House File 779 - Introduced HOUSE FILE 779 BY COMMITTEE ON WAYS AND MEANS (SUCCESSOR TO HSB 257) A BILL FOR An Act relating to the administration of the tax and 1 related laws by the department of revenue, including the 2 administration and modification of certain tax credits 3 and refunds, the individual and corporate income taxes, 4 franchise taxes, sales and use taxes, and automobile rental 5 excise taxes, the assessment of property owned by certain 6 long distance telephone companies, establishing a taxation 7 and exemption of computers task force, and providing for 8 other properly related matters, making penalties applicable, 9 and including effective date and retroactive applicability 10 provisions. 11 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 12 TLSB 2786HV (2) 88 jm/jh

H.F. 779 DIVISION I 1 INCOME TAX 2 Section 1. Section 422.4, subsection 16, paragraph e, 3 unnumbered paragraph 1, Code 2019, is amended to read as 4 follows: 5 Add back the following percentage of the qualified business 6 income deduction deductions under section 199A sections 199A(a) 7 and 199A(g) of the Internal Revenue Code taken and allowable in 8 calculating federal taxable income for the applicable tax year: 9 Sec. 2. Section 422.9, subsection 2A, paragraph a, 10 unnumbered paragraph 1, Code 2019, is amended to read as 11 follows: 12 The following percentage of the qualified business income 13 deduction deductions under section 199A sections 199A(a) and 14 199A(g) of the Internal Revenue Code taken and allowable in 15 calculating federal taxable income for the applicable tax year: 16 Sec. 3. Section 422.9, subsection 2A, paragraph b, Code 17 2019, is amended to read as follows: 18 b. Notwithstanding paragraph “a” , and section 422.4, 19 subsection 16 , paragraph “e” , for an entity electing or 20 required to file a composite return under section 422.13, 21 subsection 5 , the deduction allowed under this subsection for 22 purposes of the composite return shall be an amount equal to 23 the applicable percentage described in paragraph “a” of the 24 deduction deductions that would be allowable for federal income 25 tax purposes under section 199A sections 199A(a) and 199A(g) of 26 the Internal Revenue Code by an individual taxpayer reporting 27 the same items of income and loss that are included in the 28 composite return. 29 Sec. 4. Section 422.11S, subsection 7, paragraph b, Code 30 2019, is amended to read as follows: 31 b. The department shall authorize a school tuition 32 organization to issue tax credit certificates for contributions 33 made to the school tuition organization. The aggregate amount 34 of tax credit certificates that the department shall authorize 35 -1- LSB 2786HV (2) 88 jm/jh 1/ 31

H.F. 779 for a school tuition organization for a tax calendar year shall 1 be determined for that organization pursuant to subsection 8 . 2 However, a school tuition organization shall not be authorized 3 to issue tax credit certificates unless the organization is 4 controlled by a board of directors consisting of at least 5 seven members. The names and addresses of the members shall 6 be provided to the department and shall be made available 7 by the department to the public, notwithstanding any state 8 confidentiality restrictions. 9 Sec. 5. Section 422.11S, subsection 8, paragraph a, 10 subparagraph (2), Code 2019, is amended to read as follows: 11 (2) “Total approved tax credits” means for the tax year 12 beginning in the 2006 calendar year, two million five hundred 13 thousand dollars, for the tax year beginning in the 2007 14 calendar year, five million dollars, for tax calendar years 15 beginning on or after January 1, 2008, but before January 1, 16 2012, seven million five hundred thousand dollars, for tax 17 calendar years beginning on or after January 1, 2012, but 18 before January 1, 2014, eight million seven hundred fifty 19 thousand dollars, and for tax calendar years beginning on or 20 after January 1, 2014, but before January 1, 2019, twelve 21 million dollars, and for tax calendar years beginning on or 22 after January 1, 2019, thirteen million dollars. 23 Sec. 6. Section 422.11S, subsection 8, paragraph b, 24 unnumbered paragraph 1, Code 2019, is amended to read as 25 follows: 26 Each year by December 1, the department shall authorize 27 school tuition organizations to issue tax credit certificates 28 for the following tax calendar year. However, for the tax year 29 beginning in the 2006 calendar year only, the department, by 30 September 1, 2006, shall authorize school tuition organizations 31 to issue tax credit certificates for the 2006 calendar tax 32 year. For the tax year beginning in the 2006 calendar year 33 only, each school served by a school tuition organization shall 34 submit a participation form to the department by August 1, 35 -2- LSB 2786HV (2) 88 jm/jh 2/ 31

