House Study Bill 552 - Introduced SENATE/HOUSE FILE _____ BY (PROPOSED DEPARTMENT OF REVENUE BILL) A BILL FOR An Act relating to sales, use, and motor vehicle fuel taxes 1 administered by the department of revenue including 2 distributions to local governments and school districts, the 3 liability of sellers, tax refund and tax credit incentives, 4 and motor fuel tax reporting and terminology modifications, 5 and providing penalties, and including effective date and 6 applicability provisions. 7 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 8 TLSB 5284XD (6) 89 jm/jh

S.F. _____ H.F. _____ DIVISION I 1 SALES, USE, AND EXCISE TAX —— RETURNS DUE 2 Section 1. Section 9C.3, subsection 3, Code 2022, is amended 3 to read as follows: 4 3. The application shall state whether or not the applicant 5 has an Iowa retailers sales or use tax permit and if the 6 applicant has such permit, shall state the number of such 7 permit. 8 Sec. 2. Section 9C.5, Code 2022, is amended to read as 9 follows: 10 9C.5 Issuance of license. 11 Upon receiving an application for a transient merchant’s 12 license, the secretary of state shall investigate or cause to 13 be investigated, the reputation and character of the applicant. 14 If, upon making such investigation, the secretary of state is 15 satisfied that the statements and representations contained in 16 the application are true, and that the applicant is of good 17 reputation and character, and the holder of an Iowa retailer’s 18 sales or use tax permit, and if a foreign corporation, has 19 authority to do business in the state of Iowa, the secretary 20 shall issue to the applicant a license as a transient merchant 21 upon payment of the fee as herein prescribed for the period of 22 time requested in said application and for use at the location 23 and place where it is stated in said application the sale will 24 be held or the business conducted, both of which shall be set 25 out in said license. Such license shall be valid only for the 26 period of time and at the location and place described therein. 27 Sec. 3. Section 99G.30A, subsection 2, paragraph c, Code 28 2022, is amended to read as follows: 29 c. Frequency of deposits and quarterly monthly reports of 30 the monitor vending machine excise tax with the department of 31 revenue are governed by the tax provisions in section 423.31 . 32 Monitor vending machine excise tax collections shall not be 33 included in computation of the total tax to determine frequency 34 of filing under section 423.31 . 35 -1- LSB 5284XD (6) 89 jm/jh 1/ 47

S.F. _____ H.F. _____ Sec. 4. Section 321.105A, subsection 4, paragraph b, Code 1 2022, is amended to read as follows: 2 b. Section 422.25, subsection 4 , sections 422.30 , 422.67 , 3 and 422.68 , section 422.69, subsection 1 , sections 422.70 , 4 422.71 , 422.72 , 422.74 , and 422.75 , section 423.14, subsection 5 2 , and sections 423.23 , 423.24 , 423.25 , 423.32 , 423.33 , 423.35 , 6 423.37 through 423.42 , 423.45 , and 423.47 , consistent with the 7 provisions of this section , apply with respect to the fees 8 for new registration authorized under this section in the 9 same manner and with the same effect as if the fees for new 10 registration were retail use taxes within the meaning of those 11 statutes. 12 Sec. 5. Section 421.26, Code 2022, is amended to read as 13 follows: 14 421.26 Personal liability for tax due. 15 If a licensee or other person under section 452A.65 , a 16 retailer or purchaser under chapter 423A , 423B , 423C , 423D , 17 or 423E , or section 423.14 , 423.14A , 423.29 , 423.31 , 423.32 , 18 or 423.33 , or a user under section 423.34 , or a permit holder 19 or licensee under section 453A.13 , 453A.16 , or 453A.44 fails 20 to pay a tax under those sections when due, an officer of a 21 corporation or association, notwithstanding section 489.304 , 22 a member or manager of a limited liability company, or a 23 partner of a partnership, having control or supervision of 24 or the authority for remitting the tax payments and having 25 a substantial legal or equitable interest in the ownership 26 of the corporation, association, limited liability company, 27 or partnership, who has intentionally failed to pay the tax 28 is personally liable for the payment of the tax, interest, 29 and penalty due and unpaid. However, this section shall 30 not apply to taxes on accounts receivable. The dissolution 31 of a corporation, association, limited liability company, 32 or partnership shall not discharge a person’s liability for 33 failure to remit the tax due. 34 Sec. 6. Section 423.2, subsection 1, paragraph b, Code 2022, 35 -2- LSB 5284XD (6) 89 jm/jh 2/ 47

