Senate Study Bill 3157 - Introduced SENATE FILE _____ BY (PROPOSED COMMITTEE ON WAYS AND MEANS BILL BY CHAIRPERSON DAWSON) A BILL FOR An Act relating to state and local revenue and finances by 1 modifying sales and use taxes, the charitable conservation 2 contribution tax credit available against individual and 3 corporate income taxes, the automobile rental excise tax, 4 the water service tax, and local option taxes, crediting 5 moneys to the natural resources and outdoor recreation trust 6 fund, making appropriations, and including effective date 7 and applicability provisions. 8 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 9 TLSB 6242XC (6) 89 md/jh

S.F. _____ DIVISION I 1 SALES AND USE TAX RATES AND DISTRIBUTION 2 Section 1. Section 423.2, subsection 1, unnumbered 3 paragraph 1, Code 2022, is amended to read as follows: 4 There is imposed a tax of six percent at the rate specified 5 in subsection 12 upon the sales price of all sales of tangible 6 personal property, sold at retail in the state to consumers or 7 users except as otherwise provided in this subchapter . 8 Sec. 2. Section 423.2, subsections 2 and 3, Code 2022, are 9 amended to read as follows: 10 2. A tax of six percent at the rate specified in subsection 11 12 is imposed upon the sales price of the sale or furnishing 12 of gas, electricity, water, heat, pay television service, and 13 communication service, including the sales price from such 14 sales by any municipal corporation or joint water utility 15 furnishing gas, electricity, water, heat, pay television 16 service, and communication service to the public in its 17 proprietary capacity, except as otherwise provided in this 18 subchapter , when sold at retail in the state to consumers or 19 users. 20 3. A tax of six percent at the rate specified in subsection 21 12 is imposed upon the sales price of all sales of tickets 22 or admissions to places of amusement, fairs, and athletic 23 events except those of elementary and secondary educational 24 institutions. A tax of six percent at the rate specified in 25 subsection 12 is imposed on the sales price of an entry fee or 26 like charge imposed solely for the privilege of participating 27 in an activity at a place of amusement, fair, or athletic event 28 unless the sales price of tickets or admissions charges for 29 observing the same activity are taxable under this subchapter . 30 A tax of six percent at the rate specified in subsection 12 31 is imposed upon that part of private club membership fees or 32 charges paid for the privilege of participating in any athletic 33 sports provided club members. 34 Sec. 3. Section 423.2, subsection 4, paragraph a, Code 2022, 35 -1- LSB 6242XC (6) 89 md/jh 1/ 51

S.F. _____ is amended to read as follows: 1 a. A tax of six percent at the rate specified in subsection 2 12 is imposed upon the sales price derived from the operation 3 of all forms of amusement devices and games of skill, games of 4 chance, raffles, and bingo games as defined in chapter 99B , and 5 card game tournaments conducted under section 99B.27 , that are 6 operated or conducted within the state, the tax to be collected 7 from the operator in the same manner as for the collection of 8 taxes upon the sales price of tickets or admission as provided 9 in this section . Nothing in this subsection shall legalize any 10 games of skill or chance or slot-operated devices which are now 11 prohibited by law. 12 Sec. 4. Section 423.2, subsection 5, Code 2022, is amended 13 to read as follows: 14 5. There is imposed a tax of six percent at the rate 15 specified in subsection 12 upon the sales price from the 16 furnishing of services as defined in section 423.1 . 17 Sec. 5. Section 423.2, subsection 7, paragraph a, 18 unnumbered paragraph 1, Code 2022, is amended to read as 19 follows: 20 A tax of six percent at the rate specified in subsection 12 21 is imposed upon the sales price from the sales, furnishing, or 22 service of solid waste collection and disposal service. 23 Sec. 6. Section 423.2, subsection 8, paragraph a, Code 2022, 24 is amended to read as follows: 25 a. A tax of six percent at the rate specified in subsection 26 12 is imposed on the sales price from sales of bundled 27 transactions. For the purposes of this subsection , a “bundled 28 transaction” is the retail sale of two or more distinct and 29 identifiable products, except real property and services to 30 real property, which are sold for one nonitemized price. A 31 “bundled transaction” does not include the sale of any products 32 in which the sales price varies, or is negotiable, based on 33 the selection by the purchaser of the products included in the 34 transaction. 35 -2- LSB 6242XC (6) 89 md/jh 2/ 51