H.F. 779 2006, providing the certified enrollment as of the third Friday 1 of September 2005, along with the school tuition organization 2 that represents the school. Tax credit certificates available 3 for issue by each school tuition organization shall be 4 determined in the following manner: 5 Sec. 7. Section 422.11S, subsection 9, unnumbered paragraph 6 1, Code 2019, is amended to read as follows: 7 A school tuition organization that receives a voluntary cash 8 or noncash contribution pursuant to this section shall report 9 to the department, on a form prescribed by the department, 10 by January 12 of each tax calendar year all of the following 11 information: 12 Sec. 8. Section 422.11S, subsection 9, paragraphs b and c, 13 Code 2019, are amended to read as follows: 14 b. The total number and dollar value of contributions 15 received and the total number and dollar value of the tax 16 credits approved during the previous tax calendar year. 17 c. A list of the individual donors for the previous tax 18 calendar year that includes the dollar value of each donation 19 and the dollar value of each approved tax credit. 20 Sec. 9. Section 422.12C, subsection 4, Code 2019, is amended 21 to read as follows: 22 4. Married taxpayers who have filed joint federal returns 23 electing to file separate returns or to file separately on a 24 combined return form must determine the child and dependent 25 care credit under subsection 1 or the early childhood 26 development tax credit under subsection 2 based upon their 27 combined net income and allocate the total credit amount to 28 each spouse in the proportion that each spouse’s respective net 29 income bears to the total combined net income. Nonresidents or 30 part-year residents of Iowa must determine their Iowa child and 31 dependent care credit under subsection 1 or the early childhood 32 development tax credit under subsection 2 in the ratio of 33 their Iowa source net income to their all source net income. 34 Nonresidents or part-year residents who are married and elect 35 -3- LSB 2786HV (2) 88 jm/jh 3/ 31

H.F. 779 to file separate returns or to file separately on a combined 1 return form must allocate the Iowa child and dependent care 2 credit under subsection 1 or the early childhood development 3 tax credit under subsection 2 between the spouses in the ratio 4 of each spouse’s Iowa source net income to the combined Iowa 5 source net income of the taxpayers. 6 Sec. 10. Section 422.60, subsection 2, paragraph b, Code 7 2019, is amended by adding the following new subparagraph: 8 NEW SUBPARAGRAPH . (6) For purposes of this paragraph, 9 “Internal Revenue Code” means the Internal Revenue Code of 10 1954, prior to the date of its redesignation as the Internal 11 Revenue Code of 1986 by the Tax Reform Act of 1986, or means 12 the Internal Revenue Code of 1986 as amended and in effect on 13 December 21, 2017. This definition shall not be construed to 14 include any amendment to the Internal Revenue Code enacted 15 after the date specified in the preceding sentence, including 16 any amendment with retroactive applicability or effectiveness. 17 Sec. 11. LIKE-KIND EXCHANGES OF PERSONAL PROPERTY 18 UNDER CORPORATE INCOME TAX AND FRANCHISE TAX FOR TAX YEAR 19 2019. Notwithstanding any other provision of law to the 20 contrary, all of the following shall apply when computing net 21 income for purposes of the corporation income tax or franchise 22 tax under section 422.35 for tax years beginning during the 23 2019 calendar year: 24 1. The rules for nonrecognition of gain or loss from 25 exchanges of real property held for productive use or 26 investment and not held primarily for sale, as provided in 27 section 1031 of the Internal Revenue Code, as amended up to and 28 including March 24, 2018, apply for state income tax purposes 29 with regard to exchanges of real property. 30 2. The rules for nonrecognition of gain or loss from 31 exchanges of property other than real property held for 32 productive use or investment as provided in section 1031 of the 33 Internal Revenue Code, as amended up to and including December 34 21, 2017, apply for state income tax purposes, notwithstanding 35 -4- LSB 2786HV (2) 88 jm/jh 4/ 31