S.F. _____ H.F. _____ is amended to read as follows: 1 b. Sales of building materials, supplies, and equipment 2 to owners, contractors, subcontractors, or builders for the 3 erection of buildings or the alteration, repair, or improvement 4 of real property are retail sales of tangible personal property 5 in whatever quantity sold. Where the owner, contractor, 6 subcontractor, or builder is also a retailer holding a retail 7 sales or use tax permit and transacting retail sales of 8 building materials, supplies, and equipment, the person shall 9 purchase such items of tangible personal property without 10 liability for the tax if such property will be subject to the 11 tax at the time of resale or at the time it is withdrawn from 12 inventory for construction purposes. The sales tax shall be 13 due in the reporting period when the materials, supplies, 14 and equipment are withdrawn from inventory for construction 15 purposes or when sold at retail. The tax shall not be due when 16 materials are withdrawn from inventory for use in construction 17 outside of Iowa and the tax shall not apply to tangible 18 personal property purchased and consumed by the manufacturer as 19 building materials in the performance by the manufacturer or 20 its subcontractor of construction outside of Iowa. The sale 21 of carpeting is not a sale of building materials. The sale of 22 carpeting to owners, contractors, subcontractors, or builders 23 shall be treated as the sale of ordinary tangible personal 24 property and subject to the tax imposed under this subsection 25 and the use tax. 26 Sec. 7. Section 423.3, subsection 39, paragraph a, 27 subparagraph (2), Code 2022, is amended to read as follows: 28 (2) The sale of all or substantially all of the tangible 29 personal property, or specified digital products, or services 30 held or used by a seller in the course of the seller’s trade 31 or business for which the seller is required to hold a sales 32 or use tax permit when the seller sells or otherwise transfers 33 the trade or business to another person who shall engage in a 34 similar trade or business. 35 -3- LSB 5284XD (6) 89 jm/jh 3/ 47

S.F. _____ H.F. _____ Sec. 8. Section 423.3, subsection 80, paragraph d, Code 1 2022, is amended to read as follows: 2 d. Subject to the limitations in paragraph “c” , where the 3 owner, contractor, subcontractor, or builder is also a retailer 4 holding a retail sales or use tax permit and transacting 5 retail sales of building materials, supplies, and equipment, 6 the tax shall not be due when materials are withdrawn from 7 inventory for use in construction performed for a designated 8 exempt entity if an exemption certificate is received from such 9 entity. 10 Sec. 9. Section 423.5, subsection 2, Code 2022, is amended 11 to read as follows: 12 2. The excise tax is imposed upon every person using 13 the property within this state until the tax has been paid 14 directly to the county treasurer, the state department of 15 transportation, a retailer, or the department. This tax is 16 imposed on every person using the services or the product of 17 the services in this state until the user has paid the tax 18 either to an Iowa sales or use tax permit holder or to the 19 department. 20 Sec. 10. Section 423.14, subsection 2, paragraph b, Code 21 2022, is amended to read as follows: 22 b. The tax upon the use of all tangible personal property 23 and specified digital products other than that enumerated in 24 paragraph “a” , which is sold by a seller who is a retailer or 25 its agent that is not otherwise required to collect sales tax 26 under the provisions of this chapter , may be collected by the 27 retailer or agent and remitted to the department, pursuant to 28 the provisions of paragraph “e” , and sections 423.24 , 423.29 , 29 423.30 , 423.32 423.31 , and 423.33 . 30 Sec. 11. Section 423.14A, subsection 3, paragraph c, 31 subparagraph (2), Code 2022, is amended to read as follows: 32 (2) A marketplace facilitator shall collect sales and 33 use tax on the entire sales price or purchase price paid by 34 a purchaser on each Iowa sale subject to sales and use tax 35 -4- LSB 5284XD (6) 89 jm/jh 4/ 47

