House File 1052 - Introduced HOUSE FILE 1052 BY COMMITTEE ON WAYS AND MEANS (SUCCESSOR TO HSB 90) A BILL FOR An Act relating to state and local taxation and regulations by 1 changing certain tax credits, cigarette and tobacco-related 2 regulations, and certain city budget certification 3 deadlines, providing for penalties, and including 4 retroactive applicability and effective date provisions. 5 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 6 TLSB 1387HV (2) 91 jm/jh

H.F. 1052 DIVISION I 1 CIGARETTE AND TOBACCO-RELATED REGULATIONS 2 Section 1. Section 453A.1, subsection 27, Code 2025, is 3 amended to read as follows: 4 27. “State permit” shall mean and include all permits issued 5 by the department to distributors, wholesalers, and retailers 6 under this chapter except the permits issued to retailers 7 approved by cities and counties pursuant to sections 453A.13 8 and 453A.47A . 9 Sec. 2. Section 453A.6, subsection 8, paragraph a, Code 10 2025, is amended to read as follows: 11 a. Pay directly to the department, in lieu of the tax 12 under subsection 1 , a tax equal to three and six hundredths 13 cents on each cigarette dispensed from such machine. Payments 14 made under this paragraph shall be remitted to the department 15 electronically. 16 Sec. 3. Section 453A.8, subsection 2, Code 2025, is amended 17 to read as follows: 18 2. Orders for cigarette tax stamps, including the payment 19 for such stamps, shall be sent direct made to the department 20 electronically on a form to be prescribed by the director, 21 except as provided in subsection 6 . 22 Sec. 4. Section 453A.13, subsection 2, paragraph a, Code 23 2025, is amended to read as follows: 24 a. The department shall issue state permits to distributors, 25 wholesalers, and cigarette vendors, and retailers that 26 make delivery sales of alternative nicotine products and 27 vapor products, subject to the conditions provided in this 28 subchapter . If an out-of-state retailer makes delivery 29 sales of alternative nicotine products or vapor products, an 30 application shall be filed with the department electronically 31 and a permit shall be issued for the out-of-state retailer’s 32 principal place of business. Cities may issue approve retail 33 permits to retailers permit applications for applicants with 34 a place of business located within their respective limits. 35 -1- LSB 1387HV (2) 91 jm/jh 1/ 19

H.F. 1052 County boards of supervisors may issue approve retail permits 1 to retailers permit applications for applicants with a place of 2 business in their respective counties, outside of the corporate 3 limits of cities. Upon approval of a retail permit application 4 by a city or county, the department shall issue the permit to 5 the applicant on behalf of the city or county, in the manner 6 determined by the department. A city or county shall use the 7 electronic portal of the department to process retail permit 8 applications. A city or county that is unable to use the 9 electronic portal of the department may request permission from 10 the director to process retail applications by another method. 11 Sec. 5. Section 453A.13, subsection 2, paragraph c, Code 12 2025, is amended to read as follows: 13 c. A city or county shall submit a duplicate of any 14 application for a retail permit to the department within thirty 15 days of the issuance. The department shall submit the current 16 list of all retail permits issued to the department of health 17 and human services by the last day of each quarter of a state 18 fiscal year. 19 Sec. 6. Section 453A.13, subsection 3, paragraph a, Code 20 2025, is amended to read as follows: 21 a. All permits provided for in this subchapter shall expire 22 on June 30 of each year. A permit shall not be granted or 23 issued until the applicant has paid the fees to the department 24 required in this subchapter for the next period ending on June 25 30 next, to the department or the city or county granting the 26 permit, the fees provided for in this subchapter . The annual 27 state permit fee for a distributor, cigarette vendor, and 28 wholesaler is one hundred dollars when the permit is granted 29 during the months of July, August, or September. However, 30 whenever a state permit holder operates more than one place of 31 business, a duplicate state permit shall be issued for each 32 additional place of business on payment of five dollars for 33 each duplicate state permit, but refunds as provided in this 34 subchapter do not apply to any duplicate permit issued. 35 -2- LSB 1387HV (2) 91 jm/jh 2/ 19

