HF 606 (LSB 2285YH (2) 87)

HOUSE FILE 606

BY  DOLECHECK

A BILL FOR

An Act providing for the imposition by a county of a local option use tax.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

DIVISION I
LOCAL OPTION USE TAX

    Section 1.  Section 423B.1, subsections 3, 4, and 5, Code 2017, are amended to read as follows:
   3.  A local option tax shall be imposed only after an election at which a majority of those voting on the question favors imposition and shall then be imposed until repealed as provided in subsection 6, paragraph “a”. If the tax is a local vehicle tax imposed by a county, it shall apply to all incorporated and unincorporated areas of the county. If the tax is a local sales and services tax imposed by a county, it shall only apply to those incorporated areas and the unincorporated area of that county in which a majority of those voting in the area on the tax favors its imposition.  If the tax is a local use tax, it shall only be imposed by a county if the county is also imposing a local sales and services tax, and shall only apply to those incorporated areas and the unincorporated area of that county in which a majority of those voting in the area on the tax favors imposition, and in which the local sales and services tax is also imposed. For purposes of the local sales and services tax and the local use tax, all cities contiguous to each other shall be treated as part of one incorporated area and the tax would be imposed in each of those contiguous cities only if the majority of those voting in the total area covered by the contiguous cities favors its imposition. In the case of a local sales and services tax or a local use tax submitted to the registered voters of two or more contiguous counties as provided in subsection 4, paragraph “c”, all cities contiguous to each other shall be treated as part of one incorporated area, even if the corporate boundaries of one or more of the cities include areas of more than one county, and the tax shall be imposed in each of those contiguous cities only if a majority of those voting on the tax in the total area covered by the contiguous cities favored its imposition. For purposes of the local sales and services tax and the local use tax, a city is not contiguous to another city if the only road access between the two cities is through another state.
   4.  a.  A county board of supervisors shall direct within thirty days the county commissioner of elections to submit the question of imposition of a local vehicle tax, or a local sales and services tax, or a local use tax to the registered voters of the incorporated and unincorporated areas of the county upon receipt of a petition, requesting imposition of a local vehicle tax, or a local sales and services tax, or a local use tax, signed by eligible electors of the whole county equal in number to five percent of the persons in the whole county who voted at the last preceding general election. In the case of a local vehicle tax, the petition requesting imposition shall specify the rate of tax and the classes, if any, that are to be exempt. If more than one valid petition is received, the earliest received petition shall be used.
   b.  The question of the imposition of a local sales and services tax or a local use tax shall be submitted to the registered voters of the incorporated and unincorporated areas of the county upon receipt by the county commissioner of elections of the motion or motions, requesting such submission, adopted by the governing body or bodies of the city or cities located within the county or of the county, for the unincorporated areas of the county, representing at least one half of the population of the county. Upon adoption of such motion, the governing body of the city or county, for the unincorporated areas, shall submit the motion to the county commissioner of elections and in the case of the governing body of the city shall notify the board of supervisors of the adoption of the motion. The county commissioner of elections shall keep a file on all the motions received and, upon reaching the population requirements, shall publish notice of the ballot proposition concerning the imposition of the local sales and services tax or the local use tax. A motion ceases to be valid at the time of the holding of the regular election for the election of members of the governing body which adopted the motion. The county commissioner of elections shall eliminate from the file any motion that ceases to be valid. The manner provided under this paragraph for the submission of the question of imposition of a local sales and services tax or a local use tax is an alternative to the manner provided in paragraph “a”.
   c.  Upon receipt of petitions or motions calling for the submission of the question of the imposition of a local sales and services tax or a local use tax as described in paragraph “a” or “b”, the boards of supervisors of two or more contiguous counties in which the question is to be submitted may enter into a joint agreement providing that for purposes of this chapter, a city whose corporate boundaries include areas of more than one county shall be treated as part of the county in which a majority of the residents of the city reside. In such event, the county commissioners of elections from each such county shall cooperate in the selection of a single date upon which the election shall be held, and for all purposes of this chapter relating to the imposition, repeal, change of use, or collection of the tax, such a city shall be deemed to be part of the county in which a majority of the residents of the city reside. A copy of the joint agreement shall be provided promptly to the director of revenue.
