Senate File 2427 - Introduced SENATE FILE 2427 BY COMMITTEE ON WAYS AND MEANS (SUCCESSOR TO SSB 3179) A BILL FOR An Act relating to the duties and responsibilities of the 1 department of revenue including confidentiality of records, 2 sports wagering, the lottery, cigarette and tobacco 3 taxes, alcoholic beverages, and including effective date 4 provisions. 5 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 6 TLSB 5330SV (2) 90 jm/jh

S.F. 2427 DIVISION I 1 CONFIDENTIALITY OF RECORDS 2 Section 1. Section 422.29, Code 2024, is amended by adding 3 the following new subsection: 4 NEW SUBSECTION . 4. Notwithstanding sections 422.20 and 5 422.72 or any other provision of law to the contrary, the 6 department may submit to the court the entire record under seal 7 for the purpose of judicial review under section 17A.19. The 8 record in the custody of the department remains open to public 9 inspection to the extent allowed by chapters 17A and 22, and 10 sections 422.20, subsection 5, and 422.72, subsection 8. 11 Sec. 2. EFFECTIVE DATE. This division of this Act, being 12 deemed of immediate importance, takes effect upon enactment. 13 DIVISION II 14 SPORTS WAGERING 15 Sec. 3. Section 99F.18, Code 2024, is amended to read as 16 follows: 17 99F.18 Tax on winnings. 18 1. All winnings derived from slot machines operated 19 pursuant to this chapter are Iowa earned income and are subject 20 to state and federal income tax laws. An amount deducted from 21 winnings for payment of the state tax, pursuant to section 22 422.16, subsection 2 , shall be remitted to the department of 23 revenue on behalf of the winner. 24 2. All winnings from sports wagering authorized under this 25 chapter are Iowa earned income and subject to state and federal 26 income tax laws. An amount deducted from winnings for payment 27 of state tax pursuant to section 422.16, subsection 2, shall be 28 remitted to the department of revenue on behalf of the winner. 29 Sec. 4. Section 422.16, subsection 2, paragraph d, Code 30 2024, is amended to read as follows: 31 d. For the purposes of this subsection , state income tax 32 shall be withheld on winnings in excess of six hundred dollars 33 derived from gambling activities authorized under chapter 34 99B or 99G . State income tax shall be withheld on winnings 35 -1- LSB 5330SV (2) 90 jm/jh 1/ 23

S.F. 2427 in excess of one thousand dollars from gambling activities 1 authorized under chapter 99D . State income tax shall be 2 withheld on winnings in excess of one thousand two hundred 3 dollars derived from slot machines authorized under chapter 4 99F. State income tax shall be withheld on winnings from 5 sports wagering authorized under chapter 99F whenever federal 6 income tax is required to be withheld from the same winnings in 7 accordance with the Internal Revenue Code. 8 DIVISION III 9 LOTTERY 10 Sec. 5. Section 99G.3, Code 2024, is amended by adding the 11 following new subsections: 12 NEW SUBSECTION . 3A. “Bona fide social relationship” means 13 a real, genuine, unfeigned social relationship between two or 14 more persons, where each person has an established knowledge of 15 the other, which has not arisen for the purpose of gambling. 16 NEW SUBSECTION . 9A. “Lottery courier” means a person who 17 offers or undertakes to procure tickets or shares in lottery 18 games from a lottery retailer on behalf of another person, and 19 who does not have a bona fide social relationship with that 20 other person. 21 Sec. 6. Section 99G.24, subsection 7, Code 2024, is amended 22 by adding the following new paragraph: 23 NEW PARAGRAPH . j. The department determines, based upon 24 available information, that either the structure or activities 25 of the applicant’s business is likely to violate provisions of 26 this chapter, or any regulation, policy, or procedure of the 27 division. 28 Sec. 7. Section 99G.30, Code 2024, is amended by adding the 29 following new subsections: 30 NEW SUBSECTION . 8. A person shall not do any of the 31 following: 32 a. Act or operate as a lottery courier. 33 b. Do business with a lottery courier. 34 NEW SUBSECTION . 9. A retailer shall not knowingly sell 35 -2- LSB 5330SV (2) 90 jm/jh 2/ 23

