House Study Bill 727 - Introduced HOUSE FILE _____ BY (PROPOSED COMMITTEE ON ECONOMIC GROWTH AND TECHNOLOGY BILL BY CHAIRPERSON SORENSEN) A BILL FOR An Act relating to investment requirements for data center 1 businesses that claim certain sales tax exemptions and sales 2 and use tax refunds. 3 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 4 TLSB 6029YC (3) 91 nls/jh

H.F. _____ Section 1. NEW SECTION . 15E.30 Data center business sales 1 tax exemptions and refunds —— required investments. 2 1. a. A data center business that claims a sales tax 3 exemption under section 423.3, subsection 95, or a sales and 4 use tax refund under section 423.4, subsections 7 and 8, shall, 5 by the end of the calendar year, invest a minimum of five 6 percent of the aggregate value of the sales tax exemption and 7 sales or use tax refund claimed for the immediately preceding 8 calendar year as either of the following: 9 (1) As an equity investment in a qualifying business under 10 section 15E.28. 11 (2) As an equity investment in an innovation fund under 12 section 15E.52. 13 b. The department of revenue shall annually provide the 14 aggregate value of the sales tax exemptions and sales and use 15 tax refunds claimed by the data center business as disclosed in 16 the annual report of the data center business required pursuant 17 to section 423.3, subsection 95, paragraph “b” , subparagraph 18 (5). 19 2. The authority shall verify that the data center made 20 equity investments that meet the requirements of subsection 1. 21 If a data center business fails to make the required investment 22 described in subsection 1, all of the following shall apply: 23 a. The authority shall notify the department of revenue, and 24 the department of revenue shall cancel the registration of the 25 data center business under section 423.3, subsection 95, and 26 the data center business shall not be eligible for the sales 27 tax exemption under section 423.3, subsection 95. 28 b. The data center business shall repay the aggregate amount 29 of the sales tax exemptions and sales and use tax refunds 30 claimed in the calendar year for which the data center business 31 did not make the required investment. Any repayment shall be 32 considered a tax payment due and payable to the department 33 of revenue by the data center business, and the failure to 34 make the repayment may be treated by the department of revenue 35 -1- LSB 6029YC (3) 91 nls/jh 1/ 3

H.F. _____ in the same manner as a failure to pay the tax shown due, 1 or required to be shown due, with the filing of a return or 2 deposit form. 3 3. The authority may adopt rules pursuant to chapter 17A to 4 administer this section. 5 Sec. 2. Section 423.3, subsection 95, paragraph b, 6 subparagraph (5), Code 2026, is amended to read as follows: 7 (5) (a) The data center business shall register with 8 the department as a data center business. To maintain its 9 registration, the data center business shall file an annual 10 report with the department, by January 31, 2026, and by each 11 January 31 thereafter. The annual report shall describe the 12 aggregate sales price amount of backup power generation fuel 13 and electricity purchased in the previous calendar year for the 14 purposes described in paragraph “a” , subparagraphs (2) and (3), 15 and any other information the department requires. 16 (b) Beginning with the annual report due on or after January 17 31, 2027, the annual report shall also contain all of the 18 following information from the previous calendar year: 19 (i) The aggregate sales price amount of exempt property 20 purchased under paragraph “a” , subparagraphs (1), (2), and (3). 21 (ii) The amount of sales and use tax refunds under section 22 423.4, subsections 7 and 8. 23 (c) If the economic development authority notifies the 24 department of revenue that the data center business is not in 25 compliance with section 15E.30, the department of revenue shall 26 cancel the registration of the data center business. 27 EXPLANATION 28 The inclusion of this explanation does not constitute agreement with 29 the explanation’s substance by the members of the general assembly. 30 This bill relates to the investment requirements for data 31 center businesses that claim certain sales tax exemptions and 32 sales and use tax refunds. 33 The bill requires a data center business (data center) that 34 claims a sales tax exemption or sales and use tax refunds 35 -2- LSB 6029YC (3) 91 nls/jh 2/ 3

H.F. _____ (exemptions and refunds) to, by the end of the calendar 1 year, invest a minimum of 5 percent of the aggregate value 2 of the exemption or refund claimed for the previous year as 3 an equity investment in either a qualifying business or an 4 innovation fund. The department of revenue (department) shall 5 annually provide the aggregate value of the exemptions and 6 refunds claimed by a data center as disclosed in the data 7 center’s annual report, and the economic development authority 8 (authority) shall verify the data center made the required 9 equity investments. 10 If a data center does not make the required equity 11 investments, the authority shall notify the department, which 12 shall cancel the registration of the data center for, and 13 the data center shall not receive, a sales tax exemption. 14 Additionally, the data center shall repay the aggregate amount 15 of the exemptions and refunds claimed for which the year the 16 data center did not make the required investment. Repayment 17 shall be considered a tax payment due and payable to the 18 department, and the failure to make the repayment may be 19 treated as a failure to pay the tax shown due, or required to be 20 shown due, with the filing of a return or deposit form. 21 The authority may adopt rules to administer the bill. 22 Under current law, a data center shall register with the 23 department as a data center and shall file an annual report 24 with the department describing the backup power generation 25 fuel and electricity purchased in the previous year and any 26 other information the department requires. The bill requires 27 the annual report to describe the aggregate sales price 28 amount of the backup power generation fuel and electricity. 29 Additionally, beginning with the annual report due January 31, 30 2027, a data center’s annual report shall contain, from the 31 previous calendar year, the aggregate sales price amount of 32 exempt property purchased, and the amount of sales and use tax 33 refunds received. 34 -3- LSB 6029YC (3) 91 nls/jh 3/ 3