H.F. 779 any other provision of law to the contrary. If the taxpayer’s 1 federal taxable income includes gain or loss from property, 2 other than real property described in subsection 1, and the 3 taxpayer elects to have this subsection apply, the following 4 adjustments shall be made: 5 a. (1) Subtract the total amount of gain related to the 6 sale or exchange of the property as properly reported for 7 federal tax purposes under the Internal Revenue Code. 8 (2) Add back any gain related to the sale or exchange of the 9 property to the extent such gain does not qualify for deferral 10 under section 1031 of the Internal Revenue Code, as amended 11 up to and including December 21, 2017, which gain shall be 12 calculated using the taxpayer’s adjusted basis in the property 13 for state tax purposes. 14 b. (1) Add the total amount of loss related to the sale or 15 exchange of the property as properly reported for federal tax 16 purposes under the Internal Revenue Code. 17 (2) Subtract any loss related to the sale or exchange of the 18 property to the extent such loss does not qualify for deferral 19 under section 1031 of the Internal Revenue Code, as amended 20 up to and including December 21, 2017, which loss shall be 21 calculated using the taxpayer’s adjusted basis in the property 22 for state tax purposes. 23 c. Any other adjustments to gains, losses, deductions, or 24 tax basis for the property given up or received in the sale or 25 exchange pursuant to rules adopted by the director. 26 Sec. 12. REFUNDS —— EARLY CHILDHOOD DEVELOPMENT TAX 27 CREDIT. Notwithstanding any provision of law to the contrary, 28 for tax years beginning prior to January 1, 2019, refunds of 29 the early childhood development tax credit provided in section 30 422.12C, subsection 2, requested on or after the effective 31 date of the provision of this division of this Act amending 32 section 422.12C, subsection 4, shall not exceed the amount 33 allowed under section 422.12C, subsection 4, as amended by this 34 division of this Act. 35 -5- LSB 2786HV (2) 88 jm/jh 5/ 31

H.F. 779 Sec. 13. LEGISLATIVE INTENT. It is the intent of the 1 general assembly that the provisions of this division of 2 this Act amending section 422.11S are conforming amendments 3 consistent with current state law, and that the amendments do 4 not change the application of current law but instead reflect 5 current law both before and after the enactment of this Act. 6 Sec. 14. EFFECTIVE DATE. The following, being deemed of 7 immediate importance, take effect upon enactment: 8 1. The section of this division of this Act amending section 9 422.12C, subsection 4. 10 2. The section of this division of this Act relating to 11 refunds for the early childhood development tax credit. 12 3. The section of this division of this Act relating to 13 like-kind exchanges of personal property under corporate income 14 tax and franchise tax. 15 Sec. 15. RETROACTIVE APPLICABILITY. The following apply 16 retroactively to January 1, 2019, for tax years beginning on 17 or after that date: 18 1. The section of this division of this Act amending section 19 422.4, subsection 16, paragraph “e”, unnumbered paragraph 1. 20 2. The sections of this division of this Act amending 21 section 422.9, subsection 2A. 22 3. The section of this division of this Act amending section 23 422.12C, subsection 4. 24 4. The section of this division of this Act amending section 25 422.60, subsection 2, paragraph “b”. 26 Sec. 16. RETROACTIVE APPLICABILITY —— LIKE-KIND EXCHANGES 27 OF PERSONAL PROPERTY. The section of this division of this 28 Act relating to like-kind exchanges of personal property under 29 corporate income tax and franchise tax applies retroactively to 30 January 1, 2019, for tax years beginning on or after that date, 31 but before January 1, 2020. 32 DIVISION II 33 ADMINISTRATIVE PROVISIONS 34 Sec. 17. Section 422.20, Code 2019, is amended by adding the 35 -6- LSB 2786HV (2) 88 jm/jh 6/ 31