H.F. 1052 Sec. 7. Section 453A.13, subsection 5, unnumbered paragraph 1 1, Code 2025, is amended to read as follows: 2 Permits shall be issued only upon applications accompanied 3 by the fee indicated above, and by an adequate bond as provided 4 in section 453A.14 , and upon forms furnished by the department 5 upon written request . The failure to furnish such forms shall 6 be no excuse for the failure to file the forms unless absolute 7 refusal is shown. Applications, any supporting documentation, 8 and the associated fees required by this section shall be 9 submitted to the department electronically. The forms shall 10 set forth all of the following: 11 Sec. 8. Section 453A.13, subsection 9, unnumbered paragraph 12 1, Code 2025, is amended to read as follows: 13 Each permit issued shall describe clearly the place of 14 business for which it is issued, shall be nonassignable, 15 consecutively numbered, designating the kind of permit, and 16 shall authorize the sale of cigarettes, alternative nicotine 17 products, or vapor products in this state subject to the 18 limitations and restrictions herein contained. The retail 19 permits shall be upon forms furnished by the department or on 20 forms made available or approved by the department . 21 Sec. 9. Section 453A.14, subsection 1, unnumbered paragraph 22 1, Code 2025, is amended to read as follows: 23 No A state or manufacturer’s permit shall not be issued until 24 the applicant files a bond, with good and sufficient surety, 25 to be approved by the director, which bond shall be in favor of 26 the state and conditioned upon the payment of taxes, damages, 27 fines, penalties, and costs adjudged against the permit holder 28 for violation of any of the provisions of this subchapter . The 29 bonds shall be on forms prescribed by the director and shall be 30 filed electronically. A bond filed under this section shall be 31 in one of the following amounts: 32 Sec. 10. Section 453A.14, subsection 2, Code 2025, is 33 amended to read as follows: 34 2. A person shall not engage in interstate business unless 35 -3- LSB 1387HV (2) 91 jm/jh 3/ 19

H.F. 1052 the person files a bond, with good and sufficient surety in an 1 amount of not less than one thousand dollars. A bond required 2 by this subsection shall be on forms prescribed by the director 3 and shall be filed electronically. The amount of the bond 4 required of the person shall be fixed by the director, subject 5 to the minimum limitation provided in this section . The bond 6 is subject to approval by the director and shall be payable to 7 the state in Des Moines, Polk county, and conditioned upon the 8 payment of taxes, damages, fines, penalties, and costs adjudged 9 against the person for violation of any of the requirements of 10 this subchapter affecting the person, on a form prescribed by 11 the director. 12 Sec. 11. Section 453A.15, subsection 7, Code 2025, is 13 amended to read as follows: 14 7. The director may require by rule that Any reports 15 required to be made under this subchapter shall be filed by 16 electronic transmission electronically . 17 Sec. 12. Section 453A.16, Code 2025, is amended to read as 18 follows: 19 453A.16 Manufacturer’s permit. 20 The department may, upon application of any manufacturer, 21 issue without charge to the manufacturer a manufacturer’s 22 permit. The application shall contain information as 23 the director shall prescribe and the application shall be 24 submitted to the department electronically . The holder of a 25 manufacturer’s permit is authorized to purchase stamps from 26 the department, and must affix stamps to individual packages 27 of cigarettes outside of this state, prior to their shipment 28 into the state unless the cigarettes are shipped to an Iowa 29 permitted distributor or an Iowa permitted distributor’s agent. 30 Sec. 13. Section 453A.17, subsection 1, Code 2025, is 31 amended to read as follows: 32 1. Every distributing agent in the state, now engaged, 33 or who desires to become engaged, in the business of storing 34 unstamped cigarettes which are received in interstate commerce 35 -4- LSB 1387HV (2) 91 jm/jh 4/ 19

