House File 664 - Introduced HOUSE FILE 664 BY COMMITTEE ON WAYS AND MEANS (SUCCESSOR TO HSB 68) A BILL FOR An Act exempting certain leases or rentals between affiliates 1 from the sales and use tax and from the fee for new vehicle 2 registration, and including effective date and retroactive 3 applicability provisions. 4 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 5 TLSB 1208HV (2) 90 jm/jh

H.F. 664 Section 1. Section 321.105A, subsection 3, paragraph f, 1 Code 2023, is amended by adding the following new subparagraph: 2 NEW SUBPARAGRAPH . (3) (a) A vehicle leased between 3 affiliates, when the lessor has paid the fee imposed in 4 subsection 2 on the leased vehicle prior to the lease. 5 (b) For purposes of this subparagraph: 6 (i) “Affiliate” means an entity that directly or indirectly 7 controls, is controlled with or by, or is under common control 8 with another entity. 9 (ii) “Control” or “controlled” means any of the following: 10 (A) In the case of a United States corporation, the 11 ownership, directly or indirectly, of fifty percent or more of 12 the voting power to elect directors. 13 (B) In the case of a foreign corporation, if the voting 14 power to elect the directors is less than fifty percent, the 15 maximum amount allowed by applicable law. 16 (C) In the case of an entity other than a corporation, fifty 17 percent or more ownership interest in the entity, or the power 18 to direct the management of the entity. 19 Sec. 2. Section 423.3, Code 2023, is amended by adding the 20 following new subsection: 21 NEW SUBSECTION . 110. a. The sales price on the lease 22 or rental of personal property between affiliates when the 23 affiliate has paid a tax on the sales price imposed under this 24 subchapter, a use tax imposed under subchapter III, or a fee 25 imposed under section 321.105A on the personal property leased 26 or rented prior to such lease or rental. 27 b. For purposes of this subsection: 28 (1) “Affiliate” means an entity that directly or indirectly 29 controls, is controlled with or by, or is under common control 30 with another entity. 31 (2) “Control” or “controlled” means any of the following: 32 (a) In the case of a United States corporation, the 33 ownership, directly or indirectly, of fifty percent or more of 34 the voting power to elect directors. 35 -1- LSB 1208HV (2) 90 jm/jh 1/ 3

H.F. 664 (b) In the case of a foreign corporation, if the voting 1 power to elect the directors is less than fifty percent, the 2 maximum amount allowed by applicable law. 3 (c) In the case of an entity other than a corporation, fifty 4 percent or more ownership interest in the entity, or the power 5 to direct the management of the entity. 6 Sec. 3. REFUNDS. Refunds of taxes, interest, or penalties 7 which arise from the enactment of this Act, for leases or 8 rentals occurring between January 1, 2015, and the effective 9 date of this Act, shall not be allowed, notwithstanding any 10 other provision of the law to the contrary. 11 Sec. 4. EFFECTIVE DATE. This Act, being deemed of immediate 12 importance, takes effect upon enactment. 13 Sec. 5. RETROACTIVE APPLICABILITY. This Act applies 14 retroactively to January 1, 2015, for leases or rentals 15 occurring on or after that date. 16 EXPLANATION 17 The inclusion of this explanation does not constitute agreement with 18 the explanation’s substance by the members of the general assembly. 19 This bill exempts certain leases or rentals between 20 affiliates from the sales and use tax and from the fee for new 21 vehicle registration. 22 The bill exempts from the fee for new registration under Code 23 section 321.105A(3)(a) a vehicle leased between affiliates, 24 when the fee for new registration imposed under Code section 25 321.105A(2) has been paid by the lessor prior to the lease. 26 The bill exempts from the sales and use tax the lease or 27 rental of personal property between affiliates when a sales 28 tax, use tax, or fee for new registration for a vehicle has 29 been paid by an affiliate on the personal property leased or 30 rented prior to such lease or rental. 31 The bill prohibits refunds of taxes, interest, or penalties 32 arising from claims resulting from the enactment of the bill. 33 The bill defines “affiliate” to mean an entity that directly 34 or indirectly controls, is controlled with or by, or is under 35 -2- LSB 1208HV (2) 90 jm/jh 2/ 3

H.F. 664 common control with another entity. 1 The bill defines “control” in most instances to mean the 2 ownership, directly or indirectly, of 50 percent or more of the 3 voting power to elect directors. 4 The bill takes effect upon enactment and applies 5 retroactively to January 1, 2015, for leases or rentals 6 occurring on or after that date. 7 -3- LSB 1208HV (2) 90 jm/jh 3/ 3