H.F. 779 following new subsection: 1 NEW SUBSECTION . 5. The department may permit, by rule, the 2 disclosure of state tax information to a person a taxpayer has 3 authorized to receive such state tax information, in the manner 4 prescribed by the department. 5 Sec. 18. Section 422.72, Code 2019, is amended by adding the 6 following new subsection: 7 NEW SUBSECTION . 8. The department may permit, by rule, the 8 disclosure of state tax information to a person a taxpayer has 9 authorized to receive such state tax information, in the manner 10 prescribed by the department. 11 DIVISION III 12 SALES AND USE TAX 13 Sec. 19. Section 423.2, subsection 1, paragraph a, 14 subparagraph (5), subparagraph division (a), Code 2019, is 15 amended to read as follows: 16 (a) If a service or warranty contract does not specify a fee 17 amount for nontaxable services or taxable personal property, 18 the tax imposed pursuant to this section shall be imposed upon 19 an amount equal to one-half of the sales price of the contract. 20 Sec. 20. Section 423.2, subsection 6, paragraph k, Code 21 2019, is amended to read as follows: 22 k. Carpentry repair and installation . 23 Sec. 21. Section 423.3, Code 2019, is amended by adding the 24 following new subsection: 25 NEW SUBSECTION . 16A. a. The sales price from the sale of 26 a grain bin, including material or replacement parts used to 27 construct or repair a grain bin. 28 b. For purposes of this subsection, “grain bin” means 29 property that is vented and covered with corrugated metal or 30 similar material, and that is primarily used to hold loose 31 grain for drying or storage. 32 Sec. 22. Section 423.3, subsection 47, paragraph c, 33 subparagraph (3), Code 2019, is amended by striking the 34 subparagraph and inserting in lieu thereof the following: 35 -7- LSB 2786HV (2) 88 jm/jh 7/ 31

H.F. 779 (3) The following within the scope of section 427A.1, 1 subsection 1, paragraphs “h” and “i” : 2 (a) Computers. 3 (b) Machinery. 4 (c) Equipment, including pollution control equipment. 5 (d) Replacement parts. 6 (e) Supplies. 7 (f) Materials used to construct or self-construct the 8 following: 9 (i) Computers. 10 (ii) Machinery. 11 (iii) Equipment, including pollution control equipment. 12 (iv) Replacement parts. 13 (v) Supplies. 14 Sec. 23. Section 423.3, subsection 104, paragraph a, Code 15 2019, is amended to read as follows: 16 a. The sales price of specified digital products and of 17 prewritten computer software sold, and of enumerated services 18 described in section 423.2, subsection 1, paragraph “a” , 19 subparagraph (5), or section 423.2, subsection 6 , paragraphs 20 “bq” , “br” , “bs” , and “bu” furnished, to a commercial enterprise 21 for use exclusively by the commercial enterprise. The use of 22 prewritten computer software, a specified digital product, or 23 service fails to qualify as a use exclusively by the commercial 24 enterprise if its use for noncommercial purposes is more than 25 de minimis. 26 Sec. 24. Section 423.14A, subsection 3, paragraph b, Code 27 2019, is amended by striking the paragraph. 28 Sec. 25. Section 423.14A, subsection 3, paragraph d, 29 subparagraph (1), Code 2019, is amended to read as follows: 30 (1) A marketplace facilitator that makes or facilitates 31 Iowa sales on its own behalf or for one or more marketplace 32 sellers equal to or exceeding one hundred thousand dollars , 33 or in two hundred or more separate transactions, for an 34 immediately preceding calendar year or a current calendar year. 35 -8- LSB 2786HV (2) 88 jm/jh 8/ 31

H.F. 779 Sec. 26. Section 423.14A, subsection 3, paragraph e, 1 subparagraph (1), unnumbered paragraph 1, Code 2019, is amended 2 to read as follows: 3 A referrer if, for any immediately preceding calendar year 4 or a current calendar year, one hundred thousand dollars or 5 more in Iowa sales or two hundred or more separate Iowa sales 6 transactions result from referrals from a platform of the 7 referrer. A referrer is not required to collect and remit 8 sales and use tax pursuant to this paragraph if the referrer 9 does all of the following: 10 Sec. 27. Section 423.14A, subsection 3, paragraph e, 11 subparagraph (1), subparagraph division (c), unnumbered 12 paragraph 1, Code 2019, is amended to read as follows: 13 The referrer provides the department with monthly annual 14 reports in an electronic format and in the manner prescribed 15 by the department, which monthly annual reports contain all of 16 the following: 17 Sec. 28. Section 423.14A, subsection 3, paragraph e, Code 18 2019, is amended by adding the following new subparagraph: 19 NEW SUBPARAGRAPH . (5) This paragraph is subject to 20 implementation by the department by rule and shall not require 21 a referrer to collect tax or comply with the notice and 22 reporting requirements and other provisions of this paragraph 23 unless and until such administrative rules take effect. 24 Sec. 29. Section 423.48, subsection 2, paragraph c, Code 25 2019, is amended by striking the paragraph. 26 Sec. 30. TAXATION AND EXEMPTION OF COMPUTERS TASK FORCE. A 27 taxation and exemption of computers task force is created. The 28 department of revenue shall initiate and coordinate the task 29 force and provide staff assistance. It is the intent of the 30 general assembly that the task force include representatives of 31 the department of revenue; a commercial enterprise that claims 32 an exemption for computers under section 423.3, subsection 33 47; an association that represents manufacturers and other 34 industrial producers; and an association that represents 35 -9- LSB 2786HV (2) 88 jm/jh 9/ 31