S.F. _____ H.F. _____ that is made or facilitated by the marketplace facilitator, 1 regardless of whether the marketplace seller for whom an Iowa 2 sale is made or facilitated has or is required to have a retail 3 sales or use tax permit or would have been required to collect 4 sales and use tax had the sale not been facilitated by the 5 marketplace facilitator, and regardless of the amount of the 6 sales price or purchase price that will ultimately accrue 7 to or benefit the marketplace facilitator, the marketplace 8 seller, or any other person. This sales and use tax collection 9 responsibility of a marketplace facilitator applies but shall 10 not be limited to sales facilitated through a computer software 11 application, commonly referred to as in-app purchases, or 12 through another specified digital product. 13 Sec. 12. Section 423.31, subsections 1, 3, 5, and 6, Code 14 2022, are amended to read as follows: 15 1. a. Each Except as provided in paragraph “b” , each person 16 subject to this section and section 423.36 and in accordance 17 with the provisions of this section and section 423.36 shall, 18 on or before the last day of the month following the close of 19 each calendar quarter month during which such person is or 20 has become or ceased being subject to the provisions of this 21 section and section 423.36 , make, sign, and file electronically 22 a return for the calendar quarter month in the form as may be 23 required. Returns shall show information relating to sales 24 prices including tangible personal property, specified digital 25 products, and services converted to the use of such person, 26 the amounts of sales prices excluded and exempt from the tax, 27 the amounts of sales prices subject to tax, a calculation of 28 tax due, and any other information for the period covered by 29 the return as may be required. Returns shall be signed by 30 the retailer or the retailer’s authorized agent and must be 31 certified by the retailer to be correct in accordance with 32 forms and rules prescribed by the director. A person required 33 to file a sales or use tax return who is unable to do so may 34 request permission from the director to file a return by 35 -5- LSB 5284XD (6) 89 jm/jh 5/ 47

S.F. _____ H.F. _____ another method. 1 b. Notwithstanding paragraph “a” , each person subject to 2 this section who collects and remits less than one thousand 3 two hundred dollars in sales or use tax to the department per 4 calendar year may file a return on or before the last day of the 5 month following the close of the calendar year. 6 3. The sales tax forms prescribed by the director shall be 7 referred to as “retailers tax deposit”. Deposit forms shall 8 be signed by the retailer or the retailer’s duly authorized 9 agent, and shall be duly certified by the retailer or agent to 10 be correct. The director may authorize incorporated banks and 11 trust companies or other depositories authorized by law which 12 are depositories or financial agents of the United States, 13 or of this state, to receive any sales or use tax imposed 14 under this chapter , in the manner, at the times, and under 15 the conditions the director prescribes. The director shall 16 prescribe the manner, times, and conditions under which the 17 receipt of the tax by those depositories is to be treated as 18 payment of the tax to the department. 19 5. a. Upon making application and receiving approval 20 from the director, a person and its affiliates that make 21 retail sales of tangible personal property, specified digital 22 products, or taxable enumerated services may make deposits and 23 file a consolidated sales or use tax return for the affiliated 24 group, pursuant to rules adopted by the director. A person and 25 each affiliate that files a consolidated return are jointly and 26 severally liable for all tax, penalty, and interest found due 27 for the tax period for which a consolidated return is filed or 28 required to be filed. 29 b. A business required to file a consolidated sales or use 30 tax return shall file a form entitled “schedule of consolidated 31 business locations” with its quarterly sales or use tax 32 return that shows the taxpayer’s consolidated permit number, 33 the permit number for each Iowa business location, the state 34 sales tax amount by business location, and the amount of state 35 -6- LSB 5284XD (6) 89 jm/jh 6/ 47