S.F. _____ Sec. 7. Section 423.2, subsection 9, Code 2022, is amended 1 to read as follows: 2 9. A tax of six percent at the rate specified in 3 subsection 12 is imposed upon the sales price from any mobile 4 telecommunications service, including all paging services, 5 that this state is allowed to tax pursuant to the provisions 6 of the federal Mobile Telecommunications Sourcing Act, Pub. 7 L. No. 106-252, 4 U.S.C. §116 et seq. For purposes of this 8 subsection , taxes on mobile telecommunications service, as 9 defined under the federal Mobile Telecommunications Sourcing 10 Act that are deemed to be provided by the customer’s home 11 service provider, shall be paid to the taxing jurisdiction 12 whose territorial limits encompass the customer’s place of 13 primary use, regardless of where the mobile telecommunications 14 service originates, terminates, or passes through and 15 shall in all other respects be taxed in conformity with 16 the federal Mobile Telecommunications Sourcing Act. All 17 other provisions of the federal Mobile Telecommunications 18 Sourcing Act are adopted by the state of Iowa and incorporated 19 into this subsection by reference. With respect to mobile 20 telecommunications service under the federal Mobile 21 Telecommunications Sourcing Act, the director shall, if 22 requested, enter into agreements consistent with the provisions 23 of the federal Act. 24 Sec. 8. Section 423.2, subsection 10, paragraph a, Code 25 2022, is amended to read as follows: 26 a. A tax of six percent at the rate specified in subsection 27 12 is imposed on the sales price of specified digital products 28 sold at retail in the state. The tax applies whether the 29 purchaser obtains permanent use or less than permanent use of 30 the specified digital product, whether the sale is conditioned 31 or not conditioned upon continued payment from the purchaser, 32 and whether the sale is on a subscription basis or is not on a 33 subscription basis. 34 Sec. 9. Section 423.2, subsection 12, Code 2022, is amended 35 -3- LSB 6242XC (6) 89 md/jh 3/ 51

S.F. _____ by striking the subsection and inserting in lieu thereof the 1 following: 2 12. a. For the period beginning January 1, 2023, through 3 December 31, 2050, the sales tax rate is seven percent. 4 b. Beginning January 1, 2051, the sales tax rate is six 5 percent. 6 Sec. 10. Section 423.2A, subsection 2, paragraphs a, b, and 7 c, Code 2022, are amended to read as follows: 8 a. (1) Transfer For the period beginning January 1, 2023, 9 through December 31, 2050, transfer one-seventh of the revenues 10 collected under deposited into the general fund of the state 11 under subsection 1 to the appropriate county accounts under 12 chapter 423B for the counties from which the tax was collected . 13 (2) Beginning January 1, 2051, transfer one-sixth of the 14 revenues deposited into the general fund of the state under 15 subsection 1 to the appropriate county accounts under chapter 16 423B for the counties from which the tax was collected. 17 b. Transfer from the remaining revenues the amounts required 18 under Article VII, section 10, of the Constitution of the State 19 of Iowa to the natural resources and outdoor recreation trust 20 fund created in section 461.31 , if applicable . 21 c. Transfer one-sixth of from the remaining revenues an 22 amount equal to one-seventh of the revenues deposited into the 23 general fund of the state under subsection 1 to the secure an 24 advanced vision for education fund created in section 423F.2 . 25 This paragraph “c” is repealed January 1, 2051. 26 Sec. 11. Section 423.5, subsection 1, unnumbered paragraph 27 1, Code 2022, is amended to read as follows: 28 Except as provided in paragraph “b” , an excise tax at the 29 rate of six percent specified in subsection 4 of the purchase 30 price or installed purchase price is imposed on the following: 31 Sec. 12. Section 423.5, subsection 4, Code 2022, is amended 32 by striking the subsection and inserting in lieu thereof the 33 following: 34 4. a. For the period beginning January 1, 2023, through 35 -4- LSB 6242XC (6) 89 md/jh 4/ 51

