House File 2046 - Introduced HOUSE FILE 2046 BY JACOBY A BILL FOR An Act relating to the collection of sales and use taxes by 1 certain out-of-state retailers, and including effective date 2 provisions. 3 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 4 TLSB 5073YH (3) 87 mm/jh

H.F. 2046 Section 1. Section 423.1, subsection 48, paragraph a, Code 1 2018, is amended to read as follows: 2 a. “Retailer maintaining a place of business in this state” 3 or any like term includes any of the following: 4 (1) A retailer having or maintaining within this state, 5 directly or by a subsidiary, an office, distribution house, 6 sales house, warehouse, or other place of business, or any 7 representative operating within this state under the authority 8 of the retailer or its subsidiary, irrespective of whether that 9 place of business or representative is located here permanently 10 or temporarily, or whether the retailer or subsidiary is 11 admitted to do business within this state pursuant to chapter 12 490 . 13 (2) A retailer who does not satisfy the requirements of 14 subparagraph (1) but who does satisfy either of the following 15 requirements in the previous calendar year or the current 16 calendar year: 17 (a) The retailer’s gross revenue from the sale of tangible 18 personal property or services delivered into Iowa exceeds one 19 hundred thousand dollars. 20 (b) The retailer sells tangible personal property or 21 services for delivery into Iowa in two hundred or more separate 22 transactions. 23 Sec. 2. Section 423.1, subsection 48, paragraph b, 24 subparagraph (1), unnumbered paragraph 1, Code 2018, is amended 25 to read as follows: 26 A retailer shall be presumed to be maintaining a place of 27 business in this state , as defined in for purposes of paragraph 28 “a” , subparagraph (1), if any person that has substantial nexus 29 in this state, other than a person acting in its capacity as a 30 common carrier, does any of the following: 31 Sec. 3. CONTINGENT EFFECTIVE DATE. 32 1. This Act takes effect on the later of July 1, 2018, 33 or the first day of the first calendar quarter following the 34 date that the United States supreme court issues an opinion 35 -1- LSB 5073YH (3) 87 mm/jh 1/ 3

H.F. 2046 or that federal legislation takes effect which abrogates the 1 physical presence requirement of Quill v. North Dakota, 504 2 U.S. 298 (1992), or which otherwise confirms that a state 3 may constitutionally impose its sales or use tax upon an 4 out-of-state seller in circumstances similar to those enacted 5 in this Act. 6 2. The director of revenue shall notify the Code editor if 7 the contingency in subsection 1 occurs. 8 EXPLANATION 9 The inclusion of this explanation does not constitute agreement with 10 the explanation’s substance by the members of the general assembly. 11 This bill relates to the collection of sales and use taxes 12 by certain out-of-state retailers. A retailer making taxable 13 sales in Iowa is required to collect sales tax. For sales made 14 outside Iowa but subject to the use tax, Iowa law requires 15 retailers maintaining a place of business in this state to 16 collect and remit the use tax. 17 Currently, as defined in Code section 423.1, the term 18 “retailer maintaining a place of business in this state” 19 includes retailers that have in Iowa certain physical places 20 of business or representatives operating under the authority 21 of the retailer, and includes a presumption that a retailer is 22 maintaining a place of business in Iowa when any person who has 23 substantial nexus in Iowa meets certain conditions or performs 24 certain acts associated with the retailer. 25 The bill amends the definition of “retailer maintaining 26 a place of business in this state” to also include retailers 27 who do not meet the requirements listed above, but who do have 28 gross revenue from the sale of tangible personal property 29 or services delivered into Iowa in excess of $100,000 for 30 the current or previous calendar year, or who sell tangible 31 personal property or services for delivery into Iowa in 200 or 32 more separate transactions in the current or previous calendar 33 year. 34 The bill takes effect on the later of July 1, 2018, or the 35 -2- LSB 5073YH (3) 87 mm/jh 2/ 3

H.F. 2046 first day of the first quarter following the date that the 1 United States supreme court issues an opinion or that federal 2 legislation takes effect which abrogates the physical presence 3 requirement of Quill v. North Dakota, 504 U.S. 298 (1992), or 4 otherwise confirms that a state may constitutionally impose its 5 sales or use tax upon an out-of-state seller in circumstances 6 similar to those in the bill. In Quill, the United States 7 supreme court held it is a violation of the commerce clause 8 of the United States Constitution for a state to require an 9 out-of-state seller to collect a state’s sales or use tax if 10 the seller does not have a physical presence in that state. 11 Because Congress has the power to regulate interstate commerce, 12 it has the power to modify or abrogate the holding of Quill 13 through legislation. 14 The bill requires the director of revenue to notify the Iowa 15 Code editor when the contingency is satisfied. 16 -3- LSB 5073YH (3) 87 mm/jh 3/ 3