S.F. _____ H.F. _____ sales tax due on goods consumed that are not assigned to a 1 specific business location. Consolidated quarterly sales or 2 use tax returns that are not accompanied by the schedule of 3 consolidated business locations form are considered incomplete 4 and are subject to penalty under section 421.27 . 5 6. If necessary or advisable in order to insure ensure 6 the payment of the tax, the director may require returns and 7 payment of the tax to be made for other than quarterly monthly 8 periods, the provisions of this section or other provision to 9 the contrary notwithstanding. 10 Sec. 13. Section 423.31, subsection 2, Code 2022, is amended 11 by striking the subsection. 12 Sec. 14. Section 423.33, subsection 1, paragraph a, Code 13 2022, is amended to read as follows: 14 a. If a purchaser fails to pay sales tax to the retailer 15 required to collect the tax, then in addition to all of the 16 rights, obligations, and remedies provided, a use tax is 17 payable by the purchaser directly to the department, and 18 sections 423.31 , 423.32 , 423.37 , 423.38 , 423.39 , 423.40 , 19 423.41 , and 423.42 apply to the purchaser. 20 Sec. 15. Section 423.33, subsection 3, Code 2022, is amended 21 to read as follows: 22 3. Event sponsor’s liability for sales tax. A person 23 sponsoring a flea market or a craft, antique, coin, or stamp 24 show or similar event shall obtain from every retailer selling 25 tangible personal property, specified digital products, or 26 taxable services at the event proof that the retailer possesses 27 a valid sales or use tax permit or secure from the retailer 28 a statement, taken in good faith, that tangible personal 29 property, specified digital products, or services offered for 30 sale are not subject to sales tax. Failure to do so renders 31 a sponsor of the event liable for payment of any sales tax, 32 interest, and penalty due and owing from any retailer selling 33 property or services at the event. Sections 423.31 , 423.32 , 34 423.37 , 423.38 , 423.39 , 423.40 , 423.41 , and 423.42 apply to the 35 -7- LSB 5284XD (6) 89 jm/jh 7/ 47

S.F. _____ H.F. _____ sponsors. For purposes of this subsection , a “person sponsoring 1 a flea market or a craft, antique, coin, or stamp show or similar 2 event” does not include a marketplace facilitator as defined in 3 section 423.14A, subsection 1, an organization which sponsors 4 an event determined to qualify as an event involving casual 5 sales pursuant to section 423.3, subsection 39 , or the state 6 fair or a fair as defined in section 174.1 . 7 Sec. 16. Section 423.34, Code 2022, is amended to read as 8 follows: 9 423.34 Liability of user. 10 Any person who uses any tangible personal property, 11 specified digital products, or services enumerated in section 12 423.2 upon which the use tax has not been paid, either to the 13 county treasurer or to a retailer or direct to the department 14 as required by this subchapter , shall be liable for the payment 15 of tax, and shall on or before the last day of the month next 16 succeeding each quarterly monthly period pay the use tax upon 17 all tangible personal property, specified digital products, 18 or services used by the person during the preceding quarterly 19 monthly period in the manner and accompanied by such returns 20 as the director shall prescribe. All of the provisions of 21 sections 423.32 423.31 and 423.33 with reference to the returns 22 and payments shall be applicable to the returns and payments 23 required by this section . 24 Sec. 17. Section 423.36, subsection 4, paragraph b, Code 25 2022, is amended to read as follows: 26 b. If an applicant is making sales outside Iowa for use in 27 this state or furnishing services outside Iowa, the product 28 or result of which will be used in this state, that applicant 29 shall be issued one sales or use tax permit by the department 30 applicable to these out-of-state sales or services. 31 Sec. 18. Section 423.36, subsection 4, Code 2022, is amended 32 by adding the following new paragraph: 33 NEW PARAGRAPH . c. If an applicant is required to collect 34 sales or use tax and is not included in the definition of a 35 -8- LSB 5284XD (6) 89 jm/jh 8/ 47

S.F. _____ H.F. _____ retailer maintaining a place of business in this state in 1 section 423.1, subsection 48, paragraph “a” , subparagraph (1), 2 the applicant shall be issued one sales or use tax permit by 3 the department regardless of the number of locations from which 4 sales are made. 5 Sec. 19. Section 423.36, subsections 7 and 8, Code 2022, are 6 amended to read as follows: 7 7. a. Sellers who are not regularly engaged in selling 8 at retail and do not have a permanent place of business, but 9 who are temporarily engaged in selling from trucks, portable 10 roadside stands, concessionaires at state, county, district, 11 or local fairs, carnivals, or the like, shall report and remit 12 the sales tax on a temporary seasonal basis, under rules 13 the director shall provide for the efficient collection of 14 the sales tax. This subsection applies to sellers who are 15 temporarily engaged in furnishing services. 16 b. Persons engaged in selling tangible personal property, 17 specified digital products, or furnishing services shall not 18 be required to obtain or retain a sales or use tax permit for a 19 place of business at which taxable sales of tangible personal 20 property, specified digital products, or taxable performance of 21 services will not occur. 22 8. The provisions of subsection 1 , dealing with the lawful 23 right of a retailer to transact business, as applicable, apply 24 to persons having receipts from furnishing services enumerated 25 in section 423.2 , except that a person holding a permit 26 pursuant to subsection 1 shall not be required to obtain any 27 separate sales or use tax permit for the purpose of engaging in 28 business involving the services. 29 Sec. 20. Section 423.40, subsections 1, 2, 3, and 5, Code 30 2022, are amended to read as follows: 31 1. In addition to the sales or use tax or additional sales 32 or use tax, the taxpayer shall pay a penalty as provided in 33 section 421.27 . The taxpayer shall also pay interest on the 34 sales or use tax or additional sales or use tax at the rate 35 -9- LSB 5284XD (6) 89 jm/jh 9/ 47

