HSB 617 (LSB 5105YC (8) 86)

HOUSE FILE _____

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

A BILL FOR

An Act establishing the facilitating business rapid response to state-declared disasters Act, and including effective date provisions.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

    Section 1.  FINDINGS.  The general assembly finds all of the following:
   1.  During times of disaster or emergency, many businesses bring in resources and personnel from other states on a temporary basis to expedite the often enormous and overwhelming task of cleaning up, restoring, and repairing damaged buildings, equipment, and property, or even deploying or building replacement facilities in the state.
   2.   These undertakings may involve the need for out-of-state businesses, including out-of-state affiliates of businesses based in the state, to bring in resources, property, or personnel to perform activities related to critical infrastructure in the state, including but not limited to repairing, renovating, installing, building, and rendering services or other business activities, and for which personnel may be located in the state for extended periods of time to perform such activities.
   3.   During such time of operating in the state on a temporary basis solely for purposes of helping the state recover from the disaster or emergency, these businesses and individual employees should not be burdened by any requirements for business and employee taxes as a result of such activities in the state, and the state’s nexus and residency thresholds should not be applied to businesses and individuals coming into the state on a temporary basis to provide help and assistance in response to a declared state disaster or emergency.
   4.  To ensure that businesses may focus on quick response to the needs of the state and its citizens during a declared state disaster or emergency it is appropriate for the general assembly to deem that such activity for a reasonable period of time before, during, and after the disaster or emergency shall not establish presence, residency, or doing business in the state or any other criteria for purposes of state and local taxes, licensing, and regulatory requirements.
    Sec. 2.  Section 29C.1, subsection 3, Code 2016, is amended to read as follows:
   3.  To provide for the rendering of mutual aid among the political subdivisions of the state and with other states, and to cooperate with the federal government with respect to the carrying out of emergency management functions, and to facilitate the rapid response of businesses and workers in the state and other states to a disaster.
    Sec. 3.  NEW SECTION.  29C.24  Facilitating business rapid response to state-declared disasters Act.
   1.  Title.  This section may be cited as the “Facilitating Business Rapid Response to State-Declared Disasters Act”.
   2.  Definitions.  For purposes of this section, unless the context otherwise requires:
   a.  (1)  “Critical infrastructure” means real and personal property and equipment owned or used by any of the following networks or systems, including related support facilities, which network or system provides service to more than one customer or person:
   (a)  Communication networks.
   (b)  Electric generation, transmission, and distribution systems.
   (c)  Gas distribution systems.
   (d)  Water pipeline systems.
   (2)  “Critical infrastructure” includes but is not limited to buildings, structures, offices, lines, poles, pipes, and equipment.
   b.  “Declared state disaster or emergency” means a disaster or emergency event that meets at least one of the following conditions:
   (1)  A disaster emergency proclamation has been issued by the governor pursuant to section 29C.6 in relation to the event.
   (2)  A presidential declaration of a major disaster has been issued in relation to the event.
   c.  “Disaster or emergency-related work” means repairing, renovating, installing, building, or rendering services or other business activities, that relate to critical infrastructure that has been damaged, impaired, or destroyed by a declared state disaster or emergency.
   d.  “Disaster response period” means, with respect to each declared state disaster or emergency, a period of time that begins ten calendar days prior to the day the governor proclaims a disaster emergency or the president declares a major disaster, whichever occurs first, and extends for a period of sixty calendar days after the end of the declared state disaster or emergency.
   e.  (1)  “Out-of-state business” means a business entity that meets all of the following requirements:
   (a)  The business entity is requested to perform disaster or emergency-related work in the state by a registered business or by the state or a political subdivision of the state.
   (b)  Except for disaster and emergency-related work, the business entity has no presence in the state and conducts no business in the state.
   (c)  Except for disaster and emergency-related work, the business entity had no registrations, tax filings, or nexus in the state for the tax year immediately preceding the year in which the relevant declared state disaster or emergency occurs.
   (2)  “Out-of-state business” may include a business entity that is affiliated with a registered business solely through common ownership.
   f.  “Out-of-state employee” means an employee who does not work in this state except to perform disaster or emergency-related work during a disaster response period.
   g.  “Registered business” means a business entity that is registered to do business in the state prior to the declared state disaster or emergency.
   3.  Business and employee status during disaster response period.
   a.  Notwithstanding any other provision of law to the contrary, an out-of-state business that conducts operations within the state solely for the purpose of performing disaster or emergency-related work during a disaster response period shall not be considered to have established a level of presence that would subject the out-of-state business to any of the following:
   (1)  The requirement to complete or obtain any state or local business or occupational registration, permit, certification, or license, or pay any related fee, including but not limited to the requirement to register with the secretary of state, the department of revenue, or a political subdivision. This subparagraph (1) does not apply to the notification requirement in subsection 5.
