Senate File 631 - Introduced SENATE FILE 631 BY COMMITTEE ON WAYS AND MEANS (SUCCESSOR TO SSB 1249) 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, franchise alternative minimum taxes, moneys 5 and credits taxes, sales and use taxes, and automobile 6 rental excise taxes, the assessment of property owned by 7 certain long distance telephone companies, establishing 8 a taxation and exemption of computers task force, and 9 providing for other properly related matters, making 10 penalties applicable, and including effective date and 11 retroactive applicability provisions. 12 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 13 TLSB 2746SV (3) 88 jm/jh

S.F. 631 DIVISION I 1 INCOME AND FRANCHISE 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 2746SV (3) 88 jm/jh 1/ 47

S.F. 631 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 2746SV (3) 88 jm/jh 2/ 47

S.F. 631 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 2746SV (3) 88 jm/jh 3/ 47

S.F. 631 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 2746SV (3) 88 jm/jh 4/ 47

S.F. 631 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 2746SV (3) 88 jm/jh 5/ 47

S.F. 631 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 2746SV (3) 88 jm/jh 6/ 47

S.F. 631 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 2746SV (3) 88 jm/jh 7/ 47

S.F. 631 (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 2746SV (3) 88 jm/jh 8/ 47

S.F. 631 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 2746SV (3) 88 jm/jh 9/ 47

S.F. 631 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. REFUNDS. Refunds of taxes, interest, or penalties 14 that arise from claims resulting from the enactment of section 15 423.3, subsection 16A, for sales occurring between January 16 1, 2004, and the effective date of the enactment of section 17 423.3, subsection 16A, shall be limited to twenty-five thousand 18 dollars in the aggregate and shall not be allowed unless refund 19 claims are filed prior to October 1, 2019, notwithstanding any 20 other law to the contrary. If the amount of claims totals 21 more than twenty-five thousand dollars in the aggregate, the 22 department of revenue shall prorate the twenty-five thousand 23 dollars among all claimants in relation to the amounts of the 24 claimants’ valid claims. 25 Sec. 32. EFFECTIVE DATE. The following, being deemed of 26 immediate importance, take effect upon enactment: 27 1. The section of this division of this Act enacting section 28 423.3, subsection 16A. 29 2. The section of this division of this Act amending section 30 423.3, subsection 47, paragraph “c”, subparagraph (3). 31 3. The section of this division of this Act relating to 32 refunds that arise from claims resulting from the enactment of 33 section 423.3, subsection 16A. 34 Sec. 33. RETROACTIVE APPLICABILITY. The following applies 35 -10- LSB 2746SV (3) 88 jm/jh 10/ 47

S.F. 631 retroactively to January 1, 2016, for tax years beginning on 1 or after that date: 2 The section of this division of this Act amending section 3 423.3, subsection 47, paragraph “c”, subparagraph (3). 4 Sec. 34. RETROACTIVE APPLICABILITY. The following applies 5 retroactively to tax years beginning on or after January 1, 6 2004: 7 The section of this division of this Act enacting section 8 423.3, subsection 16A. 9 DIVISION IV 10 AUTOMOBILE RENTAL EXCISE TAX 11 Sec. 35. Section 423.14A, subsection 1, paragraph b, 12 subparagraph (3), Code 2019, is amended to read as follows: 13 (3) A “rental platform” , as defined in section 423C.2 , that 14 meets the requirements described in person who is not required 15 to collect and remit automobile rental excise tax pursuant to 16 section 423C.3, subsection 3 , paragraph “c” , subparagraph (2), 17 shall not be considered a “marketplace facilitator” with respect 18 to any sale of a transportation service under section 423.2, 19 subsection 6 , paragraph “bf” , or section 423.5, subsection 1 , 20 paragraph “e” , consisting of the rental of vehicles subject 21 to registration which are registered for a gross weight of 22 thirteen tons or less for a period of sixty days or less. 23 Sec. 36. Section 423C.2, subsection 3, paragraphs a and b, 24 Code 2019, are amended to read as follows: 25 a. A person or any affiliate of a person that owns or 26 controls an automobile and makes the automobile available for 27 rent through the person or any affiliate, or through a rental 28 platform or rental facilitator any other person required to 29 collect sales or use tax under chapter 423 . 30 b. A person or any affiliate of a person who possesses or 31 acquires a right or interest in any automobile with an intent 32 to rent the automobile to another person , or through the person 33 or any affiliate, or through a rental platform or a rental 34 facilitator any other person required to collect sales or use 35 -11- LSB 2746SV (3) 88 jm/jh 11/ 47