   5.  The county commissioner of elections shall submit the question of imposition of a local option tax at an election held on a date specified in section 39.2, subsection 4, paragraph “a”. The election shall not be held sooner than sixty days after publication of notice of the ballot proposition. The ballot proposition shall specify the type and rate of tax and in the case of a vehicle tax the classes that will be exempt and in the case of a local sales and services tax or a local use tax the date it will be imposed which date shall not be earlier than ninety days following the election. The ballot proposition shall also specify the approximate amount of local option tax revenues that will be used for property tax relief and shall contain a statement as to the specific purpose or purposes for which the revenues shall otherwise be expended. If the county board of supervisors decides under subsection 6 to specify a date on which the local option sales and services tax or a local use tax shall automatically be repealed, the date of the repeal shall also be specified on the ballot. The rate of the vehicle tax shall be in increments of one dollar per vehicle as set by the petition seeking to impose the tax. The rate of a local sales and services tax shall not be more than one percent as set by the governing body.  The rate of a local use tax shall be the same as the local sales and services tax rate set by the same governing body. The state commissioner of elections shall establish by rule the form for the ballot proposition which form shall be uniform throughout the state.
    Sec. 2.  Section 423B.1, subsection 6, paragraph a, Code 2017, is amended to read as follows:
   a.  (1)  If a majority of those voting on the question of imposition of a local option tax favors imposition of a local option tax, the governing body of that county shall impose the tax at the rate specified for an unlimited period. However, in the case of a local sales and services tax or a local use tax, the county shall not impose the tax in any incorporated area or the unincorporated area if the majority of those voting on the tax in that area did not favor its imposition and, in the case of a local use tax, shall not impose the tax in any incorporated area or the unincorporated area in which the local sales and services tax is not imposed. For purposes of the local sales and services tax and the local use tax, all cities contiguous to each other shall be treated as part of one incorporated area and the tax shall be imposed in each of those contiguous cities only if the majority of those voting on the tax in the total area covered by the contiguous cities favored its imposition. In the case of a local sales and services tax or a local use tax submitted to the registered voters of two or more contiguous counties as provided in subsection 4, paragraph “c”, all cities contiguous to each other shall be treated as part of one incorporated area, even if the corporate boundaries of one or more of the cities include areas of more than one county, and the tax shall be imposed in each of those contiguous cities only if a majority of those voting on the tax in the total area covered by the contiguous cities favored its imposition.
   (2)  The local option tax may be repealed or the rate increased or decreased or the use thereof changed after an election at which a majority of those voting on the question of repeal or rate or use change favored the repeal or rate or use change.  However, if a local sales and services tax is repealed or the rate decreased, the local use tax imposed within that county, if any, shall be deemed to be repealed or reduced by the same action repealing or reducing the local sales and services tax. The date on which the repeal, rate, or use change is to take effect shall not be earlier than ninety days following the election. The election at which the question of repeal or rate or use change is offered shall be called and held in the same manner and under the same conditions as provided in subsections 4 and 5 for the election on the imposition of the local option tax. However, in the case of a local sales and services tax and a local use tax where the tax has not been imposed countywide, the question of repeal or imposition or rate or use change shall be voted on only by the registered voters of the areas of the county where the tax has been imposed or has not been imposed, as appropriate. However, the governing body of the incorporated area or unincorporated area where the local sales and services tax and the local use tax is imposed may, upon its own motion, request the county commissioner of elections to hold an election in the incorporated or unincorporated area, as appropriate, on the question of the change in use of local sales and services tax or the local use tax revenues. The election may be held at any time but not sooner than sixty days following publication of the ballot proposition. If a majority of those voting in the incorporated or unincorporated area on the change in use favors the change, the governing body of that area shall change the use to which the revenues shall be used. The ballot proposition shall list the present use of the revenues, the proposed use, and the date after which revenues received will be used for the new use.