H.F. 1052 for distribution or delivery only upon order received from 1 without the state or to be sold outside the state, shall 2 file with the department electronically , an application for 3 a distributing agent’s permit, on a form prescribed by the 4 director , to be furnished upon written request . The failure 5 to furnish shall be no excuse for the failure to file the same 6 unless an absolute refusal is shown. Said form shall set 7 forth the name under which such distributing agent transacts 8 or intends to transact such business as a distributing agent, 9 the principal office and place of business in Iowa to which 10 the permit is to apply, and if other than an individual, the 11 principal officers or members thereof and their addresses. The 12 director may require any other information in said application. 13 No distributing agent shall engage in such business until 14 such application has been filed and fee in the sum of one 15 hundred dollars paid for the permit and until the permit has 16 been obtained. Such permit shall expire on June 30 following 17 the date of issuance. All of the provisions of the last 18 two paragraphs of section 453A.14 , relative to bonds, are 19 incorporated herein and by this reference made applicable to 20 distributing agents. Upon failure to furnish adequate bond 21 as required, the permit shall be revoked without hearing. An 22 application shall be filed and a permit obtained for each place 23 of business owned or operated by a distributing agent. 24 Sec. 14. Section 453A.18, Code 2025, is amended to read as 25 follows: 26 453A.18 Forms for records and reports. 27 The department shall furnish or make available in electronic 28 form, without charge, to holders of the various permits, forms 29 in sufficient quantities to enable permit holders to make the 30 reports required to be made under this subchapter . The permit 31 holders shall furnish at their own expense the books, records, 32 and invoices, required to be used and kept, but the books, 33 records, and invoices shall be in exact conformity to the forms 34 prescribed for that purpose by the director, and shall be kept 35 -5- LSB 1387HV (2) 91 jm/jh 5/ 19

H.F. 1052 and used in the manner prescribed by the director. However, 1 the director may, by express order in certain cases, authorize 2 permit holders to keep their records in a manner and upon forms 3 other than those prescribed. The authorization may be revoked 4 at any time. A report, book, record, invoice, and any other 5 document required to be submitted to the department under this 6 subchapter shall be submitted electronically. 7 Sec. 15. Section 453A.23, subsections 1 and 2, Code 2025, 8 are amended to read as follows: 9 1. Subject to this subchapter , a retailer’s permit may be 10 issued by the department to any dining car company, sleeping 11 car company, railroad or railway company. The permit shall 12 authorize the holder to keep for sale, and sell, cigarettes 13 at retail on any dining car, sleeping car, or passenger car 14 operated by the applicant in, through, or across the state of 15 Iowa, subject to all of the restrictions imposed upon retailers 16 under this subchapter . The application for the permit shall 17 be in the form and contain the information required by the 18 director and each application submitted under this section 19 shall be submitted to the department electronically . Each 20 permit is good throughout the state. Only one permit is 21 required for all cars operated in this state by the applicant, 22 but a duplicate of the permit shall be posted in each car 23 in which cigarettes are sold and no further permit shall be 24 required or tax levied for the privilege of selling cigarettes 25 in the cars. No cigarettes Cigarettes shall not be sold in 26 the cars without having affixed thereto stamps evidencing the 27 payment of the tax as provided in this subchapter . 28 2. As a condition precedent to the issuing of a retailer’s 29 permit for railway car, the applicant shall file with the 30 department a bond in favor of the state for the benefit of 31 all parties interested in the amount of five hundred dollars 32 conditioned upon the payment of all taxes, fines and penalties 33 and costs in this subchapter . A bond filed under this 34 subsection shall be on a form prescribed by the director and 35 -6- LSB 1387HV (2) 91 jm/jh 6/ 19