H.F. 779 business tax issues. The director of revenue or the director’s 1 designee shall serve as chairperson of the task force. 2 The task force shall be charged with reviewing the 3 definition of “computer” as used throughout the portions of the 4 Iowa Code and the Iowa Administrative Code administered by the 5 department of revenue including the exemption for computers 6 provided in section 423.3, subsection 47, paragraph “a”, 7 subparagraph (4). If the task force recommends modifications 8 to the current definition of “computer” including the exemption 9 for computers provided in section 423.3, subsection 47, 10 paragraph “a”, subparagraph (4), the department of revenue 11 shall provide any recommendations to the general assembly by 12 January 1, 2020. 13 Sec. 31. EFFECTIVE DATE. The following, being deemed of 14 immediate importance, take effect upon enactment: 15 The section of this division of this Act amending section 16 423.3, subsection 47, paragraph “c”, subparagraph (3). 17 Sec. 32. RETROACTIVE APPLICABILITY. The following applies 18 retroactively to January 1, 2016, for tax years beginning on 19 or after that date: 20 The section of this division of this Act amending section 21 423.3, subsection 47, paragraph “c”, subparagraph (3). 22 DIVISION IV 23 AUTOMOBILE RENTAL EXCISE TAX 24 Sec. 33. Section 423.14A, subsection 1, paragraph b, 25 subparagraph (3), Code 2019, is amended to read as follows: 26 (3) A “rental platform” , as defined in section 423C.2 , that 27 meets the requirements described in person who is not required 28 to collect and remit automobile rental excise tax pursuant to 29 section 423C.3, subsection 3 , paragraph “c” , subparagraph (2), 30 shall not be considered a “marketplace facilitator” with respect 31 to any sale of a transportation service under section 423.2, 32 subsection 6 , paragraph “bf” , or section 423.5, subsection 1 , 33 paragraph “e” , consisting of the rental of vehicles subject 34 to registration which are registered for a gross weight of 35 -10- LSB 2786HV (2) 88 jm/jh 10/ 31

H.F. 779 thirteen tons or less for a period of sixty days or less. 1 Sec. 34. Section 423C.2, subsection 3, paragraphs a and b, 2 Code 2019, are amended to read as follows: 3 a. A person or any affiliate of a person that owns or 4 controls an automobile and makes the automobile available for 5 rent through the person or any affiliate, or through a rental 6 platform or rental facilitator any other person required to 7 collect sales or use tax under chapter 423 . 8 b. A person or any affiliate of a person who possesses or 9 acquires a right or interest in any automobile with an intent 10 to rent the automobile to another person , or through the person 11 or any affiliate, or through a rental platform or a rental 12 facilitator any other person required to collect sales or use 13 tax under chapter 423 . 14 Sec. 35. Section 423C.2, subsection 6, Code 2019, is amended 15 to read as follows: 16 6. “Facilitation fee” means any consideration, by whatever 17 name called, that a rental facilitator or a rental platform 18 person charges to a user for facilitating the user’s rental 19 of an automobile. “Facilitation fee” does not include any 20 commission an automobile provider pays to a rental facilitator 21 or a rental platform person for facilitating the rental of an 22 automobile. 23 Sec. 36. Section 423C.2, Code 2019, is amended by adding the 24 following new subsection: 25 NEW SUBSECTION . 6A. “Host” means the registered owner of an 26 automobile made available for sharing through a peer-to-peer 27 automobile sharing marketplace. 28 Sec. 37. Section 423C.2, subsections 9 and 10, Code 2019, 29 are amended by striking the subsections. 30 Sec. 38. Section 423C.2, subsection 11, Code 2019, is 31 amended to read as follows: 32 11. “Rental price” means all consideration charged for 33 the renting and facilitation of renting of an automobile 34 before taxes, including but not limited to facilitation fees, 35 -11- LSB 2786HV (2) 88 jm/jh 11/ 31