   (3)  When submitting the question of the imposition of a local sales and services tax or a local use tax, the county board of supervisors may direct that the question contain a provision for the repeal, without election, of the local sales and services tax or the local use tax on a specific date, which date shall be as provided in section 423B.6, subsection 1.
    Sec. 3.  Section 423B.1, subsections 8, 9, and 10, Code 2017, are amended to read as follows:
   8.  Local option taxes authorized to be imposed as provided in this chapter are a local sales and services tax, and a local vehicle tax, and a local use tax. The rate of the tax shall be in increments of one dollar per vehicle for a vehicle tax as set on the petition seeking to impose the vehicle tax. The rate of a local sales and services tax shall not be more than one percent as set by the governing body.  The rate of a local use tax shall be the same as the local sales and services tax rate set by the same governing body.
   9.  In a county that has imposed a local option sales and services tax or a local option use tax, the board of supervisors shall, notwithstanding any contrary provision of this chapter, repeal the local option sales and services tax or the local option use tax in the unincorporated areas or in an incorporated city area in which the tax has been imposed upon adoption of its own motion for repeal in the unincorporated areas or upon receipt of a motion adopted by the governing body of that incorporated city area requesting repeal.  If a local sales and services tax is repealed pursuant to such a motion, the local use tax imposed within the same incorporated city area or the unincorporated area, if any, shall be deemed to be repealed by the same motion repealing the local sales and services tax. The board of supervisors shall repeal the local option sales and services tax or the local option use tax effective on the later of the date of the adoption of the repeal motion or the earliest date specified in section 423B.6, subsection 1. For purposes of this subsection, incorporated city area includes an incorporated city which is contiguous to another incorporated city.
   10.  Notwithstanding subsection 9 or any other contrary provision of this chapter, a local option sales and services tax and a local use tax shall not be repealed or reduced in rate if obligations are outstanding which are payable as provided in section 423B.9, unless funds sufficient to pay the principal, interest, and premium, if any, on the outstanding obligations at and prior to maturity have been properly set aside and pledged for that purpose.
    Sec. 4.  NEW SECTION.  423B.5A  Local use tax.
   1.  A county that is imposing a local sales and services tax under section 423B.5 may impose a local use tax at the same rate on the purchase price or installed purchase price taxed by the state under chapter 423, subchapter III. A local use tax shall be imposed on the same basis as the state use tax except it shall not be imposed on any of the following:
   a.  The purchase price on the use of natural gas, natural gas service, electricity, or electric service.
   b.  The purchase price on the use of any property or on the use of any service not taxed by the state.
   c.  The purchase price from the use of motor fuel or special fuel as defined in chapter 452A which is consumed for highway use or in watercraft or aircraft if the fuel tax is paid on the transaction and a refund has not or will not be allowed.
   d.  The purchase price from the use of equipment by the state department of transportation.
   2.  A local use tax is applicable to uses of property or services within those incorporated and unincorporated areas of the county where it is imposed and shall be collected by all persons required to collect state use taxes, and if not collected by such persons shall be paid by the person using the property or service. All cities contiguous to each other shall be treated as part of one incorporated area and the tax is imposed in each of those contiguous cities only if the majority of those voting in the total area covered by the contiguous cities favors its imposition. In the case of a local use tax submitted to the registered voters of two or more contiguous counties as provided in section 423B.1, subsection 4, paragraph “c”, all cities contiguous to each other shall be treated as part of one incorporated area, even if the corporate boundaries of one or more of the cities include areas of more than one county, and the tax shall be imposed in each of those contiguous cities only if a majority of those voting on the tax in the total area covered by the contiguous cities favor its imposition.
   3.  For purposes of the proper administration of the local use tax and to prevent its evasion, evidence that tangible personal property was sold by any person for delivery to a location in this state shall be prima facie evidence that such tangible personal property was sold for use at that location in this state. 
   4.  The amount of the purchase price, for purposes of determining the amount of the local use tax, does not include the amount of any state use tax.
   5.  A tax permit other than the state use tax permit required under section 423.36 shall not be required by local authorities.
    Sec. 5.  Section 423B.6, Code 2017, is amended to read as follows:
   423B.6  Administration.