S.F. 2427 tickets or shares in a lottery game to any of the following: 1 a. A lottery courier. 2 b. An employee or agent of a lottery courier. 3 Sec. 8. Section 99G.31, subsection 3, paragraph g, Code 4 2024, is amended by striking the paragraph and inserting in 5 lieu thereof the following: 6 g. A ticket or share issued by the division shall not 7 be purchased by and no prize shall be paid to any of the 8 following: 9 (1) A member of the board. 10 (2) An officer or employee of the department. 11 (3) An officer or employee of the state providing services 12 to the department to administer this chapter if such officer 13 or employee has access to confidential information which may 14 compromise the integrity of the lottery. 15 (4) A spouse, child, sibling, or parent residing as a member 16 of the same household in the principal place of residence of 17 any person described in subparagraphs (1) through (3). 18 Sec. 9. Section 99G.34, Code 2024, is amended by adding the 19 following new subsection: 20 NEW SUBSECTION . 9. Ticket order history; ticket inventory; 21 or any records that if disclosed could impair or adversely 22 impact the security, integrity, or fairness of a lottery game 23 or the security of lottery retailers. 24 DIVISION IV 25 CIGARETTE AND TOBACCO TAXES AND REPORTS —— ELECTRONIC FILING 26 Sec. 10. Section 453A.1, subsection 27, Code 2024, is 27 amended to read as follows: 28 27. “State permit” shall mean and include all permits issued 29 by the department to distributors, wholesalers, and retailers 30 under this chapter except the permits issued to retailers 31 approved by cities and counties pursuant to sections 453A.13 32 and 453A.47A . 33 Sec. 11. Section 453A.6, subsection 8, paragraph a, Code 34 2024, is amended to read as follows: 35 -3- LSB 5330SV (2) 90 jm/jh 3/ 23

S.F. 2427 a. Pay directly to the department, in lieu of the tax 1 under subsection 1 , a tax equal to three and six hundredths 2 cents on each cigarette dispensed from such machine. Payments 3 made under this paragraph shall be remitted to the department 4 electronically. 5 Sec. 12. Section 453A.8, subsection 2, Code 2024, is amended 6 to read as follows: 7 2. Orders for cigarette tax stamps, including the payment 8 for such stamps, shall be sent direct made to the department 9 electronically on a form to be prescribed by the director, 10 except as provided in subsection 6 . 11 Sec. 13. Section 453A.13, subsection 2, paragraph a, Code 12 2024, is amended to read as follows: 13 a. The department shall issue state permits to distributors, 14 wholesalers, and cigarette vendors, and retailers that 15 make delivery sales of alternative nicotine products and 16 vapor products, subject to the conditions provided in this 17 subchapter . If an out-of-state retailer makes delivery 18 sales of alternative nicotine products or vapor products, an 19 application shall be filed with the department electronically 20 and a permit shall be issued for the out-of-state retailer’s 21 principal place of business. Cities may issue approve retail 22 permits to retailers permit applications for applicants with 23 a place of business located within their respective limits. 24 County boards of supervisors may issue approve retail permits 25 to retailers permit applications for applicants with a place of 26 business in their respective counties, outside of the corporate 27 limits of cities. Upon approval of a retail permit application 28 by a city or county, the department shall issue the permit to 29 the applicant on behalf of the city or county, in the manner 30 determined by the department. A city or county shall use the 31 electronic portal of the department to process retail permit 32 applications. A city or county that is unable to use the 33 electronic portal of the department may request permission from 34 the director to process retail applications by another method. 35 -4- LSB 5330SV (2) 90 jm/jh 4/ 23