S.F. _____ December 31, 2050, the use tax rate is seven percent. 1 b. Beginning January 1, 2051, the use tax rate is six 2 percent. 3 Sec. 13. Section 423.43, subsection 1, paragraph b, Code 4 2022, is amended by striking the paragraph and inserting in 5 lieu thereof the following: 6 b. Subsequent to the deposit into the general fund of 7 the state the department shall do the following in the order 8 prescribed: 9 (1) (a) For the period beginning January 1, 2023, through 10 December 31, 2042, transfer one-seventh of such revenues to the 11 local use tax supplement fund. 12 (b) For the period beginning January 1, 2043, through 13 December 31, 2050, transfer one-seventh of such revenues to the 14 appropriate county accounts under chapter 423B for the counties 15 from which the tax was paid. 16 (c) Beginning January 1, 2051, transfer one-sixth of such 17 revenues to the appropriate county accounts under chapter 423B 18 for the counties from which the tax was paid. 19 (2) Transfer one-sixth of such remaining revenues to the 20 secure an advanced vision for education fund created in section 21 423F.2. This subparagraph is repealed January 1, 2051. 22 Sec. 14. EFFECTIVE DATE. This division of this Act takes 23 effect January 1, 2023. 24 DIVISION II 25 AUTOMOBILE RENTAL EXCISE TAX 26 Sec. 15. Section 423C.3, subsection 1, Code 2022, is amended 27 to read as follows: 28 1. A tax of five seven percent is imposed upon the rental 29 price of an automobile if the rental transaction is subject 30 to the sales tax under chapter 423, subchapter II , or the use 31 tax under chapter 423, subchapter III . The tax shall not be 32 imposed on any rental transaction not taxable under the state 33 sales tax, as provided in section 423.3 , or the state use tax, 34 as provided in section 423.6 , on automobile rental receipts. 35 -5- LSB 6242XC (6) 89 md/jh 5/ 51

S.F. _____ Sec. 16. EFFECTIVE DATE. This division of this Act takes 1 effect January 1, 2023. 2 DIVISION III 3 WATER SERVICE TAX 4 Sec. 17. Section 423G.3, Code 2022, is amended to read as 5 follows: 6 423G.3 Water service tax. 7 An excise tax at the rate of six seven percent is imposed on 8 the sales price from the sale or furnishing by a water utility 9 of a water service in the state to consumers or users. 10 Sec. 18. Section 423G.6, subsection 2, Code 2022, is amended 11 by striking the subsection. 12 Sec. 19. REPEAL. Chapter 423G.7, Code 2022, is repealed. 13 Sec. 20. EFFECTIVE DATE. This division of this Act takes 14 effect January 1, 2023. 15 DIVISION IV 16 CHARITABLE CONSERVATION CONTRIBUTION TAX CREDIT 17 Sec. 21. Section 2.48, subsection 3, paragraph e, 18 subparagraph (6), Code 2022, is amended by striking the 19 subparagraph. 20 Sec. 22. Section 422.11W, Code 2022, is amended by adding 21 the following new subsection: 22 NEW SUBSECTION . 5. Commencing with tax years beginning 23 on or after January 1, 2023, a charitable conservation 24 contribution tax credit shall not be claimed against taxes as 25 provided in this section, except for tax credits claimed for 26 qualified real property interests conveyed prior to January 1, 27 2023. 28 Sec. 23. Section 422.33, subsection 25, Code 2022, is 29 amended by striking the subsection and inserting in lieu 30 thereof the following: 31 25. The taxes imposed under this subchapter shall be reduced 32 by a charitable conservation contribution tax credit as allowed 33 under section 422.11W for each tax year the taxpayer has 34 credit, in excess of tax liability, for qualified real property 35 -6- LSB 6242XC (6) 89 md/jh 6/ 51