   1.  a.  A local sales and services tax or a local use tax shall be imposed either January 1 or July 1 following the notification of the director of revenue but not sooner than ninety days following the favorable election and not sooner than sixty days following notice to sellers, as defined in section 423.1. However, a jurisdiction which has voted to continue imposition of the tax may impose that tax without repeal of the prior tax.
   b.  A local sales and services tax or a local use tax shall be repealed only on June 30 or December 31 but not sooner than ninety days following the favorable election if one is held. However, a local sales and services tax shall not be repealed before the tax has been in effect for one year. At least forty days before the imposition or repeal of the tax, a county shall provide notice of the action by certified mail to the director of revenue.
   c.  The imposition of or a rate change for a local sales and services tax or a local use tax shall not be applied to purchases from a printed catalog wherein a purchaser computes the local tax based on rates published in the catalog unless a minimum of one hundred twenty days’ notice of the imposition or rate change has been given to the seller from the catalog and the first day of a calendar quarter has occurred on or after the one hundred twentieth day.
   d.  If a local sales and services tax has been imposed prior to April 1, 2000, and at the time of the election a date for repeal was specified on the ballot, the local sales and services tax may be repealed on that date, notwithstanding paragraph “b”.
   2.  a.  The director of revenue shall administer a local sales and services tax and a local use tax as nearly as possible in conjunction with the administration of state sales and use tax laws. The director shall provide appropriate forms or provide on the regular state tax forms for reporting local sales and services tax liability and local use tax liability.
   b.  The ordinance of a county board of supervisors imposing a local sales and services tax or a local use tax shall adopt by reference the applicable provisions of the appropriate sections of chapter 423. All powers and requirements of the director to administer the state sales tax law and use tax law are applicable to the administration of a local sales and services tax law, and the local excise tax, and the local use tax, including but not limited to the provisions of section 422.25, subsection 4, sections 422.30, 422.67, and 422.68, section 422.69, subsection 1, sections 422.70 through 422.75, section and sections 423.14, subsection 1 and subsection 2, paragraphs “b” through “e”, and sections 423.15, 423.23, 423.24, 423.25, 423.31 through 423.35, 423.37 through 423.42, 423.46, and 423.47. Local officials shall confer with the director of revenue for assistance in drafting the ordinance imposing a local sales and services tax or a local use tax. A certified copy of the ordinance shall be filed with the director as soon as possible after passage.
   c.  Frequency of deposits and quarterly reports of with the department of revenue are governed by the tax provisions in section 423.31 for a local sales and services tax with the department of revenue and are governed by the tax provisions in section 423.31 423.32 for a local use tax. Local tax collections shall not be included in computation of the total tax to determine frequency of filing under section 423.31 or 432.32.
   d.  The director shall apply a boundary change of a county or city imposing or collecting the local sales and services tax or the local use tax to the imposition or collection of that tax only on the first day of a calendar quarter which occurs sixty days or more after the director has given notice of the boundary change to sellers.
   3.  a.  The director, in consultation with local officials, shall collect and account for a local sales and services tax and a local use tax. The director shall certify each quarter the amount of local sales and services tax receipts and any interest and penalties to be credited to the “local sales and services tax fund” established in the office of the treasurer of state.  The director shall certify each quarter the amount of local use tax receipts and any interest and penalties to be credited to the “local use tax fund” established in the office of the treasurer of state. All taxes collected under this chapter by a retailer or any individual are deemed to be held in trust for the state of Iowa and the local jurisdictions imposing the taxes.
   b.  All local tax moneys and interest and penalties received or refunded one hundred eighty days or more after the date on which the county repeals its local sales and services tax or local use tax shall be deposited in or withdrawn from the state general fund.
    Sec. 6.  Section 423B.7, subsection 1, paragraph a, Code 2017, is amended to read as follows:
   a.  Except as provided in paragraph “b”, the director shall credit the local sales and services tax receipts and interest and penalties from a county-imposed tax to the county’s account in the local sales and services tax fund and from a city-imposed tax under section 423B.1, subsection 2, to the city’s account in the local sales and services tax fund.  The director shall credit the local use tax receipts and interest and penalties from a county-imposed tax to the county’s account in the local use tax fund. If the director is unable to determine from which county any of the receipts were collected, those receipts shall be allocated among the possible counties based on allocation rules adopted by the director.