H.F. 779 reservation fees, services fees, nonrefundable deposits, and 1 any other direct or indirect charge made or consideration 2 provided in connection with the renting or facilitation of 3 renting of an automobile the same as “sales price” as defined 4 in section 423.1, which term includes but is not limited 5 to facilitation fees, reservation fees, services fees, 6 nonrefundable deposits, and any other direct or indirect charge 7 made or consideration provided in connection with the renting 8 or facilitation of renting an automobile . 9 Sec. 39. Section 423C.3, Code 2019, is amended to read as 10 follows: 11 423C.3 Tax on rental of automobiles —— collection and 12 remittance of tax. 13 1. For purposes of this section : 14 a. “Discount rental charge” means the amount an automobile 15 provider charges to a rental facilitator for the rental of an 16 automobile, excluding any applicable tax. 17 b. “Travel package” means an automobile rental bundled 18 with one or more separate components such as lodging, air 19 transportation, or similar items and charged for a single 20 retail price. 21 2. 1. A tax of five percent is imposed upon the rental 22 price of an automobile if the rental transaction is subject to 23 the sales and services tax under chapter 423, subchapter II , or 24 the use tax under chapter 423, subchapter III . The tax shall 25 not be imposed on any rental transaction not taxable under the 26 state sales and services tax, as provided in section 423.3 , or 27 the state use tax, as provided in section 423.6 , on automobile 28 rental receipts. 29 3. 2. This subsection shall govern the collection and 30 remittance of the tax imposed under subsection 2 The tax 31 imposed under subsection 1 shall be collected and remitted to 32 the department by all persons required to collect state sales 33 and use tax on the rental transaction under chapter 423 . 34 a. Unless otherwise provided in this subsection , the 35 -12- LSB 2786HV (2) 88 jm/jh 12/ 31

H.F. 779 automobile provider shall collect the tax by adding the tax to 1 the rental price of the automobile and the tax, when collected, 2 shall be stated as a distinct item separate and apart from 3 the rental price of the automobile and the sales and services 4 tax imposed under chapter 423, subchapter II , or the use tax 5 imposed under chapter 423, subchapter III . 6 b. If a transaction for the rental of an automobile involves 7 a rental facilitator, all of the following shall occur in the 8 order prescribed: 9 (1) The rental facilitator shall collect the tax on any 10 rental price that the user pays to the rental facilitator in 11 the same manner as an automobile provider under paragraph “a” . 12 (2) (a) Unless otherwise required by rule or order of 13 the department, the rental facilitator shall remit to the 14 automobile provider that portion of the tax collected on the 15 rental price that represents the discount rental charge. 16 (b) No assessment shall be made against a rental facilitator 17 for tax due on a discount rental charge if the rental 18 facilitator collected the tax and remitted it to an automobile 19 provider that has a valid tax permit required under this 20 chapter or under chapter 423 . This subparagraph division shall 21 not apply if the rental facilitator and automobile provider 22 are affiliates, or if the department requires the rental 23 facilitator to remit taxes collected on that portion of the 24 sales price that represents the discount rental charge directly 25 to the department. 26 (3) The rental facilitator shall remit any remaining tax it 27 collected to the department. 28 (4) (a) The automobile provider shall collect and remit 29 to the department any taxes the rental facilitator remitted to 30 the automobile provider, and shall collect and remit to the 31 department any taxes due on any amount of rental price the user 32 paid to the automobile provider. 33 (b) No assessment shall be made against an automobile 34 provider for any tax due on a discount rental charge that 35 -13- LSB 2786HV (2) 88 jm/jh 13/ 31