   (2)  (a)  The requirement to collect and remit any tax imposed upon another person or file any related tax return. This subparagraph division (a) does not apply to an out-of-state business for the collection and remittance of sales and use taxes under chapter 423 if the out-of-state business is registered voluntarily as a seller under the streamlined sales and use tax agreement.
   (b)  Subparagraph division (a) shall not be construed to protect or otherwise exempt any person liable for the payment of a tax, other than the out-of-state business, from the responsibility to pay such tax.
   (3)  The imposition of income taxes under chapter 422, divisions II and III, including the requirement to file tax returns under sections 422.13 through 422.15 or 422.36, as applicable, and including the requirement to withhold and remit income tax from out-of-state employees under section 422.16. In addition, the performance of disaster or emergency-related work during a disaster response period by an out-of-state business or out-of-state employee shall not require an out-of-state business to be included in a consolidated return under section 422.37, and shall not increase the amount of net income of the out-of-state business allocated and apportioned to the state under sections 422.8 or 422.33, as applicable.
   (4)  The employment security requirements under chapter 96, including but not limited to the payment of employer contributions under section 96.7.
   (5)  The use tax under chapter 423, subchapter III, or the equipment tax under chapter 423D, on tangible personal property or equipment purchased outside the state and brought into the state to aid in the performance of disaster or emergency-related work during a disaster response period if such tangible personal property or equipment does not remain in the state after the conclusion of the disaster response period.
   (6)  The assessment of property taxes by the department of revenue under sections 428.24 through 428.29, or chapters 433, 434, and 437 through 438, or by a local assessor under another provision of law, on property brought into the state to aid in the performance of disaster or emergency-related work during a disaster period if such property does not remain in the state after the conclusion of the disaster response period.
   b.  Notwithstanding any other provision of law to the contrary, the performance of disaster or emergency-related work during a disaster response period by an out-of-state employee shall not be used as the basis to determine that the out-of-state employee has established residency or a level of presence that would subject the out-of-state employee to any of the following:
   (1)  The requirement to complete or obtain any state or local business or occupational registration, permit, certification, or license, or pay any related fee, including but not limited to the requirement to register with the secretary of state, the department of revenue, or with a political subdivision.
   (2)  The imposition of income taxes under chapter 422, division II, including the requirement to file tax returns under section 422.13 and the requirement to be subject to withholding of income tax under section 422.16. In addition, the performance of disaster or emergency-related work during a disaster response period by an out-of-state employee shall not increase the amount of net income of the out-of-state employee allocated and apportioned to the state under section 422.8.
   (3)  The use tax under chapter 423, subchapter III, or the equipment tax under chapter 423D, on tangible personal property or equipment purchased outside the state and used in the state to aid in the performance of disaster or emergency-related work during a disaster response period if such tangible personal property or equipment does not remain in the state after the conclusion of the disaster response period.
   c.  During a disaster response period, an out-of-state business or an out-of-state employee shall be subject to all taxes and fees not included in paragraphs “a” and “b”, and this subsection shall not be construed to provide protection or exemption during a disaster response period or any other period from taxes or taxable events not included in paragraphs “a” and “b”.
   4.  Business and employee status after a disaster response period.  An out-of-state business or out-of-state employee that remains in the state after the conclusion of the disaster response period for which the disaster or emergency-related work was performed shall be fully subject to the state’s standards for establishing presence, residency, or doing business as otherwise provided by law, and shall be responsible for any resulting taxes, fees, licensing, registration, filing, or other requirements.
   5.  Notification of out-of-state business during disaster response period.
   a.  An out-of-state business that enters the state to perform disaster and emergency-related work during a disaster response period shall provide notification to the secretary of state, which notification shall contain all the following information related to the out-of-state business:
   (1)  Name.
   (2)  State of domicile.
   (3)  Principal business address.
   (4)  Federal employer identification number.
   (5)  The date the out-of-state business entered the state.
   (6)  Contact information.
   (7)  A statement that the out-of-state business is in the state for the purpose of responding to a declared state disaster or emergency.
   b.  For an out-of-state business that enters this state to perform disaster and emergency-related work during a disaster response period as an affiliate of a registered business, the registered business shall provide, on behalf of the affiliate out-of-state business, the notification required in paragraph “a”, which notification shall also include contact information for the registered business.
   c.  The secretary of state shall transmit notification information to the department, department of revenue, and other appropriate state and local government agencies and officials.
   6.  Rules.  The department, the secretary of state, and the department of revenue shall each adopt rules pursuant to chapter 17A to jointly administer this section.
    Sec. 4.  EFFECTIVE UPON ENACTMENT.  This Act, being deemed of immediate importance, takes effect upon enactment.
EXPLANATION
The inclusion of this explanation does not constitute agreement with