S.F. _____ H.F. _____ in effect under section 421.7 for each month counting each 1 fraction of a month as an entire month, computed from the date 2 the semimonthly or monthly tax deposit form or return was 3 required to be filed. The penalty and interest shall be paid 4 to the department and disposed of in the same manner as other 5 receipts under this subchapter . Unpaid penalties and interest 6 may be enforced in the same manner as the taxes imposed by this 7 chapter . 8 2. a. Any person who knowingly sells tangible personal 9 property, specified digital products, tickets or admissions 10 to places of amusement and athletic events, or gas, water, 11 electricity, or communication service at retail, or engages in 12 the furnishing of services enumerated in section 423.2 , in this 13 state without procuring a permit to collect tax, as provided 14 in section 423.36 , or who violates section 423.24 and the 15 officers of any corporation who so act are guilty of a serious 16 misdemeanor. 17 b. A person who knowingly sells tangible personal property, 18 specified digital products, tickets or admissions to places of 19 amusement and athletic events, or gas, water, electricity, or 20 communication service at retail, or engages in the furnishing 21 of services enumerated in section 423.2 , in this state after 22 the person’s sales or use tax permit has been revoked and 23 before it has been restored as provided in section 423.36, 24 subsection 6 , and the officers of any corporation who so act 25 are guilty of an aggravated misdemeanor. 26 3. A person who willfully attempts in any manner to evade 27 any tax imposed by this chapter or the payment of the tax or 28 a person who makes or causes to be made a false or fraudulent 29 semimonthly or monthly tax deposit form or return with intent 30 to evade any tax imposed by subchapter II or III or the payment 31 of the tax is guilty of a class “D” felony. 32 5. A person required to pay sales or use tax, or to make, 33 sign, or file a tax deposit form or return or supplemental 34 return, who willfully makes a false or fraudulent tax deposit 35 -10- LSB 5284XD (6) 89 jm/jh 10/ 47

S.F. _____ H.F. _____ form or return, or willfully fails to pay at least ninety 1 percent of the tax or willfully fails to make, sign, or file 2 the tax deposit form or return, at the time required by law, is 3 guilty of a fraudulent practice. 4 Sec. 21. Section 423.45, subsection 4, paragraph b, Code 5 2022, is amended to read as follows: 6 b. The sales tax liability for all sales of tangible 7 personal property and specified digital products and all sales 8 of services is upon the seller and the purchaser unless the 9 seller takes from the purchaser a valid exemption certificate 10 stating under penalty of perjury that the purchase is for a 11 nontaxable purpose and is not a retail sale as defined in 12 section 423.1 , or the seller is not obligated to collect tax 13 due, or unless the seller takes a fuel exemption certificate 14 pursuant to subsection 5 . If the tangible personal property, 15 specified digital products, or services are purchased tax free 16 pursuant to a valid exemption certificate and the tangible 17 personal property, specified digital products, or services are 18 used or disposed of by the purchaser in a nonexempt manner, the 19 purchaser is solely liable for the taxes and shall remit the 20 taxes directly to the department and sections 423.31 , 423.32 , 21 423.37 , 423.38 , 423.39 , 423.40 , 423.41 , and 423.42 shall apply 22 to the purchaser. 23 Sec. 22. Section 423.45, subsection 5, paragraph c, Code 24 2022, is amended to read as follows: 25 c. The seller may accept a completed fuel exemption 26 certificate, as prepared by the purchaser, for three 27 years unless the purchaser files a new completed exemption 28 certificate. If the fuel is purchased tax free pursuant to a 29 fuel exemption certificate which is taken by the seller, and 30 the fuel is used or disposed of by the purchaser in a nonexempt 31 manner, the purchaser is solely liable for the taxes, and shall 32 remit the taxes directly to the department and sections 423.31 , 33 423.32 , 423.37 , 423.38 , 423.39 , 423.40 , 423.41 , and 423.42 34 shall apply to the purchaser. 35 -11- LSB 5284XD (6) 89 jm/jh 11/ 47

