retroactively to 27 January 1, 2016, for tax years beginning on or after that date: 28 1. The section of this Act amending section 422.8. 29 2. The section of this Act amending section 422.13. 30 3. The section of this Act amending section 422.16. 31 4. The section of this Act amending section 422.33. 32 5. The section of this Act amending section 422.36. 33 6. The section of this Act amending section 422.37. 34 EXPLANATION 35 -9- LSB 5105HV (2) 86 mm/sc 9/ 13

H.F. 2440 The inclusion of this explanation does not constitute agreement with 1 the explanation’s substance by the members of the general assembly. 2 This bill establishes the “Facilitating Business Rapid 3 Response to State-Declared Disasters Act” and provides 4 definitions. The bill also amends the statement of policy in 5 Code chapter 29C (Emergency Management and Security). 6 The bill provides that notwithstanding any law to the 7 contrary, an out-of-state business or an out-of-state employee 8 that performs disaster and emergency-related work during a 9 disaster response period will be protected from, and shall not 10 be subject to, certain taxes, fees, licensing, registration, 11 filing, and other requirements, as specified in the bill. 12 “Disaster response period” is defined as a period of time 13 beginning 10 days before the governor proclaims a state 14 disaster or emergency or the president declares a major 15 disaster in the state, and ends 60 days after the end of 16 the declared state disaster or emergency. “Disaster and 17 emergency-related work” is defined to include a variety of work 18 on critical infrastructure damaged, impaired, or destroyed 19 by the declared state disaster or emergency. “Critical 20 infrastructure” is defined to include property and equipment 21 owned or used by a communication and video network; electric 22 generation, transmission, and distribution system; gas 23 distribution system; water and wastewater pipeline system; 24 or a related support facility of those networks or systems. 25 The network or system must provide service to more than one 26 customer or person. “Critical infrastructure” includes but is 27 not limited to buildings, structures, offices, lines, poles, 28 pipes, and equipment. 29 OUT-OF-STATE BUSINESSES. The bill defines “out-of-state 30 business” and provides that an out-of-state business performing 31 disaster and emergency-related work during a disaster response 32 period shall not be considered to have established a level of 33 presence that would subject it to the following: 34 1. The requirement to obtain any state or local business or 35 -10- LSB 5105HV (2) 86 mm/sc 10/ 13

H.F. 2440 registration, license, or similar authorization as a condition 1 of doing business or engaging in an occupation in this state, 2 or pay any related fee. 3 2. The requirement to collect and remit any tax imposed upon 4 another person, or file any related tax return or obtain any 5 related tax permit, except for the collection of sales and use 6 tax by an out-of-state business registered voluntarily as a 7 seller under the streamlined sales and use tax agreement. 8 3. The requirement to pay the individual or corporate 9 income tax, including the requirement to file a tax return 10 or be included in a consolidated tax return, withhold and 11 remit income tax from out-of-state employees, or increase the 12 amount of the out-of-state business’s net income allocated 13 and apportioned to Iowa as a result of the disaster and 14 emergency-related work. 15 4. The requirement to be subject to the employment security 16 requirements of Code chapter 96, including but not limited to 17 the requirement to make employer contributions. 18 5. For tangible personal property and equipment purchased 19 outside of Iowa and brought into the state to aid in the 20 performance of disaster or emergency-related work, the 21 requirement to pay use tax or equipment tax on the property, or 22 have the property assessed for property tax purposes, provided 23 the property does not remain in the state after the disaster 24 response period. 25 Out-of-state businesses that enter the state to perform 26 disaster and emergency-related work during a disaster response 27 period are required to provide a notification containing 28 various information to the secretary of state. If the 29 out-of-state business enters the state as an affiliate of a 30 registered business, the registered business must provide the 31 required notification on behalf of the out-of-state business. 32 “Registered business” is defined in the bill. The secretary of 33 state is required to share the notification information with 34 various state and local agencies and officials as specified in 35 -11- LSB 5105HV (2) 86 mm/sc 11/ 13

H.F. 2440 the bill. 1 OUT-OF-STATE EMPLOYEES. The bill defines “out-of-state 2 employee” and provides that the performance of disaster or 3 emergency-related work during a disaster response period by 4 an out-of-state employee shall not be used as the basis to 5 determine the out-of-state employee has established residency 6 or a level of presence that would subject the out-of-state 7 employee to the following: 8 1. The requirement to obtain any state or local 9 registration, license, or similar authorization as a condition 10 of doing business or engaging in an occupation in this state, 11 or pay any related fee. 12 2. The requirement to pay the individual income tax or 13 file a tax return, be subject to income tax withholding, or 14 increase the amount of the out-of-state employee’s net income 15 allocated and apportioned to Iowa as a result of the disaster 16 and emergency-related work. 17 3. The requirement to pay use tax or equipment tax on 18 tangible personal property and equipment purchased outside of 19 Iowa and brought into the state to aid in the performance of 20 disaster or emergency-related work, provided the property does 21 not remain in the state after the disaster response period. 22 The bill provides that out-of-state businesses and 23 out-of-state employees shall be subject to all taxes and fees 24 not specifically included in the bill, and provides that 25 out-of-state businesses and out-of-state employees that remain 26 in Iowa after the conclusion of the disaster response period 27 shall be fully subject to Iowa’s standards for establishing 28 presence, residency, or doing business as otherwise provided by 29 law, and shall be responsible for any resulting taxes, fees, 30 licensing, registration, filing, or other requirements. 31 The bill includes cross references to the tax exclusions 32 and exemptions created in the bill in several sections of the 33 Code relating to the individual and corporate income tax (Code 34 chapter 422), the sales and use tax (Code chapter 423), the 35 -12- LSB 5105HV (2) 86 mm/sc 12/ 13

H.F. 2440 equipment tax (Code chapter 423D), and the property tax (Code 1 chapter 427). The cross references to the individual and 2 corporate income tax in Code chapter 422 are retroactive to 3 January 1, 2016, for tax years beginning on or after that date. 4 The bill provides that the “Facilitating Business Rapid 5 Response to State-Declared Disasters Act” shall not be 6 construed to place any new mandates or duties upon a local 7 emergency management commission or create any new authority or 8 power for a local emergency management commission not already 9 expressly provided in another provision of Code chapter 29C 10 (Emergency Management and Security). 11 The bill takes effect upon enactment. 12 -13- LSB 5105HV (2) 86 mm/sc 13/ 13