S.F. _____ interests conveyed prior to January 1, 2023. 1 Sec. 24. PRESERVATION OF EXISTING RIGHTS. This division 2 of this Act is not intended to and shall not limit, modify, or 3 otherwise adversely affect any amount of tax credit issued, 4 awarded, or allowed prior to January 1, 2023, nor shall it 5 limit, modify, or otherwise adversely affect a taxpayer’s right 6 to claim or redeem a tax credit issued, awarded, or allowed 7 prior to January 1, 2023, including but not limited to any tax 8 credit carryforward amount. 9 Sec. 25. EFFECTIVE DATE. This division of this Act takes 10 effect January 1, 2023. 11 Sec. 26. APPLICABILITY. This division of this Act applies 12 to tax years beginning on or after January 1, 2023. 13 DIVISION V 14 LOCAL OPTION TAXES 15 Sec. 27. Section 15J.7, subsection 2, Code 2022, is amended 16 to read as follows: 17 2. In addition to the moneys received pursuant to section 18 15J.6 , a municipality may deposit in the reinvestment project 19 fund any other moneys lawfully at the municipality’s disposal, 20 including but not limited to local sales and services tax 21 receipts collected revenues received under chapter 423B if such 22 use is a purpose authorized for the municipality under chapter 23 423B . 24 Sec. 28. Section 28A.17, Code 2022, is amended to read as 25 follows: 26 28A.17 Local sales and services tax. 27 1. If an authority is established as provided in section 28 28A.6 and after approval of a referendum by a simple majority 29 of votes cast in each metropolitan area in favor of the sales 30 and services tax, the governing board of a county in this state 31 within a metropolitan area which is part of the authority shall 32 impose, at the request of the authority, a local sales and 33 services tax at the rate of one-fourth of one percent on the 34 sales price taxed by this state under section 423.2 , within 35 -7- LSB 6242XC (6) 89 md/jh 7/ 51

S.F. _____ the metropolitan area located in this state. The referendum 1 shall be called by resolution of the board and shall be held 2 as provided in section 28A.6 to the extent applicable. The 3 ballot proposition shall contain a statement as to the specific 4 purpose or purposes for which the revenues shall be expended 5 and the date of expiration of the tax. The local sales and 6 services tax shall be imposed on the same basis, with the same 7 exceptions, and following the same administrative procedures as 8 provided for a county under sections 423B.5 and 423B.6 , Code 9 2022 . The amount of the sale, for the purposes of determining 10 the amount of the local sales and services tax under this 11 section , does not include the amount of any local sales and 12 services tax imposed under sections 423B.5 and 423B.6 , Code 13 2022 . 14 2. The treasurer of state shall credit the local sales 15 and services tax receipts and interest and penalties to the 16 authority’s account. Moneys in this account shall be remitted 17 quarterly to the authority. The proceeds of the tax imposed 18 under this section shall be used only for the construction, 19 reconstruction, or repair of metropolitan facilities as 20 specified in the referendum. The local sales and services tax 21 imposed under this section may be suspended for not less than 22 a fiscal quarter or more than one year by action of the board. 23 The suspension may be renewed or continued by the board, but 24 the board shall act on the suspension at least annually. 25 The local sales and services tax may also be repealed by a 26 petition and favorable referendum following the procedures and 27 requirements of sections 28A.5 and 28A.6 as applicable. The 28 board shall give the department of revenue at least forty days’ 29 notice of the repeal, suspension, or reinstatement of the tax 30 and the effective dates for imposition, suspension, or repeal 31 of the tax shall be as provided in section 423B.6 , Code 2022 . 32 3. A local sales and services tax authorized under this 33 section shall not be imposed or collected on or after January 34 1, 2023. 35 -8- LSB 6242XC (6) 89 md/jh 8/ 51

S.F. _____ Sec. 29. Section 76.4, Code 2022, is amended to read as 1 follows: 2 76.4 Permissive application of funds. 3 Whenever the governing authority of such political 4 subdivision shall have on hand funds derived from any other 5 source than taxation which may be appropriated to the payment 6 either of interest or principal, or both principal and interest 7 of such bonds, such funds may be so appropriated and used 8 and the levy for the payment of the bonds correspondingly 9 reduced. This section shall not restrict the authority of a 10 political subdivision to apply sales and services tax receipts 11 collected received pursuant to chapter 423B for such purpose. 12 Notwithstanding section 423F.3 , a school district may apply tax 13 receipts received pursuant to chapter 423F for the purposes of 14 this section . 15 Sec. 30. Section 99B.1, subsection 23, Code 2022, is amended 16 to read as follows: 17 23. “Net receipts” means gross receipts less amounts awarded 18 as prizes and less state and local sales tax paid upon the 19 gross receipts. 20 Sec. 31. Section 99B.14, subsection 1, Code 2022, is amended 21 to read as follows: 22 1. A licensed qualified organization shall certify 23 that the receipts from all charitable gambling conducted 24 by the organization under this chapter , less reasonable 25 expenses, charges, fees, taxes, and deductions, either will 26 be distributed as prizes to participants or will be dedicated 27 and distributed for educational, civic, public, charitable, 28 patriotic, or religious uses. Reasonable expenses, charges, 29 fees, taxes other than the state and local sales tax, and 30 deductions allowed by the department shall not exceed forty 31 percent of net receipts. 32 Sec. 32. Section 99G.4, subsection 2, Code 2022, is amended 33 to read as follows: 34 2. The income and property of the authority shall be exempt 35 -9- LSB 6242XC (6) 89 md/jh 9/ 51