S.F. _____ H.F. _____ Sec. 23. Section 423.50, subsection 1, Code 2022, is amended 1 to read as follows: 2 1. Only one remittance of tax per return is required except 3 as provided in this subsection . Sellers that collect more 4 than thirty thousand dollars in sales and use taxes for this 5 state during the preceding calendar year shall be required to 6 make additional remittances as required under rules adopted by 7 the director. The filing of a return is not required with an 8 additional remittance. 9 Sec. 24. Section 423.57, Code 2022, is amended to read as 10 follows: 11 423.57 Statutes applicable. 12 The director shall administer this subchapter as it relates 13 to the taxes imposed in this chapter in the same manner and 14 subject to all the provisions of, and all of the powers, 15 duties, authority, and restrictions contained in sections 16 423.14 , 423.14A , 423.14B , 423.15 , 423.16 , 423.17 , 423.19 , 17 423.20 , 423.21 , 423.22 , 423.23 , 423.24 , 423.25 , 423.29 , 423.31 , 18 423.32 , 423.33 , 423.34 , 423.34A , 423.35 , 423.37 , 423.38 , 19 423.39 , 423.40 , 423.41 , and 423.42 , section 423.43, subsection 20 1 , and sections 423.45 , 423.46 , and 423.47 . 21 Sec. 25. Section 423.58, Code 2022, is amended to read as 22 follows: 23 423.58 Collection, permit, and tax return exemption for 24 certain out-of-state businesses. 25 Notwithstanding sections 423.14 , 423.14A , 423.14B , 423.29 , 26 423.31 , 423.32 , and 423.36 , a person meeting the requirements 27 of section 29C.24 is not required to obtain a sales or use tax 28 permit, collect and remit sales and use tax, or make and file 29 applicable sales or use tax returns, as provided in section 30 29C.24, subsection 3 , paragraph “a” , subparagraph (2). 31 Sec. 26. Section 423A.6, subsection 4, Code 2022, is amended 32 to read as follows: 33 4. Section 422.25, subsection 4 , sections 422.30 , 422.67 , 34 and 422.68 , section 422.69, subsection 1 , sections 422.70 , 35 -12- LSB 5284XD (6) 89 jm/jh 12/ 47

S.F. _____ H.F. _____ 422.71 , 422.72 , 422.74 , and 422.75 , section 423.14, subsection 1 1 , and sections 423.23 , 423.24 , 423.25 , 423.31 , 423.33 , 2 423.35 , 423.37 through 423.42 , and 423.47 , consistent with the 3 provisions of this chapter , apply with respect to the taxes 4 authorized under this chapter , in the same manner and with the 5 same effect as if the state and local hotel and motel taxes 6 were retail sales taxes within the meaning of those statutes. 7 Notwithstanding this subsection , the director shall provide 8 for quarterly monthly filing of returns and for other than 9 quarterly monthly filing of returns both as prescribed in 10 section 423.31 . The director may require all persons who are 11 engaged in the business of deriving any sales price subject 12 to tax under this chapter to register with the department. 13 All taxes collected under this chapter by a retailer, lodging 14 provider, lodging facilitator, lodging platform, or any other 15 person are deemed to be held in trust for the state of Iowa and 16 the local jurisdictions imposing the taxes. 17 Sec. 27. Section 423B.5, subsection 3, Code 2022, is amended 18 to read as follows: 19 3. A tax permit other than the state sales or use tax permit 20 required under section 423.36 shall not be required by local 21 authorities. 22 Sec. 28. Section 423B.6, subsection 2, paragraph c, Code 23 2022, is amended to read as follows: 24 c. Frequency of deposits and quarterly monthly reports of a 25 local sales and services tax with the department of revenue are 26 governed by the tax provisions in section 423.31 . Local tax 27 collections shall not be included in computation of the total 28 tax to determine frequency of filing under section 423.31 . 29 Sec. 29. Section 423C.4, Code 2022, is amended to read as 30 follows: 31 423C.4 Administration and enforcement. 32 All powers and requirements of the director of revenue 33 to administer the state sales tax law under chapter 423 are 34 applicable to the administration of the tax imposed under 35 -13- LSB 5284XD (6) 89 jm/jh 13/ 47

