HF 2355 (LSB 5828YH (4) 90)

HOUSE FILE 2355

BY  HORA

A BILL FOR

An Act allowing a corn producer to choose not to participate in the promotional order otherwise requiring the first purchaser to deduct a state assessment imposed on the per bushel sales price that is forwarded to the Iowa corn promotion board, and making penalties applicable.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

    Section 1.  Section 185C.1, Code 2024, is amended by adding the following new subsection:
   NEW SUBSECTION.  3A.  “Certificate” means a certificate of nonparticipation as provided in section 185C.20A.
    Sec. 2.  NEW SECTION.  185C.20A  Certificate of nonparticipation.
   1.  When purchasing corn, a first purchaser presented with a certificate of nonparticipation shall not deduct a state assessment and shall not be liable for failing to forward the state assessment to the board. A first purchaser who by error deducts a state assessment in violation of this section is not liable to repay the producer for any part of the deducted amount.
   2.  The board shall publish all forms necessary for a producer to apply for the issuance of one or more certificates, or to amend an issued certificate. The board shall approve an application if it contains all accurate information required to issue a certificate. A certificate must at least state identifying information regarding the producer and the current marketing year for which the certificate applies. A certificate may include a unique identification number assigned by the board. The forms must allow a producer to apply for and be issued a certificate electronically.
   3.  Upon consent of the producer, the board may present the issued certificate to one or more first purchasers listed in the approved application. The board shall present the certificate to a first purchaser in any manner agreed to by the board and first purchaser. Upon notice provided to the producer by the board, the board and first purchaser may change the presentation procedure at any time.
   4.  The board shall issue a certificate or present the first purchaser with the certificate within thirty days after receiving an approved application.
   5.  The board shall reissue the certificates to the producer or present the certificates to first purchasers for each subsequent marketing year, except if any of the following apply:
   a.  Information in the producer’s application is no longer accurate. A producer may submit an amended application to the board within thirty days before the anniversary date that the certificate was last issued.
   b.  The board revises its application form or certificate.
   6.  A first purchaser who is presented with a certificate shall maintain, as part of its business records, the certificate together with information regarding the purchase and the state assessment not deducted.
   7.  The board shall adopt rules pursuant to chapter 17A as necessary to administer this section. 
    Sec. 3.  Section 185C.22, Code 2024, is amended to read as follows:
   185C.22  State assessment on purchase invoice.
   After a promotional order has been issued, the first purchaser at the time of payment for corn shall show on the purchase invoice delivered to the producer all of the following:
   1.  The total amount of the state assessment deducted from the sale on the purchase invoice.
   2.  The total amount of the state assessment not deducted from the sale due to the presentation of a certificate.
    Sec. 4.  Section 185C.23, Code 2024, is amended to read as follows:
   185C.23  Deduction of state assessment.
   1.  The first purchaser shall do either of the following:
   a.  Deduct the state assessment shall be deducted from the purchase price of corn at the time of sale, and forwarded forward the amount collected in state assessments to the board by the first purchaser.
   b.  Based on the presentation of a certificate, not deduct the state assessment from the purchase price of corn at the time of sale, and forward a statement of the amount not collected to the board.
   2.  The first purchaser shall forward to the board the amounts collected and not collected in the manner and at intervals determined by the board.
    Sec. 5.  Section 185C.27, Code 2024, is amended to read as follows:
   185C.27  Refund of assessment.
   A producer who has sold corn and had a state assessment deducted from the sale price, by application in writing to the board, may secure a refund in the amount deducted. The refund shall be payable only when the application shall have been is made to the board within sixty days after the deduction. Application forms shall be given by the board to each first purchaser when requested and the first purchaser shall make the applications available to any producer upon request. Each application for a refund submitted to the board by a producer shall have attached to the application proof of the state assessment deducted. The proof of the state assessment deducted may be in the form of a duplicate or certified copy of the purchase invoice delivered to the producer by the first purchaser pursuant to section 185C.22. The board shall have thirty days from the date the application for a refund is received to remit the refund to the producer. The board may provide for refunds of a federal assessment as provided by federal law. Unless inconsistent with federal law, refunds shall be made under section 185C.26.
EXPLANATION
The inclusion of this explanation does not constitute agreement with
the explanation’s substance by the members of the general assembly.
   BACKGROUND. An excise tax or assessment is imposed on the first purchaser of a number of different types of commodities as a pass-through (commonly referred to as a “checkoff”), which may be administered under federal or state law or both. In the case of corn, the assessment is implemented and administered under state law (Code chapter 185C). The purpose of the state assessment for corn is similar to assessments for other commodities: to fund activities which involve improving market development, which includes aspects related to the commodity’s production and market share, such as research and education (Code section 185C.1). The state assessment on corn takes effect, is continued, or is terminated on the basis of a majority vote of corn producers (producers) voting in a referendum conducted by the department of agriculture and land stewardship (DALS) (Code section 185C.25). The checkoff moneys imposed due to the state assessment are collected and expended pursuant to a promotional order under the direction of an Iowa corn promotion board (board), a governing body of elected producers (Code sections 185C.8, 185C.11, and 185C.13). The rate of the state assessment is imposed per marketing year, beginning September 1 and ending August 31. The current rate of the state assessment is 1 cent per bushel with a maximum rate of 3 cents per bushel (Code section 185C.21) subject to a producer’s right of refund (Code section 185C.27). The collected checkoff moneys are deposited into a separate state-controlled fund established in the state treasury (state fund) and transferred by the department of administrative services to the corn promotion fund, an account in a qualified financial institution eligible to hold public funds (Code chapter 12C), and established by the board (Code section 185C.26).
   BILL’S PROVISIONS. This bill allows a producer to apply to the board to be issued a certificate of nonparticipation (certificate). When presented with a certificate, the first purchaser will not deduct the state assessment and will not be liable for failing to forward the state assessment to the board (new Code section 185C.20A). Alternatively, upon consent of the producer, the board may directly present the certificate to a first purchaser listed in the producer’s application. A certificate is valid only for the current marketing year as stated on the certificate. However, the board must reissue a certificate each subsequent marketing year, unless information in the application is no longer valid or the board revises its application. The first purchaser must remit an invoice to the producer showing that the state assessment was not deducted. If the state assessment was improperly deducted, a producer may apply to the board for a refund by forwarding a copy of the certificate and invoice.
   APPLICABLE PENALTY. A person who willfully violates a provision of the bill is guilty of a simple misdemeanor (Code section 185.31). A simple misdemeanor is punishable by confinement for no more than 30 days and a fine of at least $105 but not more than $855.