H.F. 779 was not remitted to the automobile provider by a rental 1 facilitator. This subparagraph division shall not apply if the 2 automobile provider and the rental facilitator are affiliates. 3 (5) Notwithstanding any other provision of this paragraph 4 to the contrary, if a rental facilitator and its affiliates 5 facilitate total rentals under this chapter and chapter 6 423A that are equal to or less than an aggregate amount of 7 rental price and sales price of ten thousand dollars for an 8 immediately preceding calendar year or a current calendar year, 9 or in ten or fewer separate transactions for an immediately 10 preceding calendar year or a current calendar year, the 11 rental facilitator shall not be required to collect tax on the 12 amount of sales price that represents the rental facilitator’s 13 facilitation fee. 14 c. (1) If a transaction for the rental of an automobile 15 involves a rental platform, other than a rental platform 16 described in subparagraph (2), the rental platform shall 17 collect and remit the tax imposed under this chapter in the 18 same manner as an automobile provider under paragraph “a” . 19 (2) 3. A rental platform person is not required to collect 20 and remit the tax imposed under this chapter in the same manner 21 as an automobile provider under paragraph “a” if the rental 22 platform person meets all of the following requirements: 23 a. The person or any affiliate of the person is not an 24 automobile provider. 25 b. The person or any affiliate of the person facilitates 26 the renting or sharing of an automobile by doing all of the 27 following: 28 (1) The person owns, operates, or controls a peer-to-peer 29 automobile sharing marketplace that allows a host or an 30 automobile provider who is not an affiliate of the person 31 to offer or list an automobile for sharing or rent on the 32 marketplace. For purposes of this paragraph, it is immaterial 33 whether or not the automobile provider has a tax permit under 34 this chapter or chapter 423 or whether the automobile is owned 35 -14- LSB 2786HV (2) 88 jm/jh 14/ 31

H.F. 779 by a natural person or by a business entity. 1 (2) The person or affiliate of the person collects or 2 processes the rental price charged to the user. 3 (a) c. The only sales the rental platform person and 4 its affiliates of the person facilitate that are subject to 5 tax under chapter 423 are sales of a transportation service 6 under section 423.2, subsection 6 , paragraph “bf” , or section 7 423.5, subsection 1 , paragraph “e” , consisting of the rental 8 of vehicles subject to registration which are registered for 9 a gross weight of thirteen tons or less for a period of sixty 10 days or less. 11 (b) The rental platform operates a peer-to-peer automobile 12 sharing marketplace. 13 (3) 4. For any rental transaction for which the rental 14 platform a person is required to or elects to collect and 15 remit the tax under this chapter , the rental platform person 16 shall also be liable for the collection and remittance of any 17 sales or use tax due on that transaction under section 423.2, 18 subsection 6 , paragraph “bf” , or section 423.5, subsection 19 1 , paragraph “e” , notwithstanding any other provision to the 20 contrary in chapter 423 . 21 (4) 5. For any rental transaction for which the rental 22 platform person is not required to collect and remit the 23 tax under this chapter as provided under subparagraph (2) 24 subsection 3 , the automobile provider shall be solely liable 25 for any amount of uncollected or unremitted tax under this 26 chapter and chapter 423 . 27 DIVISION V 28 TELEPHONE COMPANY PROPERTY 29 Sec. 40. Section 476.1D, Code 2019, is amended by adding the 30 following new subsection: 31 NEW SUBSECTION . 10. a. The board, at the request of a 32 long distance telephone company, shall classify such company 33 as a competitive long distance telephone company if more 34 than half of the company’s revenues from its Iowa intrastate 35 -15- LSB 2786HV (2) 88 jm/jh 15/ 31

H.F. 779 telecommunications services and facilities are received 1 from services and facilities that the board has determined 2 to be subject to effective competition, or if more than 3 half of the company’s revenues from its Iowa intrastate 4 telecommunications services and facilities are received from 5 intralata interexchange services and facilities. For purposes 6 of this subsection, “intralata interexchange services” means 7 those interexchange services that originate and terminate 8 within the same local access transport area. 9 b. The board shall promptly notify the director of revenue 10 that a long distance telephone company has been classified 11 as a competitive long distance telephone company. Upon such 12 notification by the board, the director of revenue shall assess 13 the property of such competitive long distance telephone 14 company, which property is first assessed for taxation in this 15 state on or after January 1, 1996, in the same manner as all 16 other property assessed as commercial property by the local 17 assessor under chapters 427, 427A, 427B, 428, and 441. As used 18 in this section, “long distance telephone company” means an 19 entity that provides telephone service and facilities between 20 local exchanges, but does not include a cellular service 21 provider or a local exchange utility holding a certificate 22 issued under section 476.29, subsection 12. 23 Sec. 41. Section 476.1D, subsection 10, as enacted in this 24 division of this Act, is amended by striking the subsection. 25 Sec. 42. EFFECTIVE DATE. The following, being deemed of 26 immediate importance, takes effect upon enactment: 27 The section of this division of this Act enacting section 28 476.1D, subsection 10. 29 Sec. 43. RETROACTIVE APPLICABILITY. The following applies 30 retroactively to July 1, 2018, for assessment years beginning 31 on or after that date: 32 The section of this division of this Act enacting section 33 476.1D, subsection 10. 34 Sec. 44. EFFECTIVE DATE. The following takes effect July 35 -16- LSB 2786HV (2) 88 jm/jh 16/ 31

