Senate File 2325 - Introduced SENATE FILE 2325 BY COMMITTEE ON WAYS AND MEANS (SUCCESSOR TO SSB 3168) A BILL FOR An Act amending the sales and use tax exemption for the 1 sale of goods and services furnished in fulfillment of a 2 written construction contract with a nonprofit hospital, 3 and including effective date and retroactive applicability 4 provisions. 5 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 6 TLSB 6034SV (2) 86 mm/sc

S.F. 2325 Section 1. Section 423.3, subsection 29, Code 2016, is 1 amended to read as follows: 2 29. The sales price of all goods, wares, or merchandise 3 sold, or of services furnished, which are used in the 4 fulfillment of a written construction contract with a nonprofit 5 hospital licensed pursuant to chapter 135B if all of the 6 following apply: 7 a. The sales and delivery of the goods, wares, or 8 merchandise, or the services furnished , occurred between July 9 January 1, 1998 2014 , and December 31, 2001 2017 . 10 b. The written construction contract was entered into on or 11 after January 1, 2014, but prior to December 31, 1999 2016 , or 12 bonds to fund the construction were issued on or after July 1, 13 2014, but prior to December 31, 1999 2016 . 14 c. The sales or services were purchased directly by a 15 contractor , or by a contractor as the agent for the hospital , 16 or were purchased directly by the hospital. 17 d. The hospital is located in a county that borders Illinois 18 and has a population of at least one hundred fifty thousand 19 according to the 2010 certified federal census. 20 Sec. 2. REFUND AND CREDIT FOR AMOUNTS PREVIOUSLY PAID. 21 1. Notwithstanding any other provision of law to the 22 contrary, refunds of taxes, interest, or penalties that arise 23 from claims resulting from the enactment of this Act, for sales 24 occurring between January 1, 2014, and the effective date 25 of this Act, shall not be allowed, but such claims shall be 26 allowed as a credit as provided in subsection 2. 27 2. Beginning July 1, 2017, any amount of taxes, interest, or 28 penalties previously paid for sales occurring between January 29 1, 2014, and the effective date of this Act, and for which 30 a claim of exemption arises from the enactment of this Act, 31 shall be allowed as a credit to the taxpayer against sales and 32 use tax due and payable by such taxpayer on or after July 1, 33 2017, and may be claimed by the taxpayer until such credit is 34 depleted. 35 -1- LSB 6034SV (2) 86 mm/sc 1/ 3

S.F. 2325 Sec. 3. EFFECTIVE UPON ENACTMENT. This Act, being deemed of 1 immediate importance, takes effect upon enactment. 2 Sec. 4. RETROACTIVE APPLICABILITY. This Act applies 3 retroactively to January 1, 2014, for sales of tangible 4 personal property made, and services furnished, on or after 5 that date. 6 EXPLANATION 7 The inclusion of this explanation does not constitute agreement with 8 the explanation’s substance by the members of the general assembly. 9 This bill relates to the sales and use tax exemption for 10 sales of goods and services made in fulfillment of a written 11 construction contract with a nonprofit hospital licensed 12 pursuant to Code chapter 135B. In order to qualify for the 13 sales and use tax exemption under current law, the sales of 14 goods or services must have occurred between July 1, 1998, and 15 December 31, 2001, and the written construction contract or 16 construction bonds must have been entered into or issued prior 17 to December 31, 1999. 18 The bill amends these dates to provide that the exemption 19 will apply if the sales of goods or services occur between 20 January 1, 2014, and December 31, 2017, and if the written 21 construction contract is entered into on or after January 1, 22 2014, but before December 31, 2016, or the construction bonds 23 are issued on or after July 1, 2014, but before December 31, 24 2016. 25 Also under current law, the exemption only applies if the 26 goods or services were purchased by a contractor as the agent 27 for the hospital or were purchased directly by the hospital. 28 The bill provides that the exemption will also apply if the 29 goods or services were purchased directly by a contractor. 30 The bill requires the hospital entering into the 31 construction contract to be located in a county that borders 32 Illinois and that has a population of at least 150,000 33 according to the 2010 certified federal census. 34 By operation of Code section 423.6, an item exempt from the 35 -2- LSB 6034SV (2) 86 mm/sc 2/ 3

S.F. 2325 imposition of the sales tax is also exempt from the use tax 1 imposed in Code section 423.5. 2 The bill prohibits refunds of taxes, interest, or penalties 3 arising from claims resulting from enactment of the bill for 4 sales occurring between January 1, 2014, and the effective 5 date of the bill, but does allow such amounts to be claimed 6 as a credit against sales and use tax due and payable by the 7 taxpayer on or after July 1, 2017. The sales and use tax credit 8 may be claimed beginning July 1, 2017, and may be claimed until 9 the credit is depleted. 10 The bill takes effect upon enactment and applies 11 retroactively to January 1, 2014, to sales of goods and 12 services on or after that date. 13 -3- LSB 6034SV (2) 86 mm/sc 3/ 3