S.F. 2427 Sec. 14. Section 453A.13, subsection 2, paragraph c, Code 1 2024, is amended to read as follows: 2 c. A city or county shall submit a duplicate of any 3 application for a retail permit to the department within thirty 4 days of the issuance. The department shall submit the current 5 list of all retail permits issued to the department of health 6 and human services by the last day of each quarter of a state 7 fiscal year. 8 Sec. 15. Section 453A.13, subsection 3, paragraph a, Code 9 2024, is amended to read as follows: 10 a. All permits provided for in this subchapter shall expire 11 on June 30 of each year. A permit shall not be granted or 12 issued until the applicant has paid the fees to the department 13 required in this subchapter for the next period ending on June 14 30 next, to the department or the city or county granting the 15 permit, the fees provided for in this subchapter . The annual 16 state permit fee for a distributor, cigarette vendor, and 17 wholesaler is one hundred dollars when the permit is granted 18 during the months of July, August, or September. However, 19 whenever a state permit holder operates more than one place of 20 business, a duplicate state permit shall be issued for each 21 additional place of business on payment of five dollars for 22 each duplicate state permit, but refunds as provided in this 23 subchapter do not apply to any duplicate permit issued. 24 Sec. 16. Section 453A.13, subsection 5, unnumbered 25 paragraph 1, Code 2024, is amended to read as follows: 26 Permits shall be issued only upon applications accompanied 27 by the fee indicated above, and by an adequate bond as provided 28 in section 453A.14 , and upon forms furnished by the department 29 upon written request . The failure to furnish such forms shall 30 be no excuse for the failure to file the forms unless absolute 31 refusal is shown. Applications, any supporting documentation, 32 and the associated fees required by this section shall be 33 submitted to the department electronically. The forms shall 34 set forth all of the following: 35 -5- LSB 5330SV (2) 90 jm/jh 5/ 23

S.F. 2427 Sec. 17. Section 453A.13, subsection 9, unnumbered 1 paragraph 1, Code 2024, is amended to read as follows: 2 Each permit issued shall describe clearly the place of 3 business for which it is issued, shall be nonassignable, 4 consecutively numbered, designating the kind of permit, and 5 shall authorize the sale of cigarettes, alternative nicotine 6 products, or vapor products in this state subject to the 7 limitations and restrictions herein contained. The retail 8 permits shall be upon forms furnished by the department or on 9 forms made available or approved by the department . 10 Sec. 18. Section 453A.14, subsection 1, unnumbered 11 paragraph 1, Code 2024, is amended to read as follows: 12 No A state or manufacturer’s permit shall not be issued until 13 the applicant files a bond, with good and sufficient surety, 14 to be approved by the director, which bond shall be in favor of 15 the state and conditioned upon the payment of taxes, damages, 16 fines, penalties, and costs adjudged against the permit holder 17 for violation of any of the provisions of this subchapter . The 18 bonds shall be on forms prescribed by the director and shall be 19 filed electronically. A bond filed under this section shall be 20 in one of the following amounts: 21 Sec. 19. Section 453A.14, subsection 2, Code 2024, is 22 amended to read as follows: 23 2. A person shall not engage in interstate business unless 24 the person files a bond, with good and sufficient surety in an 25 amount of not less than one thousand dollars. A bond required 26 by this subsection shall be on forms prescribed by the director 27 and shall be filed electronically. The amount of the bond 28 required of the person shall be fixed by the director, subject 29 to the minimum limitation provided in this section . The bond 30 is subject to approval by the director and shall be payable to 31 the state in Des Moines, Polk county, and conditioned upon the 32 payment of taxes, damages, fines, penalties, and costs adjudged 33 against the person for violation of any of the requirements of 34 this subchapter affecting the person, on a form prescribed by 35 -6- LSB 5330SV (2) 90 jm/jh 6/ 23