H.F. 779 1, 2021: 1 The section of this division of this Act striking section 2 476.1D, subsection 10. 3 Sec. 45. APPLICABILITY. The following applies to 4 assessment years beginning on or after January 1, 2022: 5 The section of this division of this Act striking section 6 476.1D, subsection 10. 7 DIVISION VI 8 TARGETED JOBS WITHHOLDING CREDIT 9 Sec. 46. Section 403.19A, subsection 3, paragraph c, 10 subparagraph (2), Code 2019, is amended to read as follows: 11 (2) The pilot project city and the economic development 12 authority shall not enter into a withholding agreement after 13 June 30, 2019 2020 . 14 DIVISION VII 15 SCHOOL TUITION ORGANIZATION TAX CREDITS 16 Sec. 47. Section 422.11S, subsection 8, paragraph a, 17 subparagraph (2), Code 2019, is amended to read as follows: 18 (2) “Total approved tax credits” means for the tax year 19 beginning in the 2006 calendar year, two million five hundred 20 thousand dollars, for the tax year beginning in the 2007 21 calendar year, five million dollars, for tax years beginning 22 on or after January 1, 2008, but before January 1, 2012, seven 23 million five hundred thousand dollars, for tax years beginning 24 on or after January 1, 2012, but before January 1, 2014, eight 25 million seven hundred fifty thousand dollars, and for tax years 26 beginning on or after January 1, 2014, but before January 1, 27 2019, twelve million dollars, and for tax years beginning on 28 or after January 1, 2019, but before January 1, 2020, thirteen 29 million dollars , and for tax years beginning on or after 30 January 1, 2020, fourteen million dollars . 31 Sec. 48. CONTINGENT CODE EDITOR DIRECTIVE. The Code editor 32 is directed to harmonize the section of this division of this 33 Act amending section 422.11S with the other division of this 34 Act amending section 422.11S, if enacted, by changing tax year 35 -17- LSB 2786HV (2) 88 jm/jh 17/ 31

H.F. 779 to calendar year where appropriate and to make other related 1 changes, if necessary, to effectuate such changes. 2 DIVISION VIII 3 INCOME TAX CHECKOFFS 4 Sec. 49. Section 173.22, subsection 2, Code 2019, is amended 5 to read as follows: 6 2. A foundation fund is created within the state treasury 7 composed of moneys appropriated or available to and obtained or 8 accepted by the foundation. The foundation fund shall include 9 moneys credited to the fund as provided in section 422.12D 10 422.12I . 11 Sec. 50. Section 422.12E, Code 2019, is amended to read as 12 follows: 13 422.12E Income tax return checkoffs limited. 14 1. For tax years beginning on or after January 1, 2019, 15 there There shall be allowed no more than four income tax 16 return checkoffs on each income tax return. For tax years 17 beginning on or after January 1, 2017, when the same four 18 income tax return checkoffs have been provided on the income 19 tax return for two consecutive tax years, the two checkoffs for 20 which the least amount has been contributed, in the aggregate 21 for the first tax year and through March 15 after the end of the 22 second tax year, are repealed on December 31 after the end of 23 the second tax year and shall be removed from the return form . 24 2. If more checkoffs are enacted in the same session of 25 the general assembly than there is space for inclusion on the 26 individual tax return form, the checkoffs with the earliest 27 enacted checkoffs date of enactment as determined pursuant 28 to section 3.7 for which there is space for inclusion on the 29 return form shall be included on the return form, and all other 30 checkoffs enacted during that session of the general assembly 31 are repealed on December 31 of the year of enactment . If 32 more checkoffs are enacted in the same session of the general 33 assembly than there is space for inclusion on the individual 34 income tax form and the additional checkoffs are enacted on 35 -18- LSB 2786HV (2) 88 jm/jh 18/ 31