    Sec. 7.  Section 423B.7, subsection 7, Code 2017, is amended to read as follows:
   7.  Local sales and services tax moneys and local use tax moneys received by a city or county may be expended for any lawful purpose of the city or county.
    Sec. 8.  Section 423B.8, Code 2017, is amended to read as follows:
   423B.8  Construction contractor refunds.
   1.  Construction contractors may make application to the department for a refund of the additional local sales and services tax or local use tax paid under this chapter by reason of taxes paid on goods, wares, or merchandise under the following conditions:
   a.  The goods, wares, or merchandise are incorporated into an improvement to real estate in fulfillment of a written contract fully executed prior to the date of the imposition or increase in rate of a local sales and services tax or a local use tax under this chapter. The refund shall not apply to equipment transferred in fulfillment of a mixed construction contract.
   b.  The contractor has paid to the department or to a retailer the full amount of the state and local tax.
   c.  The claim is filed on forms provided by the department and is filed within one year of the date the tax is paid.
   2.  The department shall pay the refund from the appropriate city’s or county’s account in the local sales and services tax fund or the local use tax fund.
   3.  A contractor who makes an erroneous application for refund shall be liable for payment of the excess refund paid plus interest at the rate in effect under section 421.7. In addition, a contractor who willfully makes a false application for refund is guilty of a simple misdemeanor and is liable for a penalty equal to fifty percent of the excess refund claimed. Excess refunds, penalties, and interest due under this subsection may be enforced and collected in the same manner as the local sales and services tax and the local use tax imposed under this chapter.
    Sec. 9.  Section 423B.9, subsections 1, 2, and 3, Code 2017, are amended to read as follows:
   1.  For purposes of this section unless the context otherwise requires:
   a.  “Bond issuer” or “issuer” means a city, a county, or a secondary recipient.
   b.  “Designated portion” means the portion of the local option sales and services tax revenues or the local option use tax revenues which is authorized to be expended for one or a combination of purposes under an adopted public measure.
   c.  “Secondary recipient” means a political subdivision of the state which is to receive revenues from a local option sales and services tax or a local use tax over a period of years pursuant to the terms of a chapter 28E agreement with one or more cities or counties.
   2.  An issuer of public bonds which is a recipient of revenues from a local option sales and services tax or a local use tax imposed pursuant to this chapter may issue bonds in anticipation of the collection of one or more designated portions of the local option sales and services tax or the local option use tax and may pledge irrevocably an amount of the revenue derived from the designated portions for each of the years the bonds remain outstanding to the payment of the bonds. Bonds may be issued only for one or more of the purposes set forth on the ballot proposition concerning the imposition of the local option sales and services tax or the local option use tax, except bonds shall not be issued which are payable from that portion of tax revenues designated for property tax relief. The bonds may be issued in accordance with the procedures set forth in either subsection 3 or 4.
   3.  The governing body of an issuer may authorize the issuance of bonds which are payable from the designated portion of the revenues of the local option sales and services tax or the local option use tax, and not from property tax, by following the authorization procedures set forth for cities in section 384.83. Bonds may be issued for the purpose of refunding outstanding and previously issued bonds under this subsection without otherwise complying with the provisions of this subsection.