S.F. 2427 the director. 1 Sec. 20. Section 453A.15, subsection 7, Code 2024, is 2 amended to read as follows: 3 7. The director may require by rule that Any reports 4 required to be made under this subchapter shall be filed by 5 electronic transmission electronically . 6 Sec. 21. Section 453A.16, Code 2024, is amended to read as 7 follows: 8 453A.16 Manufacturer’s permit. 9 The department may, upon application of any manufacturer, 10 issue without charge to the manufacturer a manufacturer’s 11 permit. The application shall contain information as 12 the director shall prescribe and the application shall be 13 submitted to the department electronically . The holder of a 14 manufacturer’s permit is authorized to purchase stamps from 15 the department, and must affix stamps to individual packages 16 of cigarettes outside of this state, prior to their shipment 17 into the state unless the cigarettes are shipped to an Iowa 18 permitted distributor or an Iowa permitted distributor’s agent. 19 Sec. 22. Section 453A.17, subsection 1, Code 2024, is 20 amended to read as follows: 21 1. Every distributing agent in the state, now engaged, 22 or who desires to become engaged, in the business of storing 23 unstamped cigarettes which are received in interstate commerce 24 for distribution or delivery only upon order received from 25 without the state or to be sold outside the state, shall 26 file with the department electronically , an application for 27 a distributing agent’s permit, on a form prescribed by the 28 director , to be furnished upon written request . The failure 29 to furnish shall be no excuse for the failure to file the same 30 unless an absolute refusal is shown. Said form shall set 31 forth the name under which such distributing agent transacts 32 or intends to transact such business as a distributing agent, 33 the principal office and place of business in Iowa to which 34 the permit is to apply, and if other than an individual, the 35 -7- LSB 5330SV (2) 90 jm/jh 7/ 23

S.F. 2427 principal officers or members thereof and their addresses. The 1 director may require any other information in said application. 2 No distributing agent shall engage in such business until 3 such application has been filed and fee in the sum of one 4 hundred dollars paid for the permit and until the permit has 5 been obtained. Such permit shall expire on June 30 following 6 the date of issuance. All of the provisions of the last 7 two paragraphs of section 453A.14 , relative to bonds, are 8 incorporated herein and by this reference made applicable to 9 distributing agents. Upon failure to furnish adequate bond 10 as required, the permit shall be revoked without hearing. An 11 application shall be filed and a permit obtained for each place 12 of business owned or operated by a distributing agent. 13 Sec. 23. Section 453A.18, Code 2024, is amended to read as 14 follows: 15 453A.18 Forms for records and reports. 16 The department shall furnish or make available in electronic 17 form, without charge, to holders of the various permits, forms 18 in sufficient quantities to enable permit holders to make the 19 reports required to be made under this subchapter . The permit 20 holders shall furnish at their own expense the books, records, 21 and invoices, required to be used and kept, but the books, 22 records, and invoices shall be in exact conformity to the forms 23 prescribed for that purpose by the director, and shall be kept 24 and used in the manner prescribed by the director. However, 25 the director may, by express order in certain cases, authorize 26 permit holders to keep their records in a manner and upon forms 27 other than those prescribed. The authorization may be revoked 28 at any time. A report, book, record, invoice, and any other 29 document required to be submitted to the department under this 30 subchapter shall be submitted electronically. 31 Sec. 24. Section 453A.23, subsections 1 and 2, Code 2024, 32 are amended to read as follows: 33 1. Subject to this subchapter , a retailer’s permit may be 34 issued by the department to any dining car company, sleeping 35 -8- LSB 5330SV (2) 90 jm/jh 8/ 23

S.F. 2427 car company, railroad or railway company. The permit shall 1 authorize the holder to keep for sale, and sell, cigarettes 2 at retail on any dining car, sleeping car, or passenger car 3 operated by the applicant in, through, or across the state of 4 Iowa, subject to all of the restrictions imposed upon retailers 5 under this subchapter . The application for the permit shall 6 be in the form and contain the information required by the 7 director and each application submitted under this section 8 shall be submitted to the department electronically . Each 9 permit is good throughout the state. Only one permit is 10 required for all cars operated in this state by the applicant, 11 but a duplicate of the permit shall be posted in each car 12 in which cigarettes are sold and no further permit shall be 13 required or tax levied for the privilege of selling cigarettes 14 in the cars. No cigarettes Cigarettes shall not be sold in 15 the cars without having affixed thereto stamps evidencing the 16 payment of the tax as provided in this subchapter . 17 2. As a condition precedent to the issuing of a retailer’s 18 permit for railway car, the applicant shall file with the 19 department a bond in favor of the state for the benefit of 20 all parties interested in the amount of five hundred dollars 21 conditioned upon the payment of all taxes, fines and penalties 22 and costs in this subchapter . A bond filed under this 23 subsection shall be on forms prescribed by the director and 24 shall be filed electronically. 25 Sec. 25. Section 453A.24, subsection 2, Code 2024, is 26 amended to read as follows: 27 2. The director may require by rule that common carriers 28 or the appropriate persons provide monthly reports to the 29 department detailing all information the department deems 30 necessary on shipments into and out of Iowa of cigarettes 31 and tobacco products as set forth in this subchapter I and 32 subchapter II of this chapter . The director may require by 33 rule that the reports A report required to be submitted by the 34 director pursuant to this section shall be filed by electronic 35 -9- LSB 5330SV (2) 90 jm/jh 9/ 23