H.F. 1052 shall be filed electronically. 1 Sec. 16. Section 453A.24, subsection 2, Code 2025, is 2 amended to read as follows: 3 2. The director may require by rule that common carriers 4 or the appropriate persons provide monthly reports to the 5 department detailing all information the department deems 6 necessary on shipments into and out of Iowa of cigarettes 7 and tobacco products as set forth in this subchapter I and 8 subchapter II of this chapter . The director may require by 9 rule that the reports A report required to be submitted by the 10 director pursuant to this section shall be filed by electronic 11 transmission electronically . 12 Sec. 17. Section 453A.28, subsection 1, paragraph a, Code 13 2025, is amended to read as follows: 14 a. (1) If after any audit, examination of records, or 15 other investigation the department finds that any person has 16 sold cigarettes without stamps affixed or that any person 17 responsible for paying the tax has not done so as required by 18 this subchapter , the department shall fix and determine the 19 amount of tax due, and shall assess the tax against the person, 20 together with a penalty as provided in section 421.27 . 21 (2) The taxpayer shall pay interest on the tax or additional 22 tax at the rate determined under section 421.7 counting each 23 fraction of a month as an entire month, computed from the date 24 the tax was due. If any person fails to furnish evidence 25 satisfactory to the director showing purchases of sufficient 26 stamps to stamp unstamped cigarettes purchased by the person, 27 the presumption shall be that the cigarettes were sold without 28 the proper stamps affixed. Within three years after the report 29 is filed or within three years after the report became due, 30 whichever is later, the department shall examine the report 31 and determine the correct amount of tax. The period for 32 examination and determination of the correct amount of tax is 33 unlimited in the case of a false or fraudulent report made 34 with the intent to evade tax, or in the case of a failure to 35 -7- LSB 1387HV (2) 91 jm/jh 7/ 19

H.F. 1052 file a report, or if a person purchases or is in possession of 1 unstamped cigarettes. 2 (3) For purposes of imposing penalties under this section 3 and section 421.27, a person who fails to timely file or submit 4 a required return, report, or other documentation upon which no 5 tax is shown due is subject to a penalty in the amount of fifty 6 dollars for each occurrence. 7 Sec. 18. Section 453A.28, subsection 1, Code 2025, is 8 amended by adding the following new paragraph: 9 NEW PARAGRAPH . c. For purposes of this section and section 10 421.27, any application, bond, fee, report, return, remittance, 11 or other documentation required to be submitted electronically 12 under this subchapter that is filed in a manner other than in 13 an electronic format specified by the department shall not be 14 considered a valid submission unless the director has permitted 15 submission of such application, bond, fee, report, return, 16 remittance, or other documentation through an alternative 17 method pursuant to section 453A.57. 18 Sec. 19. Section 453A.35, subsection 1, paragraph a, Code 19 2025, is amended to read as follows: 20 a. With the exception of revenues credited to the health 21 care trust fund pursuant to paragraph “b” , the proceeds derived 22 from the sale of stamps and the payment of fees and penalties 23 provided for under this chapter , and the permit fees received 24 from all state permits issued by the department, shall be 25 credited to the general fund of the state. 26 Sec. 20. Section 453A.35, subsection 2, Code 2025, is 27 amended to read as follows: 28 2. All permit fees provided for in this chapter and 29 collected by the department on behalf of cities in the issuance 30 of permits granted by the cities shall be paid remitted by 31 the department to the treasurer of the city where the permit 32 is effective, or to another city officer as designated by the 33 council, and shall be credited to the general fund of the 34 city. Permit fees so collected by the department on behalf of 35 -8- LSB 1387HV (2) 91 jm/jh 8/ 19

H.F. 1052 counties shall be paid remitted to the county treasurer of the 1 county where the permit is effective . 2 Sec. 21. Section 453A.39, subsection 2, paragraph a, Code 3 2025, is amended to read as follows: 4 a. All cigarette samples shall be shipped only to a 5 distributor that has a permit to stamp cigarettes or little 6 cigars with Iowa tax. All cigarette samples must have a 7 cigarette stamp. The manufacturer shipping samples under this 8 section shall send an affidavit to the director stating the 9 shipment information, including the date shipped, quantity, and 10 to whom the samples were shipped. The distributor receiving 11 the shipment shall send an affidavit to the director stating 12 the shipment information, including the date shipped, quantity, 13 and from whom the samples were shipped. These affidavits shall 14 be duly notarized and submitted to the director at the time of 15 shipment and receipt of the samples. The distributor shall 16 pay the tax on samples by separate remittance along with the 17 affidavit. The affidavit and remittance required under this 18 paragraph shall be submitted to the department electronically. 19 Sec. 22. Section 453A.40, subsection 2, Code 2025, is 20 amended to read as follows: 21 2. Persons subject to the inventory tax imposed under this 22 section shall take an inventory as of the close of the business 23 day next preceding the effective date of the increased tax rate 24 of those items subject to the inventory tax for the purpose of 25 determining the tax due. These persons shall report the tax 26 on forms provided by the department of revenue and remit the 27 tax due within thirty days of the prescribed inventory date. 28 The report and remittance required under this subsection shall 29 be submitted to the department electronically. The department 30 of revenue shall adopt rules as are necessary to carry out this 31 section . 32 Sec. 23. Section 453A.45, subsection 5, paragraphs b, c, and 33 d, Code 2025, are amended to read as follows: 34 b. The report shall be made on forms provided by the 35 -9- LSB 1387HV (2) 91 jm/jh 9/ 19