    Sec. 10.  Section 423B.9, subsection 4, paragraph b, Code 2017, is amended to read as follows:
   b.  The provisions of chapter 76 apply to the bonds payable as provided in this subsection, except that the mandatory levy to be assessed pursuant to section 76.2 shall be at a rate to generate an amount which together with the receipts from the pledged designated portion of the local option sales and services tax or the local option use tax is sufficient to pay the interest and principal on the bonds. All amounts collected as a result of the levy assessed pursuant to section 76.2 and paid out in the first instance for bond principal and interest shall be repaid to the bond issuer which levied the tax from the first available designated portion of local option sales and services tax or local option use tax collections received in excess of the requirement for the payment of the principal and interest of the bonds and when repaid shall be applied in reduction of property taxes. The amount of bonds which may be issued under section 76.3 shall be the amount which could be retired from the actual collections of the designated portions of the local option sales and services tax or the local option use tax for the last four calendar quarters, as certified by the director of revenue. The amount of tax revenues pledged jointly by other cities or counties may be considered for the purpose of determining the amount of bonds which may be issued. If the local option sales and services tax or the local option use tax has been in effect for less than four calendar quarters, the tax collected within the shorter period may be adjusted to project the collections of the designated portion for the full year for the purpose of determining the amount of the bonds which may be issued. The provisions of this section constitute separate authorization for the issuance of bonds and shall prevail in the event of conflict with any other provision of the Code limiting the amount of bonds which may be issued or the source of payment of the bonds. Bonds issued under this section shall not limit or restrict the authority of the bond issuer to issue bonds under other provisions of the Code.
    Sec. 11.  Section 423B.9, subsection 5, Code 2017, is amended to read as follows:
   5.  A city or county, jointly with one or more other political subdivisions as provided in chapter 28E, may pledge irrevocably any amount derived from the designated portions of the revenues of the local option sales and services tax or the local option use tax to the support or payment of bonds of an issuer, issued for one or more purposes set forth on the ballot proposition concerning the imposition of the local option sales and services tax or the local option use tax or a political subdivision may apply the proceeds of its bonds to the support of any such purpose.
DIVISION II
CORRESPONDING AMENDMENTS

    Sec. 12.  Section 15J.7, subsection 2, Code 2017, is amended to read as follows:
   2.  In addition to the moneys received pursuant to section 15J.6, a municipality may deposit in the reinvestment project fund any other moneys lawfully at the municipality’s disposal, including but not limited to local sales and services tax or local use tax receipts collected under chapter 423B if such use is a purpose authorized for the municipality under chapter 423B.
    Sec. 13.  Section 49.73, subsection 1, paragraph b, Code 2017, is amended to read as follows:
   b.  Any election conducted for a city, including a local option sales and services tax or a local use tax election conducted pursuant to section 423B.1. At elections conducted pursuant to chapter 423B, all polling places shall have the same voting hours.
    Sec. 14.  Section 76.4, Code 2017, is amended to read as follows:
   76.4  Permissive application of funds.
   Whenever the governing authority of such political subdivision shall have on hand funds derived from any other source than taxation which may be appropriated to the payment either of interest or principal, or both principal and interest of such bonds, such funds may be so appropriated and used and the levy for the payment of the bonds correspondingly reduced. This section shall not restrict the authority of a political subdivision to apply local sales and services tax or local use tax receipts collected pursuant to chapter 423B for such purpose. Notwithstanding section 423F.3, a school district may apply tax receipts received pursuant to chapter 423F for the purposes of this section.
    Sec. 15.  Section 279.63, subsection 2, paragraph a, Code 2017, is amended to read as follows:
   a.  All property tax levies, income surtaxes, and local option sales and use taxes in place in the school district, listed by type of levy, rate, amount, duration, and notification of the maximum rate and amount limitations permitted by statute.
    Sec. 16.  Section 418.13, subsection 2, Code 2017, is amended to read as follows:
   2.  In addition to the moneys received pursuant to section 418.10 or 418.12, a governmental entity may deposit in the flood project fund any other moneys lawfully received by the governmental entity, including but not limited to local sales and services tax or local use tax receipts collected under chapter 423B.
    Sec. 17.  Section 423.4, subsection 7, paragraph f, Code 2017, is amended to read as follows:
   f.  The refund in this subsection applies only to state sales and use tax paid and does not apply to local option sales and services taxes or local option use taxes imposed pursuant to chapter 423B. Notwithstanding the state sales tax imposed in section 423.2, a refund issued pursuant to this section shall not exceed an amount equal to five percent of the sales price of the fuel used to create heat, power, and steam for processing or generating electrical current or from the sale price of electricity consumed by computers, machinery, or other equipment for operation of the data center business facility.