S.F. 2427 transmission electronically . 1 Sec. 26. Section 453A.35, subsection 1, paragraph a, Code 2 2024, is amended to read as follows: 3 a. With the exception of revenues credited to the health 4 care trust fund pursuant to paragraph “b” , the proceeds derived 5 from the sale of stamps and the payment of fees and penalties 6 provided for under this chapter , and the permit fees received 7 from all state permits issued by the department, shall be 8 credited to the general fund of the state. 9 Sec. 27. Section 453A.35, subsection 2, Code 2024, is 10 amended to read as follows: 11 2. All permit fees provided for in this chapter and 12 collected by the department on behalf of cities in the issuance 13 of permits granted by the cities shall be paid remitted by 14 the department to the treasurer of the city where the permit 15 is effective, or to another city officer as designated by the 16 council, and shall be credited to the general fund of the 17 city. Permit fees so collected by the department on behalf of 18 counties shall be paid remitted to the county treasurer of the 19 county where the permit is effective . 20 Sec. 28. Section 453A.39, subsection 2, paragraph a, Code 21 2024, is amended to read as follows: 22 a. All cigarette samples shall be shipped only to a 23 distributor that has a permit to stamp cigarettes or little 24 cigars with Iowa tax. All cigarette samples must have a 25 cigarette stamp. The manufacturer shipping samples under this 26 section shall send an affidavit to the director stating the 27 shipment information, including the date shipped, quantity, and 28 to whom the samples were shipped. The distributor receiving 29 the shipment shall send an affidavit to the director stating 30 the shipment information, including the date shipped, quantity, 31 and from whom the samples were shipped. These affidavits shall 32 be duly notarized and submitted to the director at the time of 33 shipment and receipt of the samples. The distributor shall 34 pay the tax on samples by separate remittance along with the 35 -10- LSB 5330SV (2) 90 jm/jh 10/ 23

S.F. 2427 affidavit. The affidavit and remittance required under this 1 paragraph shall be submitted to the department electronically. 2 Sec. 29. Section 453A.40, subsection 2, Code 2024, is 3 amended to read as follows: 4 2. Persons subject to the inventory tax imposed under this 5 section shall take an inventory as of the close of the business 6 day next preceding the effective date of the increased tax rate 7 of those items subject to the inventory tax for the purpose of 8 determining the tax due. These persons shall report the tax 9 on forms provided by the department of revenue and remit the 10 tax due within thirty days of the prescribed inventory date. 11 The report and remittance required under this subsection shall 12 be submitted to the department electronically. The department 13 of revenue shall adopt rules as are necessary to carry out this 14 section . 15 Sec. 30. NEW SECTION . 453A.41 Submitting documents —— 16 alternative method. 17 A person subject to this subchapter who is required to submit 18 an application, bond, fee, report, return, remittance, or other 19 documentation electronically and who is unable to do so, may 20 request permission from the director to make the submission 21 using an alternative method. 22 Sec. 31. Section 453A.45, subsection 5, paragraphs b and c, 23 Code 2024, are amended to read as follows: 24 b. The report shall be made on forms provided by the 25 director. The director may require by rule that the A report 26 required under this subsection shall be filed by electronic 27 transmission electronically . 28 c. Common carriers transporting tobacco products into 29 this state shall file with the director reports of all such 30 shipments other than those which are delivered to public 31 warehouses of first destination in this state which are 32 licensed under the provisions of chapter 554 . Such reports 33 shall be filed electronically with the department on or before 34 the tenth day of each month and shall show with respect to 35 -11- LSB 5330SV (2) 90 jm/jh 11/ 23

