House
Study
Bill
651
-
Introduced
HOUSE
FILE
_____
BY
(PROPOSED
COMMITTEE
ON
WAYS
AND
MEANS
BILL
BY
CHAIRPERSON
SANDS)
A
BILL
FOR
An
Act
creating
an
exemption
from
the
sales
tax
for
certain
1
items
directly
and
primarily
used
in
the
production
of
2
electricity.
3
BE
IT
ENACTED
BY
THE
GENERAL
ASSEMBLY
OF
THE
STATE
OF
IOWA:
4
TLSB
6056YC
(2)
86
mm/sc
H.F.
_____
Section
1.
Section
423.3,
subsection
47,
paragraph
a,
Code
1
2016,
is
amended
by
adding
the
following
new
subparagraph:
2
NEW
SUBPARAGRAPH
.
(7)
Directly
and
primarily
used
to
3
produce
electricity
to
be
offered
for
sale,
which
electricity
4
is
produced
at
a
facility
that
meets
all
of
the
following
5
requirements:
6
(a)
The
facility
has
a
generating
capacity
greater
than
five
7
hundred
megawatts.
8
(b)
The
facility
was
originally
placed
in
service
prior
to
9
January
1,
2016.
10
(c)
On
December
31,
2015,
a
majority
of
the
facility
was
11
owned
by
a
person
that
is
not
a
public
utility
as
defined
under
12
section
476.1,
subsection
3.
13
Sec.
2.
Section
423.3,
subsection
47,
paragraph
c,
14
subparagraph
(3),
Code
2016,
is
amended
to
read
as
follows:
15
(3)
Industrial
machinery,
equipment,
and
computers,
16
including
pollution-control
equipment
within
the
scope
of
17
section
427A.1,
subsection
1
,
paragraphs
“h”
and
“i”
.
This
18
subparagraph
(3)
shall
not
apply
to
paragraph
“a”
,
subparagraph
19
(7),
of
this
subsection.
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
sales
tax
exemption
in
Code
section
24
423.3(47)
for
the
purchase
or
rental
of
computers,
machinery,
25
equipment,
and
replacement
parts,
and
materials
used
to
26
construct
computers,
machinery,
and
equipment
(collectively
27
“specified
items”)
that
are
used
in
certain
activities.
The
28
bill
provides
that
the
specified
items
will
be
exempt
from
the
29
sales
tax
if
they
are
directly
and
primarily
used
to
produce
30
electricity
to
be
offered
for
sale,
provided
the
electricity
31
is
produced
at
a
facility
that
has
a
generating
capacity
32
greater
than
500
megawatts,
that
was
originally
placed
in
33
service
prior
to
January
1,
2016,
and
that,
on
December
31,
34
2015,
was
majority-owned
by
a
person
that
is
not
a
public
35
-1-
LSB
6056YC
(2)
86
mm/sc
1/
2
H.F.
_____
utility
as
defined
in
Code
section
476.1(3).
Code
section
1
476.1(3)
generally
defines
a
public
utility
as
a
person
2
that
is
furnishing
gas
or
water
by
pipe
distribution
system,
3
electricity,
or
communication
services
to
the
public
for
4
compensation.
5
Under
current
law,
the
sales
tax
exemption
in
Code
section
6
423.3(47)
does
not
apply
to
industrial
machinery,
equipment,
7
computers,
and
pollution-control
equipment
listed
in
Code
8
section
427A.1(1)(h)
and
(i)
(property
assessed
as
real
9
property).
The
bill
makes
a
conforming
amendment
to
provide
10
that
this
exclusion
from
the
sales
tax
exemption
does
not
11
apply
to
the
specified
items
used
to
produce
electricity
to
be
12
offered
for
sale.
13
By
operation
of
Code
section
423.6,
an
item
exempt
from
the
14
imposition
of
the
sales
tax
is
also
exempt
from
the
use
tax
15
imposed
in
Code
section
423.5.
16
-2-
LSB
6056YC
(2)
86
mm/sc
2/
2