H.F. 1052 director. The director may require by rule that the A report 1 required under this subsection shall be filed by electronic 2 transmission electronically . A report required to be submitted 3 electronically under this subsection that is filed in a manner 4 other than in an electronic format specified by the department 5 shall not be considered a valid submission unless the director 6 has permitted the submission of such a report through an 7 alternative method pursuant to section 453A.57. 8 c. Common carriers transporting tobacco products into 9 this state shall file with the director reports of all such 10 shipments other than those which are delivered to public 11 warehouses of first destination in this state which are 12 licensed under the provisions of chapter 554 . Such reports 13 shall be filed electronically with the department on or before 14 the tenth day of each month and shall show with respect to 15 deliveries made in the preceding month all of the following: 16 (1) The date. 17 (2) The point of origin. 18 (3) The point of delivery. 19 (4) The name of the consignee. 20 (5) A description and the quantity of tobacco products 21 delivered. 22 (6) Such other information as the director may require. 23 d. Any person who fails or refuses to transmit to the 24 director the required reports or whoever refuses to permit the 25 examination of the records by the director shall be guilty 26 of a serious misdemeanor. In addition, any person who fails 27 to timely submit a report required under this section is 28 subject to a penalty in the amount of fifty dollars for each 29 occurrence. 30 Sec. 24. Section 453A.46, subsection 1, paragraph a, 31 subparagraph (1), Code 2025, is amended to read as follows: 32 (1) On or before the twentieth day of each calendar month 33 every distributor with a place of business in this state shall 34 file a return with the director showing for the preceding 35 -10- LSB 1387HV (2) 91 jm/jh 10/ 19

H.F. 1052 calendar month the quantity and wholesale sales price of each 1 tobacco product brought, or caused to be brought, into this 2 state for sale; made, manufactured, or fabricated in this state 3 for sale in this state; and any other information the director 4 may require. Every licensed distributor outside this state 5 shall in like manner file a return with the director showing 6 for the preceding calendar month the quantity and wholesale 7 sales price of each tobacco product shipped or transported to 8 retailers in this state to be sold by those retailers and any 9 other information the director may require. Returns shall 10 be made upon forms furnished or made available in electronic 11 form and prescribed by the director and shall contain other 12 information as the director may require. Each return shall be 13 accompanied by a remittance for the full tax liability shown 14 on the return, less a discount as fixed by the director not to 15 exceed five percent of the tax. Within three years after the 16 return is filed or within three years after the return became 17 due, whichever is later, the department shall examine it, 18 determine the correct amount of tax, and assess the tax against 19 the taxpayer for any deficiency. The period for examination 20 and determination of the correct amount of tax is unlimited in 21 the case of a false or fraudulent return made with the intent 22 to evade tax, or in the case of a failure to file a return. 23 Sec. 25. Section 453A.46, subsection 3, Code 2025, is 24 amended to read as follows: 25 3. In addition to the tax or additional tax, the taxpayer 26 shall also pay a penalty as provided in section 421.27 and be 27 subject to the civil penalties set forth in sections 421.27 ; 28 453A.31, subsection 1 , paragraph “b” ; and 453A.50, subsection 29 3 , as applicable. For purposes of imposing penalties under 30 this section and section 421.27, a person who fails to 31 timely file or submit a required return, report, or other 32 documentation upon which no tax is shown due is subject to a 33 penalty in the amount of fifty dollars for each occurrence. 34 Sec. 26. Section 453A.46, subsection 7, Code 2025, is 35 -11- LSB 1387HV (2) 91 jm/jh 11/ 19