S.F. 631 tax under chapter 423 . 1 Sec. 37. Section 423C.2, subsection 6, Code 2019, is amended 2 to read as follows: 3 6. “Facilitation fee” means any consideration, by whatever 4 name called, that a rental facilitator or a rental platform 5 person charges to a user for facilitating the user’s rental 6 of an automobile. “Facilitation fee” does not include any 7 commission an automobile provider pays to a rental facilitator 8 or a rental platform person for facilitating the rental of an 9 automobile. 10 Sec. 38. Section 423C.2, subsections 9 and 10, Code 2019, 11 are amended by striking the subsections. 12 Sec. 39. Section 423C.2, subsection 11, Code 2019, is 13 amended to read as follows: 14 11. “Rental price” means all consideration charged for 15 the renting and facilitation of renting of an automobile 16 before taxes, including but not limited to facilitation fees, 17 reservation fees, services fees, nonrefundable deposits, and 18 any other direct or indirect charge made or consideration 19 provided in connection with the renting or facilitation of 20 renting of an automobile the same as “sales price” as defined 21 in section 423.1, which term includes but is not limited 22 to facilitation fees, reservation fees, services fees, 23 nonrefundable deposits, and any other direct or indirect charge 24 made or consideration provided in connection with the renting 25 or facilitation of renting an automobile . 26 Sec. 40. Section 423C.3, Code 2019, is amended to read as 27 follows: 28 423C.3 Tax on rental of automobiles —— collection and 29 remittance of tax. 30 1. For purposes of this section : 31 a. “Discount rental charge” means the amount an automobile 32 provider charges to a rental facilitator for the rental of an 33 automobile, excluding any applicable tax. 34 b. “Travel package” means an automobile rental bundled 35 -12- LSB 2746SV (3) 88 jm/jh 12/ 47

S.F. 631 with one or more separate components such as lodging, air 1 transportation, or similar items and charged for a single 2 retail price. 3 2. 1. A tax of five percent is imposed upon the rental 4 price of an automobile if the rental transaction is subject to 5 the sales and services tax under chapter 423, subchapter II , or 6 the use tax under chapter 423, subchapter III . The tax shall 7 not be imposed on any rental transaction not taxable under the 8 state sales and services tax, as provided in section 423.3 , or 9 the state use tax, as provided in section 423.6 , on automobile 10 rental receipts. 11 3. 2. This subsection shall govern the collection and 12 remittance of the tax imposed under subsection 2 The tax 13 imposed under subsection 1 shall be collected and remitted to 14 the department by all persons required to collect state sales 15 and use tax on the rental transaction under chapter 423 . 16 a. Unless otherwise provided in this subsection , the 17 automobile provider shall collect the tax by adding the tax to 18 the rental price of the automobile and the tax, when collected, 19 shall be stated as a distinct item separate and apart from 20 the rental price of the automobile and the sales and services 21 tax imposed under chapter 423, subchapter II , or the use tax 22 imposed under chapter 423, subchapter III . 23 b. If a transaction for the rental of an automobile involves 24 a rental facilitator, all of the following shall occur in the 25 order prescribed: 26 (1) The rental facilitator shall collect the tax on any 27 rental price that the user pays to the rental facilitator in 28 the same manner as an automobile provider under paragraph “a” . 29 (2) (a) Unless otherwise required by rule or order of 30 the department, the rental facilitator shall remit to the 31 automobile provider that portion of the tax collected on the 32 rental price that represents the discount rental charge. 33 (b) No assessment shall be made against a rental facilitator 34 for tax due on a discount rental charge if the rental 35 -13- LSB 2746SV (3) 88 jm/jh 13/ 47