the explanation’s substance by the members of the general assembly.
   This bill establishes the “Facilitating Business Rapid Response to State-Declared Disasters Act” and provides findings and definitions. The bill also amends the statement of policy in Code chapter 29C (Emergency Management and Security).
   The bill provides that notwithstanding any law to the contrary, an out-of-state business or an out-of-state employee that performs disaster and emergency-related work during a disaster response period will be protected from, and shall not be subject to, certain taxes, fees, licensing, registration, filing, and other requirements, as specified in the bill.
   “Disaster response period” is defined as a period of time beginning 10 days before the governor proclaims a state disaster or emergency or the president declares a major disaster in the state, and ends 60 days after the end of the declared state disaster or emergency. “Disaster and emergency-related work” is defined to include a variety of work on critical infrastructure damaged, impaired, or destroyed by the declared state disaster or emergency. “Critical infrastructure” is defined to include property and equipment owned or used by a communication network; electric generation, transmission, and distribution system; gas distribution system; water pipeline system; or a related support facility of those networks or systems. The network or system must provide service to more than one customer or person. “Critical infrastructure” includes but is not limited to buildings, structures, offices, lines, poles, pipes, and equipment.
   OUT-OF-STATE BUSINESSES. The bill defines “out-of-state business” and provides that an out-of-state business performing disaster and emergency-related work during a disaster response period shall not be considered to have established a level of presence that would subject it to the following:
   1.  The requirement to obtain any state or local business or occupational registration, permit, certification, or license, or pay any related fee.
   2.  The requirement to collect and remit any tax imposed upon another person, or file any related tax return, except for the collection of sales and use tax by an out-of-state business registered voluntarily as a seller under the streamlined sales and use tax agreement.
   3.  The requirement to pay the individual or corporate income tax, including the requirement to file a tax return or be included in a consolidated tax return, withhold and remit income tax from out-of-state employees, or increase the amount of the out-of-state business’s net income allocated and apportioned to Iowa as a result of the disaster and emergency-related work.
   4.  The requirement to be subject to the employment security requirements of Code chapter 96, including but not limited to the requirement to make employer contributions.
   5.  For tangible personal property and equipment purchased outside of Iowa and brought into the state to aid in the performance of disaster or emergency-related work, the requirement to pay use tax or equipment tax on the property, or have the property assessed for property tax purposes, provided the property does not remain in the state after the disaster response period.
   Out-of-state businesses that enter the state to perform disaster and emergency-related work during a disaster response period are required to provide a notification containing various information to the secretary of state. If the out-of-state business enters the state as an affiliate of a registered business, the registered business must provide the required notification on behalf of the out-of-state business. “Registered business” is defined in the bill. The secretary of state is required to share the notification information with various state and local agencies and officials as specified in the bill.
   OUT-OF-STATE EMPLOYEES. The bill defines “out-of-state employee” and provides that the performance of disaster or emergency-related work during a disaster response period by an out-of-state employee shall not be used as the basis to determine the out-of-state employee has established residency or a level of presence that would subject the out-of-state employee to the following:
   1.  The requirement to obtain any state or local business or occupational registration, permit, certification, or license, or pay any related fee.
   2.  The requirement to pay the individual income tax or file a tax return, be subject to income tax withholding, or increase the amount of the out-of-state employee’s net income allocated and apportioned to Iowa as a result of the disaster and emergency-related work.
   3.  The requirement to pay use tax or equipment tax on tangible personal property and equipment purchased outside of Iowa and brought into the state to aid in the performance of disaster or emergency-related work, provided the property does not remain in the state after the disaster response period.
   The bill provides that out-of-state businesses and out-of-state employees shall be subject to all taxes and fees not specifically included in the bill, and provides that out-of-state businesses and out-of-state employees that remain in Iowa after the conclusion of the disaster response period shall be fully subject to Iowa’s standards for establishing presence, residency, or doing business as otherwise provided by law, and shall be responsible for any resulting taxes, fees, licensing, registration, filing, or other requirements.
   The bill takes effect upon enactment.