S.F. 2427 deliveries made in the preceding month all of the following: 1 (1) The date. 2 (2) The point of origin. 3 (3) The point of delivery. 4 (4) The name of the consignee. 5 (5) A description and the quantity of tobacco products 6 delivered. 7 (6) Such other information as the director may require. 8 Sec. 32. Section 453A.46, subsection 1, paragraph a, 9 subparagraph (1), Code 2024, is amended to read as follows: 10 (1) On or before the twentieth day of each calendar month 11 every distributor with a place of business in this state shall 12 file a return with the director showing for the preceding 13 calendar month the quantity and wholesale sales price of each 14 tobacco product brought, or caused to be brought, into this 15 state for sale; made, manufactured, or fabricated in this state 16 for sale in this state; and any other information the director 17 may require. Every licensed distributor outside this state 18 shall in like manner file a return with the director showing 19 for the preceding calendar month the quantity and wholesale 20 sales price of each tobacco product shipped or transported to 21 retailers in this state to be sold by those retailers and any 22 other information the director may require. Returns shall 23 be made upon forms furnished or made available in electronic 24 form and prescribed by the director and shall contain other 25 information as the director may require. Each return shall be 26 accompanied by a remittance for the full tax liability shown 27 on the return, less a discount as fixed by the director not to 28 exceed five percent of the tax. Within three years after the 29 return is filed or within three years after the return became 30 due, whichever is later, the department shall examine it, 31 determine the correct amount of tax, and assess the tax against 32 the taxpayer for any deficiency. The period for examination 33 and determination of the correct amount of tax is unlimited in 34 the case of a false or fraudulent return made with the intent 35 -12- LSB 5330SV (2) 90 jm/jh 12/ 23

S.F. 2427 to evade tax, or in the case of a failure to file a return. 1 Sec. 33. Section 453A.46, subsection 7, Code 2024, is 2 amended by striking the subsection and inserting in lieu 3 thereof the following: 4 7. A return and remittance required to be submitted under 5 this subchapter shall be filed electronically. 6 Sec. 34. Section 453A.47A, subsection 6, Code 2024, is 7 amended to read as follows: 8 6. Issuance. Cities may issue approve retail permits 9 to permit applications of retailers located within their 10 respective limits. County boards of supervisors may issue 11 approve retail permits to permit applications of retailers 12 located in their respective counties, outside of the corporate 13 limits of cities. The city or county shall submit a duplicate 14 of any application for a retail permit to the department within 15 thirty days of issuance of a permit. Upon approval of a retail 16 permit application by a city or county, the department shall 17 issue the permit to the applicant on behalf of the city or 18 county, in the manner determined by the department. A city 19 or county shall use the electronic portal of the department 20 to process retail permit applications. A city or county that 21 is unable to use the electronic portal of the department 22 may request permission from the director to process retail 23 applications by another method. The department shall submit 24 the current list of all retail permits issued to the department 25 of health and human services by the last day of each quarter of 26 a state fiscal year. 27 Sec. 35. Section 453A.47A, subsection 7, paragraph a, 28 unnumbered paragraph 1, Code 2024, is amended to read as 29 follows: 30 All permits provided for in this subchapter shall expire on 31 June 30 of each year. A permit shall not be granted or issued 32 until the applicant has paid the fees provided for to the 33 department required in this section for the next period ending 34 on June 30 next, to the city or county granting the permit . The 35 -13- LSB 5330SV (2) 90 jm/jh 13/ 23