S.F. 631 facilitator collected the tax and remitted it to an automobile 1 provider that has a valid tax permit required under this 2 chapter or under chapter 423 . This subparagraph division shall 3 not apply if the rental facilitator and automobile provider 4 are affiliates, or if the department requires the rental 5 facilitator to remit taxes collected on that portion of the 6 sales price that represents the discount rental charge directly 7 to the department. 8 (3) The rental facilitator shall remit any remaining tax it 9 collected to the department. 10 (4) (a) The automobile provider shall collect and remit 11 to the department any taxes the rental facilitator remitted to 12 the automobile provider, and shall collect and remit to the 13 department any taxes due on any amount of rental price the user 14 paid to the automobile provider. 15 (b) No assessment shall be made against an automobile 16 provider for any tax due on a discount rental charge that 17 was not remitted to the automobile provider by a rental 18 facilitator. This subparagraph division shall not apply if the 19 automobile provider and the rental facilitator are affiliates. 20 (5) Notwithstanding any other provision of this paragraph 21 to the contrary, if a rental facilitator and its affiliates 22 facilitate total rentals under this chapter and chapter 23 423A that are equal to or less than an aggregate amount of 24 rental price and sales price of ten thousand dollars for an 25 immediately preceding calendar year or a current calendar year, 26 or in ten or fewer separate transactions for an immediately 27 preceding calendar year or a current calendar year, the 28 rental facilitator shall not be required to collect tax on the 29 amount of sales price that represents the rental facilitator’s 30 facilitation fee. 31 c. (1) If a transaction for the rental of an automobile 32 involves a rental platform, other than a rental platform 33 described in subparagraph (2), the rental platform shall 34 collect and remit the tax imposed under this chapter in the 35 -14- LSB 2746SV (3) 88 jm/jh 14/ 47

S.F. 631 same manner as an automobile provider under paragraph “a” . 1 (2) 3. A rental platform person is not required to collect 2 and remit the tax imposed under this chapter in the same manner 3 as an automobile provider under paragraph “a” if the rental 4 platform person meets all of the following requirements: 5 a. The person or any affiliate of the person is not an 6 automobile provider. 7 b. The person or any affiliate of the person facilitates the 8 renting of an automobile by doing all of the following: 9 (1) The person owns, operates, or controls an automobile 10 rental marketplace that allows an automobile provider who is 11 not an affiliate of the person to offer or list an automobile 12 for rent on the marketplace. For purposes of this paragraph, 13 it is immaterial whether or not the automobile provider has 14 a tax permit under this chapter or chapter 423 or whether 15 the automobile is owned by a natural person or by a business 16 entity. 17 (2) The person or affiliate of the person collects or 18 processes the rental price charged to the user. 19 (a) c. The only sales the rental platform person and 20 its affiliates of the person facilitate that are subject to 21 tax under chapter 423 are sales of a transportation service 22 under section 423.2, subsection 6 , paragraph “bf” , or section 23 423.5, subsection 1 , paragraph “e” , consisting of the rental 24 of vehicles subject to registration which are registered for 25 a gross weight of thirteen tons or less for a period of sixty 26 days or less. 27 (b) d. The rental platform person operates a peer-to-peer 28 automobile sharing marketplace. 29 (3) 4. For any rental transaction for which the rental 30 platform a person is required to or elects to collect and 31 remit the tax under this chapter , the rental platform person 32 shall also be liable for the collection and remittance of any 33 sales or use tax due on that transaction under section 423.2, 34 subsection 6 , paragraph “bf” , or section 423.5, subsection 35 -15- LSB 2746SV (3) 88 jm/jh 15/ 47

S.F. 631 1 , paragraph “e” , notwithstanding any other provision to the 1 contrary in chapter 423 . 2 (4) 5. For any rental transaction for which the rental 3 platform person is not required to collect and remit the 4 tax under this chapter as provided under subparagraph (2) 5 subsection 3 , the automobile provider shall be solely liable 6 for any amount of uncollected or unremitted tax under this 7 chapter and chapter 423 . 8 DIVISION V 9 TELEPHONE COMPANY PROPERTY 10 Sec. 41. Section 476.1D, Code 2019, is amended by adding the 11 following new subsection: 12 NEW SUBSECTION . 10. a. The board, at the request of a 13 long distance telephone company, shall classify such company 14 as a competitive long distance telephone company if more 15 than half of the company’s revenues from its Iowa intrastate 16 telecommunications services and facilities are received 17 from services and facilities that the board has determined 18 to be subject to effective competition, or if more than 19 half of the company’s revenues from its Iowa intrastate 20 telecommunications services and facilities are received from 21 intralata interexchange services and facilities. For purposes 22 of this subsection, “intralata interexchange services” means 23 those interexchange services that originate and terminate 24 within the same local access transport area. 25 b. The board shall promptly notify the director of revenue 26 that a long distance telephone company has been classified 27 as a competitive long distance telephone company. Upon such 28 notification by the board, the director of revenue shall assess 29 the property of such competitive long distance telephone 30 company, which property is first assessed for taxation in this 31 state on or after January 1, 1996, in the same manner as all 32 other property assessed as commercial property by the local 33 assessor under chapters 427, 427A, 427B, 428, and 441. As used 34 in this section, “long distance telephone company” means an 35 -16- LSB 2746SV (3) 88 jm/jh 16/ 47