S.F. _____ H.F. _____ section 423C.3 , including but not limited to section 422.25, 1 subsection 4 , sections 422.30 , 422.67 , and 422.68 , section 2 422.69, subsection 1 , sections 422.70 through 422.75 , section 3 423.14, subsection 1 , and sections 423.15 , 423.23 , 423.24 , 4 423.25 , 423.31 , 423.33 , 423.35 and 423.37 through 423.42 , 5 423.45 , 423.46 , and 423.47 . However, as an exception to the 6 powers specified in section 423.31 , the director shall only 7 require the filing of quarterly monthly reports. 8 Sec. 30. Section 423D.4, subsection 3, Code 2022, is amended 9 to read as follows: 10 3. Section 422.25, subsection 4 , sections 422.30 , 422.67 , 11 and 422.68 , section 422.69, subsection 1 , sections 422.70 , 12 422.71 , 422.72 , 422.74 , and 422.75 , section 423.14, subsection 13 1 , and sections 423.23 , 423.24 , 423.25 , 423.31 through 14 423.35 , 423.37 through 423.42 , and 423.47 , consistent with 15 the provisions of this chapter , apply with respect to the tax 16 authorized under this chapter , in the same manner and with the 17 same effect as if the excise taxes on equipment sales or use 18 were retail sales taxes within the meaning of those statutes. 19 Notwithstanding this subsection , the director shall provide 20 for quarterly monthly filing of returns and for other than 21 quarterly monthly filing of returns both as prescribed in 22 section 423.31 . All taxes collected under this chapter by a 23 retailer or any user are deemed to be held in trust for the 24 state of Iowa. 25 Sec. 31. Section 423G.5, subsection 3, Code 2022, is amended 26 to read as follows: 27 3. Section 422.25, subsection 4 , sections 422.30 , 422.67 , 28 and 422.68 , section 422.69, subsection 1 , sections 422.70 , 29 422.71 , 422.72 , 422.74 , and 422.75 , section 423.14, subsection 30 1 , and sections 423.23 , 423.24 , 423.25 , 423.31 through 31 423.35 , 423.37 through 423.42 , and 423.47 , consistent with the 32 provisions of this chapter , shall apply with respect to the tax 33 authorized under this chapter , in the same manner and with the 34 same effect as if the excise taxes on the sale or furnishing of 35 -14- LSB 5284XD (6) 89 jm/jh 14/ 47

S.F. _____ H.F. _____ a water service were retail sales taxes within the meaning of 1 those statutes. Notwithstanding this subsection , the director 2 shall provide for quarterly monthly filing of returns and 3 for other than quarterly monthly filing of returns both as 4 prescribed in section 423.31 . All taxes collected under this 5 chapter by a retailer or any user are deemed to be held in trust 6 for the state of Iowa. 7 Sec. 32. Section 728.1, subsection 6, Code 2022, is amended 8 to read as follows: 9 6. “Place of business” means the premises of a business 10 required to obtain a sales or use tax permit pursuant to 11 chapter 423 , the premises of a nonprofit or not-for-profit 12 organization, and the premises of an establishment which is 13 open to the public at large or where entrance is limited by a 14 cover charge or membership requirement. 15 Sec. 33. Section 728.5, subsection 1, unnumbered paragraph 16 1, Code 2022, is amended to read as follows: 17 An owner, manager, or person who exercises direct control 18 over a place of business required to obtain a sales or use tax 19 permit shall be guilty of a serious misdemeanor under any of 20 the following circumstances: 21 Sec. 34. REPEAL. Section 423.32, Code 2022, is repealed. 22 DIVISION II 23 DISTRIBUTIONS OF REVENUE TO LOCAL GOVERNMENTS AND SCHOOL 24 DISTRICTS 25 Sec. 35. Section 423B.7, subsection 2, paragraph a, Code 26 2022, is amended to read as follows: 27 a. The director of revenue by August 15 of each fiscal 28 year the last day of each month shall send transfer to each 29 city or county where the local option tax is imposed , an 30 estimate of the amount of tax moneys remitted to the department 31 attributable to each city or county will receive for the year 32 and for each month of the year from the preceding month . At the 33 end of each month, the director may revise the estimates for 34 the year and remaining months. 35 -15- LSB 5284XD (6) 89 jm/jh 15/ 47