H.F. 1052 amended by striking the subsection and inserting in lieu 1 thereof the following: 2 7. A report, return, remittance, or other documentation 3 required to be submitted under this subchapter shall be filed 4 electronically. Any report, return, remittance, or other 5 documentation required to be submitted electronically that 6 is submitted in a manner other than in an electronic format 7 specified by the department shall not be considered a valid 8 submission unless the director has permitted submission of such 9 application, bond, fee, report, return, remittance, or other 10 documentation through an alternative method pursuant to section 11 453A.57. 12 Sec. 27. Section 453A.47A, subsection 6, Code 2025, is 13 amended to read as follows: 14 6. Issuance. Cities may issue approve retail permits to 15 retailers permit applications of applicants located within 16 their respective limits. County boards of supervisors may 17 issue approve retail permits to retailers permit applications 18 of applicants located in their respective counties, outside 19 of the corporate limits of cities. The city or county shall 20 submit a duplicate of any application for a retail permit to 21 the department within thirty days of issuance of a permit. 22 Upon approval of a retail permit application by a city or 23 county, the department shall issue the permit to the applicant 24 on behalf of the city or county, in the manner determined by 25 the department. A city or county shall use the electronic 26 portal of the department to process retail permit applications. 27 A city or county that is unable to use the electronic portal 28 of the department may request permission from the director to 29 process retail applications by another method. The department 30 shall submit the current list of all retail permits issued to 31 the department of health and human services by the last day of 32 each quarter of a state fiscal year. 33 Sec. 28. Section 453A.47A, subsection 7, paragraph a, 34 unnumbered paragraph 1, Code 2025, is amended to read as 35 -12- LSB 1387HV (2) 91 jm/jh 12/ 19

H.F. 1052 follows: 1 All permits provided for in this subchapter shall expire on 2 June 30 of each year. A permit shall not be granted or issued 3 until the applicant has paid the fees provided for to the 4 department required in this section for the next period ending 5 on June 30 next, to the city or county granting the permit . The 6 fee for retail permits is as follows when the permit is granted 7 during the month of July, August, or September: 8 Sec. 29. Section 453A.47A, subsection 9, unnumbered 9 paragraph 1, Code 2025, is amended to read as follows: 10 Retail permits shall be issued only upon applications, 11 accompanied by the fee indicated above, made upon forms 12 furnished by the department upon written request . The failure 13 to furnish such forms shall be no excuse for the failure to 14 file the form unless absolute refusal is shown. Applications, 15 any supporting documentation, and the associated fees 16 required by this section shall be submitted to the department 17 electronically. The forms shall specify: 18 Sec. 30. Section 453A.47A, subsection 10, paragraph b, Code 19 2025, is amended to read as follows: 20 b. Every retailer shall, when requested by the department, 21 make additional reports as the department deems necessary and 22 proper and shall at the request of the department furnish full 23 and complete information pertaining to any transaction of the 24 retailer involving the purchase or sale or use of tobacco, 25 tobacco products, alternative nicotine products, or vapor 26 products. A report required to be submitted to the department 27 pursuant to this subsection shall be submitted electronically. 28 Sec. 31. Section 453A.52, Code 2025, is amended by adding 29 the following new subsection: 30 NEW SUBSECTION . 9. Any certification form, notice, and 31 supporting documentation and any payment required to be 32 submitted to the department pursuant to this section shall 33 be submitted to the department electronically, unless the 34 director has permitted submission of such information through 35 -13- LSB 1387HV (2) 91 jm/jh 13/ 19