S.F. 631 entity that provides telephone service and facilities between 1 local exchanges, but does not include a cellular service 2 provider or a local exchange utility holding a certificate 3 issued under section 476.29, subsection 12. 4 Sec. 42. Section 476.1D, subsection 10, as enacted in this 5 division of this Act, is amended by striking the subsection. 6 Sec. 43. EFFECTIVE DATE. The following, being deemed of 7 immediate importance, takes effect upon enactment: 8 The section of this division of this Act enacting section 9 476.1D, subsection 10. 10 Sec. 44. RETROACTIVE APPLICABILITY. The following applies 11 retroactively to July 1, 2018, for assessment years beginning 12 on or after that date: 13 The section of this division of this Act enacting section 14 476.1D, subsection 10. 15 Sec. 45. EFFECTIVE DATE. The following takes effect July 16 1, 2021: 17 The section of this division of this Act striking section 18 476.1D, subsection 10. 19 Sec. 46. APPLICABILITY. The following applies to 20 assessment years beginning on or after January 1, 2022: 21 The section of this division of this Act striking section 22 476.1D, subsection 10. 23 DIVISION VI 24 CHILD AND DEPENDENT CARE CREDIT AND EARLY CHILDHOOD DEVELOPMENT 25 CREDIT 26 Sec. 47. Section 422.12C, subsection 1, Code 2019, is 27 amended to read as follows: 28 1. The taxes imposed under this division , less the amounts 29 of nonrefundable credits allowed under this division , shall 30 be reduced by a child and dependent care credit equal to the 31 following percentages of the federal child and dependent care 32 credit provided in section 21 of the Internal Revenue Code, 33 without regard to whether or not the federal credit was limited 34 by the taxpayer’s federal tax liability: 35 -17- LSB 2746SV (3) 88 jm/jh 17/ 47

S.F. 631 a. For a taxpayer with net income of less than ten twelve 1 thousand seven hundred fifty dollars, seventy-five percent. 2 b. For a taxpayer with net income of ten twelve thousand 3 seven hundred fifty dollars or more but less than twenty 4 twenty-five thousand four hundred ninety dollars, sixty-five 5 percent. 6 c. For a taxpayer with net income of twenty twenty-five 7 thousand four hundred ninety dollars or more but less than 8 twenty-five thirty-one thousand eight hundred sixty dollars, 9 fifty-five percent. 10 d. For a taxpayer with net income of twenty-five thirty-one 11 thousand eight hundred sixty dollars or more but less than 12 thirty-five forty-four thousand six hundred ten dollars, fifty 13 percent. 14 e. For a taxpayer with net income of thirty-five forty-four 15 thousand six hundred ten dollars or more but less than forty 16 fifty thousand nine hundred eighty dollars, forty percent. 17 f. For a taxpayer with net income of forty fifty thousand 18 nine hundred eighty dollars or more but less than forty-five 19 fifty-seven thousand three hundred sixty dollars, thirty 20 percent. 21 g. For a taxpayer with net income of forty-five fifty-seven 22 thousand three hundred sixty dollars or more, zero percent. 23 Sec. 48. Section 422.12C, subsection 2, paragraph a, Code 24 2019, is amended to read as follows: 25 a. The taxes imposed under this division , less the amounts 26 of nonrefundable credits allowed under this division , may be 27 reduced by an early childhood development tax credit equal to 28 twenty-five percent of the first one thousand dollars which 29 the taxpayer has paid to others for each dependent, as defined 30 in the Internal Revenue Code, ages three through five for 31 early childhood development expenses. In determining the 32 amount of early childhood development expenses for the tax year 33 beginning in the 2006 calendar year only, such expenses paid 34 during November and December of the previous tax year shall 35 -18- LSB 2746SV (3) 88 jm/jh 18/ 47