S.F. _____ from all state and local taxes, and the sale of lottery tickets 1 and shares issued and sold by the authority and its retail 2 licensees shall be exempt from all state and local sales taxes. 3 Sec. 33. Section 99G.30A, subsection 2, paragraph a, Code 4 2022, is amended to read as follows: 5 a. The director of revenue shall administer the monitor 6 vending machine excise tax as nearly as possible in conjunction 7 with the administration of state sales tax laws. The director 8 shall provide appropriate forms or provide appropriate entries 9 on the regular state tax forms for reporting local sales and 10 services tax liability. 11 Sec. 34. Section 279.63, subsection 2, paragraph a, Code 12 2022, is amended to read as follows: 13 a. All property tax levies , and income surtaxes , and local 14 option sales taxes in place in the school district, listed by 15 type of levy, rate, amount, duration, and notification of the 16 maximum rate and amount limitations permitted by statute. 17 Sec. 35. Section 321.40, subsection 5, Code 2022, is amended 18 by striking the subsection. 19 Sec. 36. Section 321.130, Code 2022, is amended to read as 20 follows: 21 321.130 Fees in lieu of taxes. 22 The registration fees imposed by this chapter upon private 23 passenger motor vehicles or semitrailers are in lieu of all 24 state and local taxes , except local vehicle taxes, to which 25 motor vehicles or semitrailers are subject. 26 Sec. 37. Section 418.13, subsection 2, Code 2022, is amended 27 to read as follows: 28 2. In addition to the moneys received pursuant to section 29 418.10 or 418.12 , a governmental entity may deposit in the 30 flood project fund any other moneys lawfully received by the 31 governmental entity, including but not limited to local sales 32 and services tax receipts collected amounts received under 33 chapter 423B . 34 Sec. 38. Section 421.26, Code 2022, is amended to read as 35 -10- LSB 6242XC (6) 89 md/jh 10/ 51

S.F. _____ follows: 1 421.26 Personal liability for tax due. 2 If a licensee or other person under section 452A.65 , a 3 retailer or purchaser under chapter 423A , 423B , 423C , 423D , 4 or 423E , or section 423.14 , 423.14A , 423.29 , 423.31 , 423.32 , 5 or 423.33 , or a user under section 423.34 , or a permit holder 6 or licensee under section 453A.13 , 453A.16 , or 453A.44 fails 7 to pay a tax under those sections when due, an officer of a 8 corporation or association, notwithstanding section 489.304 , 9 a member or manager of a limited liability company, or a 10 partner of a partnership, having control or supervision of 11 or the authority for remitting the tax payments and having 12 a substantial legal or equitable interest in the ownership 13 of the corporation, association, limited liability company, 14 or partnership, who has intentionally failed to pay the tax 15 is personally liable for the payment of the tax, interest, 16 and penalty due and unpaid. However, this section shall 17 not apply to taxes on accounts receivable. The dissolution 18 of a corporation, association, limited liability company, 19 or partnership shall not discharge a person’s liability for 20 failure to remit the tax due. 21 Sec. 39. Section 421.28, Code 2022, is amended to read as 22 follows: 23 421.28 Exceptions to successor liability. 24 The immediate successor to a licensee’s or retailer’s 25 business or stock of goods under chapter 423A or 423B , or 26 section 423.33 or 452A.65 , is not personally liable for 27 the amount of delinquent tax, interest, or penalty due and 28 unpaid if the immediate successor shows that the purchase of 29 the business or stock of goods was made in good faith that 30 no delinquent tax, interest, or penalty was due and unpaid. 31 For purposes of this section the immediate successor shows 32 good faith by evidence that the department had provided 33 the immediate successor with a certified statement that 34 no delinquent tax, interest, or penalty is unpaid, or that 35 -11- LSB 6242XC (6) 89 md/jh 11/ 51