S.F. 2427 fee for retail permits is as follows when the permit is granted 1 during the month of July, August, or September: 2 Sec. 36. Section 453A.47A, subsection 9, unnumbered 3 paragraph 1, Code 2024, is amended to read as follows: 4 Retail permits shall be issued only upon applications, 5 accompanied by the fee indicated above, made upon forms 6 furnished by the department upon written request . The failure 7 to furnish such forms shall be no excuse for the failure to 8 file the form unless absolute refusal is shown. Applications, 9 any supporting documentation, and the associated fees 10 required by this section shall be submitted to the department 11 electronically. The forms shall specify: 12 Sec. 37. Section 453A.47A, subsection 10, paragraph b, Code 13 2024, is amended to read as follows: 14 b. Every retailer shall, when requested by the department, 15 make additional reports as the department deems necessary and 16 proper and shall at the request of the department furnish full 17 and complete information pertaining to any transaction of the 18 retailer involving the purchase or sale or use of tobacco, 19 tobacco products, alternative nicotine products, or vapor 20 products. A report required to be submitted to the department 21 pursuant to this subsection shall be filed electronically. 22 Sec. 38. NEW SECTION . 453A.52 Submitting documents —— 23 alternative method. 24 A person subject to this subchapter who is required to submit 25 an application, bond, fee, report, return, remittance, or other 26 documentation electronically and who is unable to do so, may 27 request permission from the director to make the submission 28 using an alternative method. 29 Sec. 39. Section 453C.1, subsection 10, Code 2024, is 30 amended to read as follows: 31 10. “Units sold” means the number of individual cigarettes 32 sold in the state by the applicable tobacco product 33 manufacturer, whether directly or through a distributor, 34 retailer, or similar intermediary or intermediaries, during the 35 -14- LSB 5330SV (2) 90 jm/jh 14/ 23

S.F. 2427 year in question, as measured by excise taxes collected by the 1 state on in packs bearing required to bear the excise stamp of 2 the state or on in the case of roll-your-own tobacco containers 3 on which a tax is due pursuant to chapter 453A . The department 4 of revenue shall adopt rules as are necessary to ascertain 5 the amount of state excise tax paid on the cigarettes of such 6 tobacco product manufacturer for each year. 7 Sec. 40. Section 453D.5, subsection 1, Code 2024, is amended 8 to read as follows: 9 1. No later than twenty calendar days after the end of 10 each calendar quarter, and more frequently if so directed by 11 the director, each stamping agent and distributor shall submit 12 information as the director requires to facilitate compliance 13 with this chapter , including but not limited to a list by brand 14 family of the total number of cigarettes, or, in the case of 15 roll-your-own tobacco, the equivalent stick count, for which 16 the stamping agent or distributor affixed stamps during the 17 previous calendar quarter or otherwise paid the tax due for 18 the cigarettes. The stamping agent and distributor shall 19 maintain, and make available to the director, all invoices and 20 documentation of sales of all nonparticipating manufacturer 21 cigarettes and any other information relied upon in reporting 22 to the director for a period of five years. Violations of this 23 subsection are subject to civil penalties as established in 24 section 453A.31, subsection 1 , paragraph “b” . Any information 25 submitted pursuant to this subsection shall be submitted to the 26 director electronically. 27 Sec. 41. EFFECTIVE DATE. This division of this Act takes 28 effect January 1, 2025, for returns, payments, remittances, 29 reports, books, records, invoices, and any other document 30 required to be electronically filed with or submitted to the 31 department on or after that date. 32 DIVISION V 33 ALCOHOLIC BEVERAGES 34 Sec. 42. Section 123.3, subsections 10 and 32, Code 2024, 35 -15- LSB 5330SV (2) 90 jm/jh 15/ 23

S.F. 2427 are amended to read as follows: 1 10. “Canned cocktail” means a mixed drink or cocktail 2 primarily composed of alcoholic liquor that is premixed and 3 packaged in a metal can and contains more than one-half of one 4 percent of alcohol by volume but not more than fifteen percent 5 of alcohol by volume. A mixed drink or cocktail mixed and 6 packaged in a metal can pursuant to section 123.49, subsection 7 2 , paragraph “d” , subparagraph (3), shall not be considered a 8 canned cocktail. 9 32. “Mixed drink or cocktail” means an alcoholic beverage, 10 composed in whole or in part of alcoholic liquor or wine , that 11 is combined with other alcoholic beverages or nonalcoholic 12 beverages or ingredients including but not limited to ice, 13 water, soft drinks, or flavorings. 14 Sec. 43. Section 123.5, subsection 3, Code 2024, is amended 15 to read as follows: 16 3. Members of the commission shall be chosen on the basis 17 of managerial ability and experience as business executives. 18 Not more than two members of the commission may be the holder 19 of or have an interest in a permit or license to manufacture 20 alcoholic liquor, wine, or beer or to sell alcoholic liquor, 21 wine, or beer at wholesale or retail directly or indirectly; 22 individually; as a member of a partnership or an association; 23 as a member, owner, or stockholder, except as an institutional 24 investor, of a corporation or other entity; or as a relative to 25 a person by blood or marriage within the second degree do any 26 of the following: 27 a. Hold a permit or license to manufacture alcoholic 28 beverages or sell alcoholic beverages at wholesale or retail . 29 b. Have an interest in the manufacture of or dealing in 30 alcoholic beverages or in an enterprise or industry in which 31 alcoholic beverages are required. 32 c. Receive a commission or profit on the purchase or sale of 33 alcoholic beverages by any person. 34 d. Have an interest in or mortgage or deed of trust on any 35 -16- LSB 5330SV (2) 90 jm/jh 16/ 23

