House File 2355 - Introduced HOUSE FILE 2355 BY HORA A BILL FOR An Act allowing a corn producer to choose not to participate 1 in the promotional order otherwise requiring the first 2 purchaser to deduct a state assessment imposed on the 3 per bushel sales price that is forwarded to the Iowa corn 4 promotion board, and making penalties applicable. 5 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 6 TLSB 5828YH (4) 90 da/ns

H.F. 2355 Section 1. Section 185C.1, Code 2024, is amended by adding 1 the following new subsection: 2 NEW SUBSECTION . 3A. “Certificate” means a certificate of 3 nonparticipation as provided in section 185C.20A. 4 Sec. 2. NEW SECTION . 185C.20A Certificate of 5 nonparticipation. 6 1. When purchasing corn, a first purchaser presented with 7 a certificate of nonparticipation shall not deduct a state 8 assessment and shall not be liable for failing to forward the 9 state assessment to the board. A first purchaser who by error 10 deducts a state assessment in violation of this section is 11 not liable to repay the producer for any part of the deducted 12 amount. 13 2. The board shall publish all forms necessary for a 14 producer to apply for the issuance of one or more certificates, 15 or to amend an issued certificate. The board shall approve 16 an application if it contains all accurate information 17 required to issue a certificate. A certificate must at least 18 state identifying information regarding the producer and the 19 current marketing year for which the certificate applies. A 20 certificate may include a unique identification number assigned 21 by the board. The forms must allow a producer to apply for and 22 be issued a certificate electronically. 23 3. Upon consent of the producer, the board may present 24 the issued certificate to one or more first purchasers listed 25 in the approved application. The board shall present the 26 certificate to a first purchaser in any manner agreed to by 27 the board and first purchaser. Upon notice provided to the 28 producer by the board, the board and first purchaser may change 29 the presentation procedure at any time. 30 4. The board shall issue a certificate or present the 31 first purchaser with the certificate within thirty days after 32 receiving an approved application. 33 5. The board shall reissue the certificates to the producer 34 or present the certificates to first purchasers for each 35 -1- LSB 5828YH (4) 90 da/ns 1/ 5

H.F. 2355 subsequent marketing year, except if any of the following 1 apply: 2 a. Information in the producer’s application is no longer 3 accurate. A producer may submit an amended application to the 4 board within thirty days before the anniversary date that the 5 certificate was last issued. 6 b. The board revises its application form or certificate. 7 6. A first purchaser who is presented with a certificate 8 shall maintain, as part of its business records, the 9 certificate together with information regarding the purchase 10 and the state assessment not deducted. 11 7. The board shall adopt rules pursuant to chapter 17A as 12 necessary to administer this section. 13 Sec. 3. Section 185C.22, Code 2024, is amended to read as 14 follows: 15 185C.22 State assessment on purchase invoice. 16 After a promotional order has been issued, the first 17 purchaser at the time of payment for corn shall show on 18 the purchase invoice delivered to the producer all of the 19 following: 20 1. The total amount of the state assessment deducted from 21 the sale on the purchase invoice . 22 2. The total amount of the state assessment not deducted 23 from the sale due to the presentation of a certificate. 24 Sec. 4. Section 185C.23, Code 2024, is amended to read as 25 follows: 26 185C.23 Deduction of state assessment. 27 1. The first purchaser shall do either of the following: 28 a. Deduct the state assessment shall be deducted from the 29 purchase price of corn at the time of sale, and forwarded 30 forward the amount collected in state assessments to the board 31 by the first purchaser . 32 b. Based on the presentation of a certificate, not deduct 33 the state assessment from the purchase price of corn at 34 the time of sale, and forward a statement of the amount not 35 -2- LSB 5828YH (4) 90 da/ns 2/ 5

