SF 200 (LSB 2135XS (3) 91)

SENATE FILE 200

BY  SINCLAIR

A BILL FOR

An Act relating to the distribution of water exempt from taxation and the use of tax exemption certificates, and providing civil penalties.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

    Section 1.  NEW SECTION.  421.72  Valid exemption certificate —— penalty.
   1.  As used in this section:
   a.  “Exemption certificate” means a valid certificate whether furnished by the department of revenue or the person using the water that exempts all or a portion of the person’s use of water from the tax imposed pursuant to chapter 423 or 423G.
   b.  “Water utility” means a public utility as defined in section 476.1, subsection 2, paragraph “c”.
   2.  A water utility shall accept and retain a valid exemption certificate and shall not unnecessarily require a person who presents a valid exemption certificate to obtain a sales or water service tax refund from the department of revenue rather than receiving the exemption.
   3.  a.  A water utility that does not accept a valid exemption certificate shall pay a civil penalty to the department of revenue equal to the amount of tax refunded to the person who possessed a valid exemption certificate plus interest at the rate in effect under section 421.7.
   b.  The department of revenue shall deposit any penalties and interest collected pursuant to this section into the general fund of the state.
   4.  The department of revenue shall adopt rules to administer this section.
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 distribution of water exempt from taxation.
   The bill requires a water utility to accept and retain a valid exemption certificate and shall not unnecessarily require a person who presents a valid exemption certificate to obtain a sales or water service tax refund from the department of revenue rather than receiving the exemption.
   A water utility that does not accept a valid exemption certificate shall pay a civil penalty to the department of revenue equal to the amount of tax refunded to the person who possessed a valid exemption certificate plus interest.
   The bill defines “exemption certificate” and “water utility”.
   The department of revenue is required to adopt rules to administer the bill.