S.F. _____ the immediate successor had taken in good faith a certified 1 statement from the licensee, retailer, or seller that no 2 delinquent tax, interest, or penalty is unpaid. When requested 3 to do so by a person with whom the licensee or retailer is 4 negotiating the sale of the business or stock of goods, the 5 director of revenue shall, upon being satisfied that such 6 a situation exists, inform that person as to the amount of 7 unpaid delinquent tax, interest, or penalty due by the licensee 8 or the retailer. The giving of the information under this 9 circumstance is not a violation of section 422.20 , 422.72 , or 10 452A.63 . 11 Sec. 40. Section 421.60, subsection 2, paragraph m, 12 subparagraphs (1) and (2), Code 2022, are amended to read as 13 follows: 14 (1) The director may abate unpaid state sales and use 15 taxes and local sales and services taxes owed by a retailer 16 in the event that the retailer failed to collect tax from the 17 purchaser as a result of erroneous written advice issued by 18 the department that was specially directed to the retailer 19 by the department and the retailer is unable to collect the 20 tax, interest, or penalties from the purchaser. Before the 21 tax, interest, and penalties shall be abated on the basis of 22 erroneous written advice, the retailer must present a copy of 23 the retailer’s request for written advice to the department and 24 a copy of the department’s reply. The department shall not 25 maintain a position against the retailer that is inconsistent 26 with the erroneous written advice, except on the basis of 27 subsequent written advice sent by the department to that 28 retailer, or a change in state or federal law, a reported 29 court case to the contrary, a contrary rule adopted by the 30 department, a change in material facts or circumstances 31 relating to the retailer, or the retailer’s misrepresentation 32 or incomplete or inadequate representation of material facts 33 and circumstances in requesting the written advice. 34 (2) (a) The director shall abate the unpaid state sales 35 -12- LSB 6242XC (6) 89 md/jh 12/ 51

S.F. _____ and use taxes and any local sales and services taxes owed by a 1 retailer where the retailer failed to collect the tax from the 2 purchaser on the charges paid for access to on-line computer 3 services as a result of erroneous written advice issued by the 4 department regarding the taxability of charges paid for access 5 to on-line computer services. To qualify for the abatement 6 under this subparagraph, the erroneous written advice shall 7 have been issued by the department prior to July 1, 1999, and 8 shall have been specially directed to the retailer by the 9 department. 10 (b) If an abatement of unpaid state sales and use taxes and 11 any local sales and services taxes is granted to the retailer 12 by the director pursuant to this subparagraph, the department 13 is precluded from collecting from the purchaser any unpaid 14 state sales and use taxes and any local sales and services 15 taxes which were abated. 16 Sec. 41. Section 422.72, subsection 6, paragraph a, Code 17 2022, is amended to read as follows: 18 a. The department may enter into a written informational 19 exchange agreement for tax administration purposes with a city 20 or county which is entitled to receive funds due to a local 21 hotel and motel tax or a local sales and services tax . The 22 written informational exchange agreement shall designate no 23 more than two paid city or county employees that have access to 24 actual return information relating to that city’s or county’s 25 receipts from a local hotel and motel tax or a local sales and 26 services tax . 27 Sec. 42. Section 423.4, subsection 2, paragraph d, Code 28 2022, is amended by striking the paragraph. 29 Sec. 43. Section 423.4, subsection 5, paragraph f, Code 30 2022, is amended to read as follows: 31 f. Notwithstanding the state sales tax imposed in section 32 423.2 , a rebate issued pursuant to this subsection shall not 33 exceed an amount equal to five percent of the sales price 34 of the tangible personal property or services furnished to 35 -13- LSB 6242XC (6) 89 md/jh 13/ 51