H.F. 1052 an alternative method pursuant to section 453A.57. 1 Sec. 32. Section 453A.52B, Code 2025, is amended by adding 2 the following new subsection: 3 NEW SUBSECTION . 6. Payment for any penalty imposed 4 pursuant to this section shall be remitted to the department 5 electronically, unless the director has permitted submission 6 of such information through an alternative method pursuant to 7 section 453A.57. 8 Sec. 33. Section 453A.52D, Code 2025, is amended by adding 9 the following new subsection: 10 NEW SUBSECTION . 4. Notice to the department and any 11 supporting documentation required to be submitted to the 12 department pursuant to this section shall be submitted to the 13 department electronically, unless the director has permitted 14 submission of such information through an alternative method 15 pursuant to section 453A.57. 16 Sec. 34. NEW SECTION . 453A.57 Submitting documents —— 17 alternative method. 18 A person subject to this chapter who is required to submit an 19 application, bond, fee, report, return, remittance, or other 20 documentation electronically and who is unable to do so, may 21 request permission from the director to make a submission using 22 an alternative method. 23 Sec. 35. Section 453D.5, subsection 1, Code 2025, is amended 24 to read as follows: 25 1. No later than twenty calendar days after the end of 26 each calendar quarter, and more frequently if so directed by 27 the director, each stamping agent and distributor shall submit 28 information as the director requires to facilitate compliance 29 with this chapter , including but not limited to a list by brand 30 family of the total number of cigarettes, or, in the case of 31 roll-your-own tobacco, the equivalent stick count, for which 32 the stamping agent or distributor affixed stamps during the 33 previous calendar quarter or otherwise paid the tax due for 34 the cigarettes. The stamping agent and distributor shall 35 -14- LSB 1387HV (2) 91 jm/jh 14/ 19

H.F. 1052 maintain, and make available to the director, all invoices and 1 documentation of sales of all nonparticipating manufacturer 2 cigarettes and any other information relied upon in reporting 3 to the director for a period of five years. Any information 4 submitted pursuant to this subsection shall be submitted to 5 the director electronically, unless the director has permitted 6 submission of such information through an alternative method 7 pursuant to section 453A.57. Any information submitted 8 pursuant to this subsection that is submitted in a manner other 9 than in a format specified by the department shall not be 10 considered a valid submission. Violations of this subsection 11 are subject to civil penalties as established in section 12 453A.31, subsection 1 , paragraph “b” . 13 Sec. 36. CODE EDITOR DIRECTIVES. 14 1. The Code editor is directed to place new section 453A.57, 15 as enacted by this division of this Act, in subchapter IV 16 titled “Uniformed Application of Chapter”. 17 2. The Code editor may modify subchapter titles if necessary 18 and is directed to correct internal references in the Code as 19 necessary due to enactment of this section. 20 DIVISION II 21 RESEARCH ACTIVITIES TAX CREDIT 22 Sec. 37. Section 422.10, subsection 1, paragraph a, 23 subparagraph (1), subparagraph division (b), subparagraph 24 subdivision (i), Code 2025, is amended to read as follows: 25 (i) (A) A person engaged in agricultural production as 26 defined in section 423.1 except if the credit is based on 27 conducting agriscience research as defined in subparagraph part 28 (B) and the person or the business is engaged in bovine and 29 porcine veterinary research, the person shall not be considered 30 to be engaged in agricultural production as defined in section 31 423.1 . 32 (B) As used in this subparagraph subdivision, “agriscience 33 research” means research that is approved and overseen or 34 monitored by a board that includes, at a minimum, an individual 35 -15- LSB 1387HV (2) 91 jm/jh 15/ 19

H.F. 1052 who was employed with, contracted by, or professionally trained 1 by an accredited university as a researcher in an applied 2 animal science and an individual holding a doctor of veterinary 3 medicine or a doctoral degree in an applied animal science; 4 is conducted in this state in an applied animal science; 5 improves the scientific knowledge base or increases scientific 6 innovation, performance, or viability within this state; the 7 results of the research are evaluated by a person educated and 8 trained in statistics by an accredited university and capable 9 of applying generally accepted methodologies to the results 10 in accordance with industry standards in an applied animal 11 science; and the results of the research are made available 12 to the public by submission to or publication in a journal, 13 magazine, or similar periodical, if the statistical evaluation 14 indicated the research is reliable and relevant to an applied 15 animal science. 16 (C) As used in this subparagraph subdivision, “applied 17 animal science” includes the areas of animal science, 18 veterinary medicine, nutritional science, genetic science, and 19 microbiology. 20 Sec. 38. Section 422.33, subsection 5, paragraph e, 21 subparagraph (1), subparagraph division (b), subparagraph 22 subdivision (i), Code 2025, is amended to read as follows: 23 (i) (A) A person engaged in agricultural production as 24 defined in section 423.1 , except if the credit is based on 25 conducting agriscience research and the person or the business 26 is engaged in bovine and porcine veterinary research, the 27 person shall not be considered to be engaged in agricultural 28 production as defined in section 423.1 . 29 (B) As used in this subparagraph subdivision, “agriscience 30 research” means research that is approved and overseen or 31 monitored by a board that includes, at a minimum, an individual 32 who was employed with, contracted by, or professionally trained 33 by an accredited university as a researcher in an applied 34 animal science and an individual holding a doctor of veterinary 35 -16- LSB 1387HV (2) 91 jm/jh 16/ 19

