H.F. 1033 Section 1. Section 423.4, subsection 1, paragraph a, Code 1 2025, is amended by adding the following new subparagraph: 2 NEW SUBPARAGRAPH . (11) A rural water district organized 3 under chapter 504 as provided in chapter 357A. 4 Sec. 2. Section 423.3, subsection 38, Code 2025, is amended 5 by striking the subsection. 6 EXPLANATION 7 The inclusion of this explanation does not constitute agreement with 8 the explanation’s substance by the members of the general assembly. 9 This bill makes a nonprofit rural water district organized 10 under Code chapter 504 as provided in Code chapter 357A a 11 designated exempt entity, which allows the nonprofit rural 12 water district to apply to the department of revenue for 13 the refund of the sales and use tax upon sales of building 14 materials, supplies, and equipment, or from services furnished 15 by a contractor in the performance of a written contract with 16 the rural water district, if certain circumstances relating to 17 the contract are met. By designating a rural water district a 18 designated exempt entity under the bill, construction services 19 provided to the water district also become exempt from the 20 sales tax which is different than the sales tax exemption under 21 current law. 22 Under current law, the building materials, supplies, or 23 equipment sold to a rural water district for the construction 24 of facilities are exempt from the sales tax in Code section 25 423.3(38). The bill strikes the current rural water sales 26 tax exemption in Code section 423.3(38) so two separate and 27 distinct sales tax exemptions do not exist at the same time 28 relating to building materials, supplies, or equipment sold to 29 a rural water district. 30 -1- LSB 1258HV (1) 91 jm/jh 1/ 1