S.F. _____ purchasers at the automobile racetrack facility. Any local 1 option taxes paid and collected shall not be subject to rebate 2 under this subsection . 3 Sec. 44. Section 423.4, subsection 7, paragraph f, Code 4 2022, is amended to read as follows: 5 f. The refund in this subsection applies only to state 6 sales and use tax paid and does not apply to local option 7 sales and services taxes imposed pursuant to chapter 423B . 8 Notwithstanding the state sales tax imposed in section 423.2 , 9 a refund issued pursuant to this section shall not exceed 10 an amount equal to five percent of the sales price of the 11 fuel used to create heat, power, and steam for processing 12 or generating electrical current or from the sale price 13 of electricity consumed by computers, machinery, or other 14 equipment for operation of the data center business facility. 15 Sec. 45. Section 423.4, subsection 8, paragraph g, Code 16 2022, is amended to read as follows: 17 g. The refund in this subsection applies only to state 18 sales and use tax paid and does not apply to local option 19 sales and services taxes imposed pursuant to chapter 423B . 20 Notwithstanding the state sales tax imposed in section 423.2 , 21 a refund issued pursuant to this section shall not exceed an 22 amount equal to five percent of the sales price of the items 23 listed in paragraph “a” , subparagraphs (1), (2), and (3). 24 Sec. 46. Section 423.14A, subsection 2, Code 2022, is 25 amended to read as follows: 26 2. In addition to and not in lieu of any application of 27 this chapter to sellers who are retailers and sellers who are 28 retailers maintaining a place of business in this state, any 29 person described in subsection 3 , or the person’s agents, 30 shall be considered a retailer in this state and a retailer 31 maintaining a place of business in this state for purposes of 32 this chapter on or after January 1, 2019, and shall be subject 33 to all requirements of this chapter imposed on retailers and 34 retailers maintaining a place of business in this state, 35 -14- LSB 6242XC (6) 89 md/jh 14/ 51

S.F. _____ including but not limited to the requirement to collect and 1 remit sales and use taxes pursuant to sections 423.14 and 2 423.29 , and local option taxes under chapter 423B . 3 Sec. 47. Section 423.33, subsection 1, paragraph c, Code 4 2022, is amended to read as follows: 5 c. If the retailer fails to collect sales tax at the time 6 of the transaction, the retailer shall thereafter remit the 7 applicable sales tax, or the purchaser thereafter shall remit 8 the applicable use tax. If the purchaser remits all applicable 9 use tax, the retailer remains liable for any local sales and 10 services tax under chapter 423B that the retailer failed to 11 collect. 12 Sec. 48. Section 423.34A, unnumbered paragraph 1, Code 13 2022, is amended to read as follows: 14 A purchaser is relieved of liability for payment of state 15 sales or use tax, for payment of any local option sales tax, 16 for payment of interest, or for payment of any penalty for 17 nonpayment of tax which nonpayment is not fraudulent, willful, 18 or intentional, under the following circumstances: 19 Sec. 49. Section 423.36, subsection 9, paragraph a, Code 20 2022, is amended to read as follows: 21 a. Except as provided in paragraph “b” , purchasers, users, 22 and consumers of tangible personal property, specified digital 23 products, or enumerated services taxed pursuant to subchapter 24 II or III of this chapter or chapter 423B may be authorized, 25 pursuant to rules adopted by the director, to remit tax owed 26 directly to the department instead of the tax being collected 27 and paid by the seller. To qualify for a direct pay tax permit, 28 the purchaser, user, or consumer must accrue a tax liability 29 of more than four thousand dollars in tax under subchapters 30 II and III in a semimonthly period and make deposits and file 31 returns pursuant to section 423.31 . This authority shall not 32 be granted or exercised except upon application to the director 33 and then only after issuance by the director of a direct pay 34 tax permit. 35 -15- LSB 6242XC (6) 89 md/jh 15/ 51

S.F. _____ Sec. 50. Section 423B.1, Code 2022, is amended by striking 1 the section and inserting in lieu thereof the following: 2 423B.1 Use of revenues deposited in the local sales and use 3 tax fund —— revenue purpose statement. 4 1. a. Revenues credited to and deposited in each county’s 5 account within the local sales and use tax fund shall be 6 expended by each recipient county and city as required by the 7 revenue purpose statement, subject to the requirements of 8 section 423B.7, subsection 7, and approved under this section 9 for the city or for the county for the unincorporated areas of 10 the county, or as required by subsection 3. 11 b. A revenue purpose statement for the use of local option 12 sales and services tax revenue under this chapter approved at 13 election prior to January 1, 2023, and in effect on or set 14 to take effect on or after January 1, 2023, and the use of 15 revenues received under this chapter for purposes authorized 16 under section 423B.10 for ordinances in effect and approved 17 before January 1, 2023, shall continue in effect for revenues 18 received under this chapter until the expiration of the revenue 19 purpose statement or ordinance, if applicable, or until the 20 county board of supervisors or city council, as applicable, 21 adopts a new revenue purpose statement under subsection 2 or 22 repeals or amends the ordinance for the use of revenues under 23 section 423B.10. 24 2. The board of supervisors of each county and the city 25 council of each city may adopt by resolution a revenue purpose 26 statement for the expenditure of funds received under this 27 chapter. 28 3. Each city and county without a valid revenue purpose 29 statement shall expend the revenues received for the following 30 purposes in the order prescribed in this subsection, except 31 that the payment of bonds for which the revenues have been 32 pledged shall be paid first: 33 a. Reduction of the county’s basic levies under section 34 331.423 or reduction of the city general fund levy under 35 -16- LSB 6242XC (6) 89 md/jh 16/ 51