H.F. 2355 collected to the board. 1 2. The first purchaser shall forward to the board the 2 amounts collected and not collected in the manner and at 3 intervals determined by the board. 4 Sec. 5. Section 185C.27, Code 2024, is amended to read as 5 follows: 6 185C.27 Refund of assessment. 7 A producer who has sold corn and had a state assessment 8 deducted from the sale price, by application in writing to the 9 board, may secure a refund in the amount deducted. The refund 10 shall be payable only when the application shall have been 11 is made to the board within sixty days after the deduction. 12 Application forms shall be given by the board to each first 13 purchaser when requested and the first purchaser shall make 14 the applications available to any producer upon request . 15 Each application for a refund submitted to the board by a 16 producer shall have attached to the application proof of the 17 state assessment deducted. The proof of the state assessment 18 deducted may be in the form of a duplicate or certified copy 19 of the purchase invoice delivered to the producer by the first 20 purchaser pursuant to section 185C.22 . The board shall have 21 thirty days from the date the application for a refund is 22 received to remit the refund to the producer. The board may 23 provide for refunds of a federal assessment as provided by 24 federal law. Unless inconsistent with federal law, refunds 25 shall be made under section 185C.26 . 26 EXPLANATION 27 The inclusion of this explanation does not constitute agreement with 28 the explanation’s substance by the members of the general assembly. 29 BACKGROUND. An excise tax or assessment is imposed on the 30 first purchaser of a number of different types of commodities 31 as a pass-through (commonly referred to as a “checkoff”), which 32 may be administered under federal or state law or both. In the 33 case of corn, the assessment is implemented and administered 34 under state law (Code chapter 185C). The purpose of the 35 -3- LSB 5828YH (4) 90 da/ns 3/ 5

H.F. 2355 state assessment for corn is similar to assessments for other 1 commodities: to fund activities which involve improving 2 market development, which includes aspects related to the 3 commodity’s production and market share, such as research and 4 education (Code section 185C.1). The state assessment on corn 5 takes effect, is continued, or is terminated on the basis 6 of a majority vote of corn producers (producers) voting in 7 a referendum conducted by the department of agriculture and 8 land stewardship (DALS) (Code section 185C.25). The checkoff 9 moneys imposed due to the state assessment are collected and 10 expended pursuant to a promotional order under the direction 11 of an Iowa corn promotion board (board), a governing body of 12 elected producers (Code sections 185C.8, 185C.11, and 185C.13). 13 The rate of the state assessment is imposed per marketing year, 14 beginning September 1 and ending August 31. The current rate 15 of the state assessment is 1 cent per bushel with a maximum 16 rate of 3 cents per bushel (Code section 185C.21) subject to 17 a producer’s right of refund (Code section 185C.27). The 18 collected checkoff moneys are deposited into a separate 19 state-controlled fund established in the state treasury (state 20 fund) and transferred by the department of administrative 21 services to the corn promotion fund, an account in a qualified 22 financial institution eligible to hold public funds (Code 23 chapter 12C), and established by the board (Code section 24 185C.26). 25 BILL’S PROVISIONS. This bill allows a producer to apply 26 to the board to be issued a certificate of nonparticipation 27 (certificate). When presented with a certificate, the first 28 purchaser will not deduct the state assessment and will not be 29 liable for failing to forward the state assessment to the board 30 (new Code section 185C.20A). Alternatively, upon consent of 31 the producer, the board may directly present the certificate 32 to a first purchaser listed in the producer’s application. A 33 certificate is valid only for the current marketing year as 34 stated on the certificate. However, the board must reissue a 35 -4- LSB 5828YH (4) 90 da/ns 4/ 5

H.F. 2355 certificate each subsequent marketing year, unless information 1 in the application is no longer valid or the board revises its 2 application. The first purchaser must remit an invoice to the 3 producer showing that the state assessment was not deducted. 4 If the state assessment was improperly deducted, a producer may 5 apply to the board for a refund by forwarding a copy of the 6 certificate and invoice. 7 APPLICABLE PENALTY. A person who willfully violates 8 a provision of the bill is guilty of a simple misdemeanor 9 (Code section 185.31). A simple misdemeanor is punishable by 10 confinement for no more than 30 days and a fine of at least $105 11 but not more than $855. 12 -5- LSB 5828YH (4) 90 da/ns 5/ 5