House File 91 - Introduced HOUSE FILE 91 BY ANDREWS A BILL FOR An Act relating to the state sales and use tax by expanding 1 nonprofit exemptions on the state sales and use tax to 2 include all nonprofit entities exempt from federal taxation. 3 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 4 TLSB 1380YH (4) 90 jm/jh

H.F. 91 Section 1. Section 321.105A, subsection 2, paragraph c, 1 subparagraph (1), Code 2023, is amended to read as follows: 2 (1) Entities listed in section 423.3, subsections 17, 18, 3 19, 20, 21, 22, 26, 27, 28, 31, and 79 , Code 2023, and entities 4 listed in section 423.3, subsection 31, to the extent that 5 those entities are exempt from the tax imposed on the sale 6 of tangible personal property sold at retail in the state to 7 consumers or users. 8 Sec. 2. Section 321.105A, subsection 3, paragraph f, 9 subparagraph (1), Code 2023, is amended to read as follows: 10 (1) Vehicles leased to entities listed in section 423.3, 11 subsections 17, 18, 19, 20, 21, 22, 26, 27, 28, 31, and 79 , Code 12 2023, and entities listed in section 423.3, subsection 31, to 13 the extent that those entities are exempt from the tax imposed 14 on the sale of tangible personal property sold at retail in the 15 state to consumers or users. 16 Sec. 3. Section 423.3, subsections 17, 18, 19, 20, 21, 22, 17 23, 24, 25, 26, 26A, 27, 28, 30, 79, 87, 88, 97, and 107, Code 18 2023, are amended by striking the subsections. 19 Sec. 4. Section 423.3, Code 2023, is amended by adding the 20 following new subsection: 21 NEW SUBSECTION . 29. The sales price of tangible personal 22 property or specified digital products sold, or services 23 furnished, to a nonprofit entity whose income is exempt from 24 federal taxation under section 501 of the Internal Revenue 25 Code. 26 Sec. 5. Section 423.3, subsection 47, paragraph d, 27 subparagraph (1), Code 2023, is amended to read as follows: 28 (1) “Commercial enterprise” means businesses and 29 manufacturers conducted for profit, for-profit and nonprofit 30 insurance companies, and for-profit and nonprofit financial 31 institutions, but excludes other nonprofits and professions and 32 occupations. 33 Sec. 6. Section 423.3, subsection 78, paragraph a, 34 unnumbered paragraph 1, Code 2023, is amended to read as 35 -1- LSB 1380YH (4) 90 jm/jh 1/ 2

H.F. 91 follows: 1 The sales price from the sale of tangible personal property, 2 specified digital products, or services rendered by any entity 3 where the profits from the sale of the tangible personal 4 property, specified digital products, or services rendered, are 5 used by or donated to a nonprofit entity that is exempt from 6 federal income taxation pursuant to section 501(c)(3) 501 of 7 the Internal Revenue Code, a government entity, or a nonprofit 8 private educational institution, and where the entire profits 9 are expended for any of the following purposes: 10 EXPLANATION 11 The inclusion of this explanation does not constitute agreement with 12 the explanation’s substance by the members of the general assembly. 13 This bill relates to the state sales and use tax by expanding 14 nonprofit exemptions on the state sales and use tax to include 15 all nonprofit entities exempt from federal taxation under 16 section 501 of the Internal Revenue Code (IRC). 17 The bill consolidates existing nonprofit sales and use tax 18 exemptions by striking such exemptions and moving most of the 19 exemptions into the newly created nonprofit exemption in Code 20 section 423.3(29). 21 The bill exempts from the sales and use tax the sale of 22 tangible personal property or specified digital products sold, 23 or services furnished, to a nonprofit entity whose income is 24 exempt from federal taxation under section 501 of the IRC. The 25 bill expands current law and makes a sale by any such nonprofit 26 exempt from the sales and use tax if the entire profits from 27 the sale are used for an educational, religious, or charitable 28 purpose. 29 The bill does not change the nonprofit exemptions to the fees 30 assessed for new vehicle registration in Code section 321.105A. 31 By operation of Code section 423.6, an item exempt from the 32 imposition of the sales tax is also exempt from the use tax 33 imposed in Code section 423.5. 34 -2- LSB 1380YH (4) 90 jm/jh 2/ 2