S.F. _____ section 384.1, as applicable. 1 b. Reduction of any debt service levy of the county or city, 2 as applicable. 3 c. Reduction of the city’s additional taxes levied under 4 section 384.12 or the county’s supplemental levies under 5 section 331.424, as applicable. 6 d. Reduction of any other property tax levy of the county 7 or city, as applicable. 8 Sec. 51. NEW SECTION . 423B.1A Local use tax supplement 9 fund. 10 1. A local use tax supplement fund is created in the state 11 treasury under the control of the department of revenue. The 12 fund shall consist of all moneys transferred under section 13 423.43, subsection 1, paragraph “b” , subparagraph (1), 14 subparagraph division (a), and moneys appropriated to the fund. 15 2. Moneys in the local use tax supplement fund are annually 16 appropriated to the department of revenue and shall be used for 17 supplement payments to cities and counties under this section. 18 3. For each year during the period beginning January 1, 19 2023, through December 31, 2042, each city or county for the 20 unincorporated portion of the county, shall receive a local 21 use tax supplement payment equal to the difference, but not 22 less than zero between the amount of revenue received by the 23 city or county under section 423B.7, Code 2022, for the period 24 beginning January 1, 2022, and ending December 31, 2022, minus 25 the amount that would have been received by that city or county 26 for that period if all cities and the county were eligible for 27 distributions of such revenues under section 423B.7, Code 2022. 28 If moneys in the fund are insufficient to pay all supplement 29 amounts for the year, the director of revenue shall prorate the 30 payment of the supplement payments and shall notify the cities 31 and counties of the pro rata percentage. 32 4. The supplement payment calculated under subsection 3 33 shall be paid to each city or county for the unincorporated 34 area of the county and shall be combined with and be used in the 35 -17- LSB 6242XC (6) 89 md/jh 17/ 51

S.F. _____ same manner and be subject to the same requirements as moneys 1 received by the city or county under section 423B.7 for that 2 year. 3 5. Notwithstanding section 12C.7, subsection 2, interest or 4 earnings on moneys deposited in the local use tax supplement 5 fund shall be credited to the local use tax supplement fund. 6 Notwithstanding section 8.33, moneys credited to the local use 7 tax supplement fund shall not revert at the close of a fiscal 8 year. 9 6. This section is repealed January 1, 2043. Moneys in the 10 fund upon the repeal of this section shall be transferred to 11 the appropriate county accounts under section 423B.7 for the 12 counties from which the tax was paid. 13 Sec. 52. Section 423B.7, subsection 1, Code 2022, is amended 14 to read as follows: 15 1. a. Except as provided in paragraphs paragraph “b” and 16 “c” , the director shall credit the local sales and services tax 17 receipts and interest and penalties from a county-imposed tax 18 as specified in section 423.2A, subsection 2, paragraph “a” , 19 including any interest and penalties, to the county’s account 20 in the local sales and services use tax fund for the county in 21 from which the tax was collected. The director shall credit 22 the use tax receipts as specified in section 423.43, subsection 23 1, paragraph “b” , subparagraph (1), subparagraph divisions (b) 24 and (c), including any interest and penalties, to the county’s 25 account in the local sales and use tax fund for the county 26 from which the use tax was paid. If the director is unable to 27 determine from which county any of the receipts were collected 28 or paid, as applicable , those receipts shall be allocated among 29 the possible counties based on allocation rules adopted by the 30 director. 31 b. The director shall credit the designated amount of the 32 increase in local sales and services tax receipts, as computed 33 in section 423B.10 , collected in an urban renewal area of an 34 eligible city that has adopted an ordinance pursuant to section 35 -18- LSB 6242XC (6) 89 md/jh 18/ 51