House Study Bill 218 - Introduced SENATE/HOUSE FILE _____ BY (PROPOSED DEPARTMENT OF REVENUE BILL) A BILL FOR An Act relating to the administration of the streamlined sales 1 and use tax agreement by the department of revenue. 2 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 3 TLSB 1312XD (6) 86 mm/sc

S.F. _____ H.F. _____ Section 1. Section 423.3, subsection 57, paragraph f, 1 subparagraph (3), Code 2015, is amended by adding the following 2 new subparagraph division: 3 NEW SUBPARAGRAPH DIVISION . (e) Food sold that ordinarily 4 requires additional cooking by the consumer prior to 5 consumption. 6 Sec. 2. Section 423.52, Code 2015, is amended by adding the 7 following new subsection: 8 NEW SUBSECTION . 3. a. Sellers and certified service 9 providers are relieved from liability to this state or its 10 local taxing jurisdictions for having charged and collected 11 the incorrect amount of sales or use tax resulting from the 12 seller or certified service provider relying on erroneous data 13 provided in the state’s taxability matrix. 14 b. Sellers and certified service providers that rely 15 upon a prior version of the state’s taxability matrix shall 16 be relieved of liability to the state and its local taxing 17 jurisdictions until the first day of the calendar month that 18 is at least 30 days after notice of a change to the taxability 19 matrix is submitted by the state to the governing board. 20 EXPLANATION 21 The inclusion of this explanation does not constitute agreement with 22 the explanation’s substance by the members of the general assembly. 23 This bill relates to the administration of the sales and 24 use taxes under the streamlined sales and use tax agreement 25 (agreement). 26 Iowa is a member of the agreement, which is an effort to 27 administer state sales and use taxes in all participating 28 states according to the same simplified system. Under 29 the agreement, Iowa must periodically make changes in the 30 administration of the sales and use taxes in order to remain 31 in compliance. 32 Under current law, prepared food is subject to the sales and 33 use tax. The bill amends the definition of “prepared food” to 34 exclude food that ordinarily requires additional cooking by the 35 -1- LSB 1312XD (6) 86 mm/sc 1/ 2

S.F. _____ H.F. _____ consumer prior to consumption. 1 The bill also provides liability relief to sellers and 2 certified service providers that rely on erroneous or outdated 3 information in the state’s taxability matrix. A taxability 4 matrix is a comprehensive list of items subject to and exempt 5 from the sales and use tax that is required to be maintained by 6 each member state of the agreement. The bill provides that if 7 Iowa amends an existing provision of its taxability matrix, a 8 seller or certified service provider is relieved from liability 9 to the state and its local taxing jurisdictions for having 10 charged and collected the incorrect amount of sales or use tax 11 according to the prior version of the taxability matrix. The 12 liability relief extends until the first day of the calendar 13 month that is at least 30 days after the state submits to the 14 governing board of the agreement the notice of change to the 15 taxability matrix. 16 The bill also provides that sellers and certified service 17 providers are relieved from liability to the state or its local 18 taxing jurisdictions for having charged and collected the 19 incorrect amount of sales or use tax after relying on erroneous 20 data provided in the state’s taxability matrix. 21 -2- LSB 1312XD (6) 86 mm/sc 2/ 2