    Sec. 18.  Section 423.4, subsection 8, paragraph g, Code 2017, is amended to read as follows:
   g.  The refund in this subsection applies only to state sales and use tax paid and does not apply to local option sales and services taxes or local option use taxes imposed pursuant to chapter 423B. Notwithstanding the state sales tax imposed in section 423.2, a refund issued pursuant to this section shall not exceed an amount equal to five percent of the sales price of the items listed in paragraph “a”, subparagraphs (1), (2), and (3).
    Sec. 19.  Section 423.34A, unnumbered paragraph 1, Code 2017, is amended to read as follows:
   A purchaser is relieved of liability for payment of state sales or use tax, for payment of any local option sales or use tax, for payment of interest, or for payment of any penalty for nonpayment of tax which nonpayment is not fraudulent, willful, or intentional, under the following circumstances:
EXPLANATION
The inclusion of this explanation does not constitute agreement with
the explanation’s substance by the members of the general assembly.
   BACKGROUND. Iowa law currently imposes a state sales tax and a state use tax. The state sales tax applies to retail sales of property and certain services within Iowa. The state use tax is complementary to the state sales tax and generally applies to the purchase of property or a service that would be subject to the state sales tax if the transaction was consummated in Iowa, but that is instead consummated outside of Iowa but purchased for use in Iowa and used in Iowa.
   Iowa law also currently allows Iowa counties to impose a local sales and services tax that, with a few exceptions, applies to the same sales of property and services as are subject to the state sales tax. The local option sales and services tax generally applies to sales occurring, and services performed, within the area imposing the tax. Iowa law does not permit counties to impose a local use tax. 
   BILL CHANGES. This bill creates a local option use tax that may be imposed by a county that is also imposing a local option sales and services tax. If imposed, the local use tax rate must be the same as the county’s local sales and services tax rate, which under current law cannot exceed 1 percent. 
   The local option use tax is authorized, imposed, and repealed by a county in the same manner as a local option sales and services tax and is administered by the department of revenue (department) in the same manner as the state sales and use tax laws. A county may impose the local option use tax upon a petition of the voters or motions of city councils or the board of supervisors and after an election at which a majority of those voting favors imposition. When imposed, a local option use tax only applies in those incorporated areas and the unincorporated area of a county in which a majority of those voting in the area favored imposition, and if the area is also imposing the local sales and services tax. The local option use tax may be repealed by a majority vote or by motion of the governing body of the area imposing the tax. However, if the county’s local option sales and services tax is repealed or the rate decreased, the bill provides that the local option use tax imposed in that county, if any, shall be deemed to be repealed or reduced by the same election or motion of the governing body. 
   The local option use tax is imposed on the same basis as the state use tax and is applicable to uses of taxable property or services within those incorporated and unincorporated areas of the county where it is imposed. The bill provides that evidence that tangible personal property was sold by any person for delivery to a location in Iowa shall be prima facie evidence that such tangible personal property was sold for use at that location in Iowa. The bill also provides that the local option use tax will not apply to the use of natural gas, natural gas service, electricity, or electric service, certain uses of motor or special fuel, the use of equipment by the state department of transportation, and the use of any property or service not taxed by the state.
   The local option use tax is required to be collected by persons required to collect state use taxes, and if not collected by such persons is required to be paid by the person using the property or service. 
   Local option use taxes are remitted to the department of revenue to be deposited in the appropriate county’s account within the local use tax fund created in the bill, and are then distributed back to local governments according to a statutory formula involving population and property tax revenues in the same manner as local sales and services tax revenues are under current law. Local option use taxes received by a city or county may be expended for any lawful purposes of the city or county. 
   The bill provides that local option use taxes may be refunded to certain construction contractors, and pledged towards the repayment of bonds of a city or county, in the same manner as local option sales and services taxes may be under current law. The bill does not allow local use tax revenues to be used to fund urban renewal projects, which is a permitted use of local sales and services tax revenues under current law. 
   Finally, the bill makes several corresponding changes to provisions of the Iowa Code that reference local option taxes or the local option sales and services tax to include references to the local option use tax created in the bill.