S.F. 2427 land or building where alcoholic beverages are manufactured for 1 sale, offered for sale, or sold or in any personal property 2 used for the manufacturing or sale of alcoholic beverages. 3 Sec. 44. Section 123.5, Code 2024, is amended by adding the 4 following new subsections: 5 NEW SUBSECTION . 3A. In addition to the requirements of 6 chapter 68B, members of the commission shall not do any of the 7 following: 8 a. Hold any other office or position under the laws of this 9 state, or any other state or territory or of the United States. 10 b. Directly or indirectly use the office of the member 11 to influence, persuade, or induce any person to adopt their 12 political views or to favor any particular candidate for an 13 elective or appointive public office. 14 c. Directly or indirectly, solicit or accept, in any manner 15 or way, any money or other thing of value for any person 16 seeking an elective or appointive public office, or to any 17 political party or any group of persons seeking to become a 18 political party. 19 NEW SUBSECTION . 6. This section does not prohibit a 20 commission member from lawfully purchasing and keeping 21 alcoholic beverages in the possession of the commission member. 22 Sec. 45. Section 123.13, Code 2024, is amended by striking 23 the section and inserting in lieu thereof the following: 24 123.13 Prohibitions —— director and employees. 25 1. For purposes of this section, “director” means the 26 director of the department. 27 2. The requirements of this section are in addition to the 28 requirements of chapter 68B. 29 3. The director shall not directly or indirectly; 30 individually; as a member of a partnership or an association; 31 as a member, owner, or stockholder, except as an institutional 32 investor of a corporation or other entity; or as a relative to 33 a person by blood or marriage within the second degree do any 34 of the following: 35 -17- LSB 5330SV (2) 90 jm/jh 17/ 23

S.F. 2427 a. Have an interest in the manufacture of or dealing in 1 alcoholic beverages, or in an enterprise or industry in which 2 alcoholic beverages are required. 3 b. Receive a commission or profit from the purchase or sale 4 of an alcoholic beverage by any person. 5 c. Have an interest in, or mortgage or deed of trust on, any 6 land or building where alcoholic beverages are manufactured for 7 sale, offered for sale, or sold, or in any personal property 8 used in the manufacture or sale of alcoholic beverages. 9 4. An employee of the department shall not license, permit, 10 or participate in the licensing or permitting of a person, 11 business, or organization that requires a license or permit 12 under the laws and rules governing alcoholic beverages, if the 13 employee has an ownership interest related to that person, 14 business, or organization. 15 5. An employee of the department shall not enforce any 16 law or rule governing alcoholic beverages against a person, 17 business, or organization that requires a license or permit 18 under the laws and rules governing alcoholic beverages, if the 19 employee has an ownership interest related to that person, 20 business, or organization. 21 6. The director or an employee violating this section or 22 any other provisions of this chapter shall, in addition to any 23 other penalties provided by law, be subject to suspension or 24 discharge from employment. 25 7. This section does not prohibit the director or an 26 employee of the department from lawfully purchasing and keeping 27 alcoholic beverages in the possession of the director or the 28 employee. 29 Sec. 46. Section 123.30, subsection 3, paragraph b, 30 subparagraph (2), subparagraph division (c), Code 2024, is 31 amended to read as follows: 32 (c) The holder of a special class “C” retail alcohol 33 license shall be authorized to sell wine and beer to patrons 34 by the individual drink for consumption on the premises only. 35 -18- LSB 5330SV (2) 90 jm/jh 18/ 23