SF 2325 (LSB 6034SV (2) 86)

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 sale of goods and services furnished in fulfillment of a written construction contract with a nonprofit hospital, and including effective date and retroactive applicability provisions.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

    Section 1.  Section 423.3, subsection 29, Code 2016, is amended to read as follows:
   29.  The sales price of all goods, wares, or merchandise sold, or of services furnished, which are used in the fulfillment of a written construction contract with a nonprofit hospital licensed pursuant to chapter 135B if all of the following apply:
   a.  The sales and delivery of the goods, wares, or merchandise, or the services furnished, occurred between July January 1, 1998 2014, and December 31, 2001 2017.
   b.  The written construction contract was entered into on or after January 1, 2014, but prior to December 31, 1999 2016, or bonds to fund the construction were issued on or after July 1, 2014, but prior to December 31, 1999 2016.
   c.  The sales or services were purchased directly by a contractor, or by a contractor as the agent for the hospital, or were purchased directly by the hospital.
   d.  The hospital is located in a county that borders Illinois and has a population of at least one hundred fifty thousand according to the 2010 certified federal census.
    Sec. 2.  REFUND AND CREDIT FOR AMOUNTS PREVIOUSLY PAID.
   1.  Notwithstanding any other provision of law to the contrary, refunds of taxes, interest, or penalties that arise from claims resulting from the enactment of this Act, for sales occurring between January 1, 2014, and the effective date of this Act, shall not be allowed, but such claims shall be allowed as a credit as provided in subsection 2.
   2.  Beginning July 1, 2017, any amount of taxes, interest, or penalties previously paid for sales occurring between January 1, 2014, and the effective date of this Act, and for which a claim of exemption arises from the enactment of this Act, shall be allowed as a credit to the taxpayer against sales and use tax due and payable by such taxpayer on or after July 1, 2017, and may be claimed by the taxpayer until such credit is depleted.
    Sec. 3.  EFFECTIVE UPON ENACTMENT.  This Act, being deemed of immediate importance, takes effect upon enactment.
    Sec. 4.  RETROACTIVE APPLICABILITY.  This Act applies retroactively to January 1, 2014, for sales of tangible personal property made, and services furnished, on or after that date.
EXPLANATION
The inclusion of this explanation does not constitute agreement with

the explanation’s substance by the members of the general assembly.
   This bill relates to the sales and use tax exemption for sales of goods and services made in fulfillment of a written construction contract with a nonprofit hospital licensed pursuant to Code chapter 135B. In order to qualify for the sales and use tax exemption under current law, the sales of goods or services must have occurred between July 1, 1998, and December 31, 2001, and the written construction contract or construction bonds must have been entered into or issued prior to December 31, 1999.
   The bill amends these dates to provide that the exemption will apply if the sales of goods or services occur between January 1, 2014, and December 31, 2017, and if the written construction contract is entered into on or after January 1, 2014, but before December 31, 2016, or the construction bonds are issued on or after July 1, 2014, but before December 31, 2016.
   Also under current law, the exemption only applies if the goods or services were purchased by a contractor as the agent for the hospital or were purchased directly by the hospital. The bill provides that the exemption will also apply if the goods or services were purchased directly by a contractor.
   The bill requires the hospital entering into the construction contract to be located in a county that borders Illinois and that has a population of at least 150,000 according to the 2010 certified federal census.
   By operation of Code section 423.6, an item exempt from the imposition of the sales tax is also exempt from the use tax imposed in Code section 423.5.
   The bill prohibits refunds of taxes, interest, or penalties arising from claims resulting from enactment of the bill for sales occurring between January 1, 2014, and the effective date of the bill, but does allow such amounts to be claimed as a credit against sales and use tax due and payable by the taxpayer on or after July 1, 2017. The sales and use tax credit may be claimed beginning July 1, 2017, and may be claimed until the credit is depleted.
   The bill takes effect upon enactment and applies retroactively to January 1, 2014, to sales of goods and services on or after that date.