S.F. _____ H.F. _____ Sec. 36. Section 423B.7, subsection 2, paragraphs b and c, 1 Code 2022, are amended by striking the paragraphs. 2 Sec. 37. Section 423F.2, subsection 4, paragraph a, Code 3 2022, is amended to read as follows: 4 a. The director of revenue by August 15 of each fiscal year 5 the last day of each month shall send transfer to each school 6 district an estimate of the amount of tax moneys remitted 7 to the department attributable to each school district will 8 receive for the year and for each month of the year from the 9 preceding month . At the end of each month, the director may 10 revise the estimates for the year and remaining months. 11 Sec. 38. Section 423F.2, subsection 4, paragraphs b and c, 12 Code 2022, are amended by striking the paragraphs. 13 Sec. 39. TRANSITION PROVISION FOR LOCAL OPTION SALES TAX 14 AND SECURING AN ADVANCED VISION FOR EDUCATION —— TRANSFER 15 AMOUNTS. Notwithstanding any other provision of law to the 16 contrary, the department of revenue shall estimate monthly 17 local option sales tax and securing an advanced vision for 18 education transfer amounts through the end of the 2022 calendar 19 year. The department of revenue shall transfer estimated 20 amounts to each local government or school district for the 21 months of July, August, and September 2022. Beginning with the 22 October 2022 transfer, the department shall not use estimated 23 amounts and shall transfer the amount of tax attributable to 24 each local government or school district for the tax remitted 25 in September 2022. Any adjustment amount that is necessary to 26 the July, August, or September 2022 estimated transfer amount 27 to reflect the accurate attributable amount shall be made by 28 the department of revenue or the local government or school 29 district by the close of business on December 30, 2022. 30 DIVISION III 31 LIABILITY OF SELLERS USING CERTIFIED SERVICE PROVIDER 32 Sec. 40. Section 423.48, subsection 3, paragraph a, Code 33 2022, is amended to read as follows: 34 a. A model 1 seller’s obligation to calculate, collect, and 35 -16- LSB 5284XD (6) 89 jm/jh 16/ 47

S.F. _____ H.F. _____ remit sales and use taxes shall be performed by its certified 1 service provider, except for the seller’s obligation to remit 2 tax on its own purchases. As the seller’s agent, the certified 3 service provider is liable for its model 1 seller’s sales 4 and use tax due Iowa on all sales transactions it processes 5 for the seller except as set out in this section . A seller 6 that contracts with a certified service provider is not 7 liable to the state for sales or use tax due on transactions 8 processed by the certified service provider unless the seller 9 misrepresents the types of items or services it sells or 10 commits fraud certified service provider establishes that 11 the certified service provider is not liable in accordance 12 with the agreement . In the absence of probable cause to 13 believe that the seller has committed fraud or made a material 14 misrepresentation liability relief established by the certified 15 service provider , the seller is not subject to audit on the 16 transactions processed by the certified service provider. 17 A model 1 seller is subject to audit for transactions not 18 processed by the certified service provider. The director is 19 authorized to perform a system check of the model 1 seller and 20 review the seller’s procedures to determine if the certified 21 service provider’s system is functioning properly and the 22 extent to which the seller’s transactions are being processed 23 by the certified service provider. 24 DIVISION IV 25 AUTHORITY TO CANCEL VARIOUS PERMITS ISSUED BY THE DEPARTMENT 26 Sec. 41. Section 421.17, Code 2022, is amended by adding the 27 following new subsection: 28 NEW SUBSECTION . 37. Notwithstanding any other provision 29 of law to the contrary, to cancel the following permits upon 30 verification by the department of revenue the permits are no 31 longer in use: income tax withholding, sales or use tax, or 32 motor fuel tax. 33 DIVISION V 34 ECONOMIC DEVELOPMENT AUTHORITY SALES AND USE TAX REFUND 35 -17- LSB 5284XD (6) 89 jm/jh 17/ 47