Senate Study Bill 1180 - Introduced SENATE FILE _____ BY (PROPOSED COMMITTEE ON WAYS AND MEANS BILL BY CHAIRPERSON FEENSTRA) A BILL FOR An Act providing a sales tax refund for the sale of goods and 1 services furnished in fulfillment of a written construction 2 contract with a qualifying nonprofit hospital, and providing 3 penalties. 4 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 5 TLSB 1813XC (1) 87 mm/jh

S.F. _____ Section 1. Section 423.4, Code 2017, is amended by adding 1 the following new subsection: 2 NEW SUBSECTION . 12. a. For purposes of this subsection, 3 “designated nonprofit hospital” means a nonprofit hospital 4 licensed pursuant to chapter 135B that entered into a written 5 construction contract on or after January 1, 2014, but prior to 6 December 31, 2017, or that issued bonds to fund construction on 7 or after July 1, 2014, but prior to December 31, 2017. 8 b. Beginning July 1, 2018, a designated nonprofit hospital 9 in this state may make application to the department for the 10 refund of the sales or use tax upon the sales price of all sales 11 of goods, wares, or merchandise, or from services furnished to 12 a contractor, used in the fulfillment of a written construction 13 contract with the designated nonprofit hospital entered into on 14 or after January 1, 2014, but prior to December 31, 2017. In 15 order to qualify for the refund, the sale and delivery of the 16 goods, wares, or merchandise, or the services furnished, must 17 have occurred between January 1, 2014, and December 31, 2018, 18 and must have been purchased directly by a contractor, or by a 19 contractor as the agent for the designated nonprofit hospital, 20 or directly by the designated nonprofit hospital. 21 c. Such contractor shall state under oath, on forms provided 22 by the department, the amount of such sales of goods, wares, or 23 merchandise, or services furnished and used in the performance 24 of such contract, and upon which sales or use tax has been 25 paid, and shall file such forms with the designated nonprofit 26 hospital which has made any written contract for performance 27 by the contractor. 28 d. On or after July 1, 2018, but not more than five 29 years after final settlement has been made, the designated 30 nonprofit hospital shall make application to the department 31 for any refund of the amount of the sales or use tax which 32 shall have been paid upon any goods, wares, or merchandise, 33 or services furnished. The application shall be made in the 34 manner prescribed by the department and upon forms provided by 35 -1- LSB 1813XC (1) 87 mm/jh 1/ 3

S.F. _____ the department. The department shall audit the claim and, if 1 approved, issue a warrant to the designated nonprofit hospital 2 in the amount of the sales or use tax which has been paid to the 3 state of Iowa under the contract. However, for sales and use 4 tax paid between January 1, 2014, and July 1, 2018, the total 5 eligible refund shall be amortized equally over two calendar 6 years, and the department shall issue one warrant each calendar 7 quarter for eight calendar quarters until the total applicable 8 refund amount has been issued. 9 e. Any contractor who willfully makes a false report of 10 tax paid under the provisions of this subsection is guilty of 11 a simple misdemeanor and in addition shall be liable for the 12 payment of the tax and any applicable penalty and interest. 13 f. This subsection is repealed July 1, 2024. 14 EXPLANATION 15 The inclusion of this explanation does not constitute agreement with 16 the explanation’s substance by the members of the general assembly. 17 This bill authorizes the department of revenue (department) 18 to refund certain sales and use tax paid for goods, or from 19 services furnished to a contractor, used in fulfillment of 20 a written construction contract with a designated nonprofit 21 hospital entered into on or after January 1, 2014, but prior to 22 December 31, 2017. The person eligible to receive the refund 23 is the designated nonprofit hospital, as defined in the bill. 24 To qualify for the refund, the sale or delivery of the goods 25 or the services furnished must have occurred between January 26 1, 2014, and December 31, 2018, and must have been purchased 27 directly by a contractor, or by a contractor as the agent 28 for the designated nonprofit hospital, or directly by the 29 designated nonprofit hospital. 30 The bill allows a designated nonprofit hospital to apply 31 for the sales and use tax refund beginning July 1, 2018, on 32 forms provided by the department. For sales and use tax paid 33 between January 1, 2014, and July 1, 2018, the total eligible 34 refund shall be amortized equally over two calendar years, and 35 -2- LSB 1813XC (1) 87 mm/jh 2/ 3

S.F. _____ the department shall issue one warrant each calendar quarter 1 for eight calendar quarters until the total applicable refund 2 amount has been issued. 3 A contractor that has a written contract with the designated 4 nonprofit hospital is required to provide information under 5 oath to the designated nonprofit hospital regarding the amount 6 of goods or services used in performance of the contract and 7 upon which sales or use tax has been paid. A contractor 8 who willfully makes a false report is guilty of a simple 9 misdemeanor and is liable for the payment of the tax and any 10 applicable penalty and interest. A simple misdemeanor is 11 punishable by confinement for no more than 30 days or a fine of 12 at least $65 but not more than $625 or by both. 13 The refund is repealed July 1, 2024. 14 -3- LSB 1813XC (1) 87 mm/jh 3/ 3