H.F. 1052 medicine or a doctoral degree in an applied animal science; 1 is conducted in this state in an applied animal science; 2 improves the scientific knowledge base or increases scientific 3 innovation, performance, or viability within this state; the 4 results of the research are evaluated by a person educated and 5 trained in statistics by an accredited university and capable 6 of applying generally accepted methodologies to the results 7 in accordance with industry standards in an applied animal 8 science; and the results of the research are made available 9 to the public by submission to or publication in a journal, 10 magazine, or similar periodical, if the statistical evaluation 11 indicated the research is reliable and relevant to an applied 12 animal science. 13 (C) As used in this subparagraph subdivision, “applied 14 animal science” includes the areas of animal science, 15 veterinary medicine, nutritional science, genetic science, and 16 microbiology. 17 Sec. 39. RETROACTIVE APPLICABILITY. This division of this 18 Act applies retroactively to January 1, 2017, for tax years 19 beginning on or after that date. 20 DIVISION III 21 CITY BUDGET CERTIFICATION DEADLINE 22 Sec. 40. CITY BUDGET CERTIFICATION DEADLINE —— FY 23 2025-2026. 24 1. As used in this section, “qualified city” means a city 25 in this state having a population between twenty thousand four 26 hundred and twenty thousand five hundred, according to the 2020 27 federal decennial census. 28 2. a. Notwithstanding any provision of section 384.16 to 29 the contrary, a qualified city that failed to certify a budget 30 as required in section 384.16 for the fiscal year beginning 31 July 1, 2025, may comply with the requirements in section 32 384.16 by certifying the budget on or before July 1, 2025. 33 b. A qualified city that complies with the requirements of 34 paragraph “a” is not required to conduct a hearing as required 35 -17- LSB 1387HV (2) 91 jm/jh 17/ 19

H.F. 1052 in section 384.16 or 384.18. In addition, the provisions of 1 section 384.19 allowing persons affected by the budget to file 2 a written protest with the county auditor do not apply to the 3 qualified city’s budget for the fiscal year beginning July 1, 4 2025. 5 c. A qualified city that meets the extended certification 6 deadline as provided in this subsection shall be deemed to have 7 complied with the requirements of section 384.16 on April 30, 8 2025. 9 Sec. 41. EFFECTIVE DATE. This division of this Act, being 10 deemed of immediate importance, takes effect upon enactment. 11 EXPLANATION 12 The inclusion of this explanation does not constitute agreement with 13 the explanation’s substance by the members of the general assembly. 14 This bill relates to state and local taxation and 15 regulations. 16 DIVISION I —— CIGARETTE AND TOBACCO-RELATED REGULATIONS. 17 The bill specifies that cities and counties may approve 18 tobacco-related retail permits but the department shall issue 19 the permit to the applicant on behalf of the city or county. 20 The bill requires the city or county to use the electronic 21 portal of the department to process retail permit applications. 22 If a city or county is unable to use the electronic portal 23 of the department, the city or county may request permission 24 from the director of revenue to process retail applications by 25 another method. 26 The bill provides that all tobacco-related permit fees shall 27 be collected by the department, and the department shall credit 28 the fees to the city or county where the permit is in effect. 29 The bill specifies that a person who fails to timely file or 30 submit a required return, report, or other documentation upon 31 which no tax is shown due is subject to a penalty in the amount 32 of $50 for each occurrence. 33 The bill requires cigarette and tobacco tax returns, 34 reports, invoices, bonds, and payments to be filed with or 35 -18- LSB 1387HV (2) 91 jm/jh 18/ 19