HF 2198 (LSB 5416YH (2) 91)

HOUSE FILE 2198

BY  ZABNER

A BILL FOR

An Act relating to the disclosure of tax incentives provided to web search portal businesses and data center businesses, and including effective date provisions.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

    Section 1.  Section 422.20, subsection 3, paragraph a, Code 2026, is amended to read as follows:
   a.  Unless otherwise expressly permitted by section 8G.4, section 11.41, section 96.11, subsection 6, section 421.17, subsections 22, 23, and 26, section 421.17, subsection 27, paragraph “k”, section 421.17, subsection 31, section 252B.9, section 321.40, subsection 6, sections 321.120, 421.19, 421.28, 421.59, 421.65, 422.72, section 423.3, subsections 92, 93, and 95, section 423.4, subsections 7 and 8, section 452A.63, and 556.19, subsection 2, this section, or another provision of law, a tax return, return information, or investigative or audit information shall not be divulged to any person or entity, other than the taxpayer, the department, or internal revenue service for use in a matter unrelated to tax administration.
    Sec. 2.  Section 423.3, subsection 92, paragraph b, subparagraph (5), Code 2026, is amended to read as follows:
   (5)  (a)  The web search portal business shall register with the department as a web search portal. To maintain its registration, the web search portal business shall file an annual report with the department, by January 31, 2026, and by each January 31 thereafter. The annual report shall describe the aggregate sales price amount of backup power generation fuel and electricity purchased and the amount used in the previous calendar year for the purposes described in paragraph “a”, subparagraphs (2) and (3), and any other information the department requires.
   (b)  Beginning with an annual report due on or after January 31, 2027, the annual report shall also contain the aggregate sales price amount of exempt property purchased under paragraph “a”, subparagraph (1).
   (c)  (i)  For annual reports due on or after January 31, 2027, the department of revenue shall estimate the amount of tax saved under this subchapter by the business solely based upon the aggregate sales price amounts disclosed in the annual report.
   (ii)  The name of the web search portal business filing the annual report and the amount of estimated tax saved that is described in this subparagraph division shall be a public record on or after January 31, 2027.
    Sec. 3.  Section 423.3, subsection 93, paragraph b, subparagraph (5), Code 2026, is amended to read as follows:
   (5)  (a)  The web search portal business shall register with the department as a web search portal business. To maintain its registration, the web search portal business shall file an annual report with the department, by January 31, 2026, and by each January 31 thereafter. The annual report shall describe the aggregate sales price amount of backup power generation fuel and electricity purchased and the amount used in the previous calendar year for the purposes described in paragraph “a”, subparagraphs (2) and (3), and any other information the department requires.
   (b)  Beginning with an annual report due on or after January 31, 2027, the annual report shall contain the aggregate sales price amount of exempt property purchased under paragraph “a”, subparagraph (1).
   (c)  (i)  For annual reports due on or after January 31, 2027, the department of revenue shall estimate the amount of tax saved under this subchapter by the business solely based upon the aggregate sales price amounts disclosed in the annual report.
   (ii)  The name of the web search portal business filing the annual report and the amount of estimated tax saved that is described in this subparagraph division shall be a public record on or after January 31, 2027.
    Sec. 4.  Section 423.3, subsection 95, paragraph b, subparagraph (5), Code 2026, is amended to read as follows:
   (5)  (a)  The data center business shall register with the department as a data center business. To maintain its registration, the data center business shall file an annual report with the department, by January 31, 2026, and by each January 31 thereafter. The annual report shall describe the aggregate sales price amount of backup power generation fuel and electricity purchased in the previous calendar year for the purposes described in paragraph “a”, subparagraphs (2) and (3), and any other information the department requires.
   (b)  Beginning with an annual report due on or after January 31, 2027, the annual report shall also contain the aggregate sales price amount of exempt property purchased under paragraph “a”, subparagraph (1).
   (c)  (i)  For annual reports due on or after January 31, 2027, the department of revenue shall estimate the amount of tax saved under this subchapter by the business solely based upon the aggregate sales price amounts disclosed in the annual report.
   (ii)  The name of the data center business filing the annual report and the amount of estimated tax saved that is described in this subparagraph division shall be a public record on or after January 31, 2027.
    Sec. 5.  Section 423.4, subsection 7, Code 2026, is amended by adding the following new paragraph:
   NEW PARAGRAPH.  0g.  The name of the owner of a data center business and the annual amount of sales and use tax refunds that are provided to the data center business under this subsection shall be considered a public record on or after January 1, 2027.
    Sec. 6.  Section 423.4, subsection 8, Code 2026, is amended by adding the following new paragraph:
   NEW PARAGRAPH.  0h.  The name of the owner of a data center business and the annual amount of sales and use tax refunds that are provided to the data center business under this subsection shall be considered a public record on or after January 1, 2027.
    Sec. 7.  2025 Iowa Acts, chapter 155, section 4, is amended to read as follows:
   SEC. 4.  FINANCIAL ASSISTANCE REPORTING —— ECONOMIC DEVELOPMENT AUTHORITY.
   1.  The economic development authority shall submit an annual report to the general assembly no later than November 1, 2025, that details the amount of every direct loan, forgivable loan, tax credit, tax exemption, tax refund, grant, or any other financial assistance awarded to a person during the prior fiscal year by the authority under an economic development program administered by the authority. The report shall identify the county where the project associated with each such award is located.
   2.  Notwithstanding any other Code provision to the contrary, the tax incentives described in subsection 1 that are provided to a web search portal business or a data center business shall be posted and maintained on the economic development authority’s internet site in a searchable database for public viewing within thirty days of the effective date of this subsection of this Act. The searchable database shall include the name of the web search portal business or data center business and the aggregate amount of tax incentives received by such a business disclosed in the report. For purposes of this subsection, “web search portal business” means the same as defined in section 423.3, subsection 92 or 93, and “data center business” means the same as defined in section 423.3, subsection 95.
    Sec. 8.  EFFECTIVE DATE.  The following, being deemed of immediate importance, takes effect upon enactment:
   The section of this Act amending 2025 Iowa Acts, chapter 155, section 4.
EXPLANATION
The inclusion of this explanation does not constitute agreement with
the explanation’s substance by the members of the general assembly.
   This bill relates to the disclosure of tax incentives provided to web search portal businesses and data center businesses (business).
   Currently, beginning January 31, 2026, and by each January 31 thereafter, a business receiving sales and use tax incentives is required to file an annual report with the department of revenue (DOR). The annual report shall describe the aggregate sales price amount of fuel or electricity purchased that is exempt from sales and use tax in the previous calendar year.
   For annual reports filed on or after January 31, 2027, the bill requires the annual report to contain the aggregate sales price amount of all items exempt from sales and use taxes purchased by the business. The bill requires DOR to estimate the amount of sales and use taxes saved by the business solely based upon the aggregate sales price amounts disclosed in the annual report to DOR in annual reports filed on or after January 31, 2027. The bill specifies the name of the business and the amount of estimated tax saved by the business shall be a public record on or after January 31, 2027.
   Currently, a business is entitled to a sales and use tax refund under certain circumstances under Code section 423.4(7) and (8). The bill makes the name of the business and the amount of such a refund a public record on or after January 1, 2027.
   The bill amends 2025 Iowa Acts, chapter 155, section 4, enacted during the 2025 legislative session. The amendment requires the economic development authority to aggregate and post all tax incentives provided to a business in a searchable database for public viewing on the authority’s internet site within 30 days of the effective date of this provision. The provision takes effect upon enactment.