S.F. 2069 Section 1. Section 438.3, Code 2026, is amended by adding 1 the following new subsection: 2 NEW SUBSECTION . 13. Whether liquefied carbon dioxide is 3 transported though or within the state through the pipelines 4 owned, operated, or leased by the pipeline company, and whether 5 the liquefied carbon dioxide being transported is used in 6 enhanced oil recovery. As used in this subsection, “enhanced 7 oil recovery” means the same as defined in section 438A.1. 8 Sec. 2. NEW SECTION . 438A.1 Definitions. 9 As used in this section: 10 1. “Department” means the department of revenue. 11 2. “Director” means the director of revenue. 12 3. “Enhanced oil recovery” means an advanced oil extraction 13 technique to remove stranded crude oil from a reservoir after 14 the use of primary or secondary extraction techniques. 15 4. “Pipeline company” means any person, partnership, 16 association, corporation, or syndicate that may own or operate 17 or be engaged in operating or utilizing pipelines, for the 18 purpose of transporting liquefied carbon dioxide as permitted 19 pursuant to chapter 479B. 20 Sec. 3. NEW SECTION . 438A.2 Taxation procedure. 21 Every person, partnership, association, corporation, or 22 syndicate that is engaged in the business of transporting 23 liquefied carbon dioxide by means of pipelines permitted 24 pursuant to chapter 479B, whether such pipelines be owned or 25 leased, shall be taxed as provided in this chapter. 26 Sec. 4. NEW SECTION . 438A.3 Administration —— rules. 27 1. The department shall administer and enforce the tax 28 imposed by this chapter. 29 2. The department shall adopt rules pursuant to chapter 17A 30 to administer this chapter. 31 Sec. 5. NEW SECTION . 438A.4 Imposition of tax —— notice. 32 1. In addition to any other tax imposed in this state, there 33 shall be a tax imposed at a rate of two dollars and fifty cents 34 per metric ton of liquefied carbon dioxide transported by a 35 -1- LSB 5917XS (5) 91 jm/jh 1/ 11

S.F. 2069 pipeline company within or through this state by means of a 1 pipeline to any recipient located within or outside the state. 2 2. Notwithstanding subsection 1, the rate shall be one 3 dollar per metric ton of liquefied carbon dioxide transported 4 by a pipeline company within or through this state by means of 5 a pipeline to any recipient located within or outside the state 6 for use in enhanced oil recovery. 7 3. A pipeline company subject to taxation under this section 8 shall notify the department of the date when liquefied carbon 9 dioxide begins to be transported through or within the state 10 and to what extent the liquefied carbon dioxide will be used 11 for enhanced oil recovery. 12 Sec. 6. NEW SECTION . 438A.5 Return and payment 13 requirements. 14 1. Each pipeline company, on or before March 31 following 15 a tax year in which a pipeline company transported liquefied 16 carbon dioxide subject to tax imposed under this chapter, shall 17 file a return with the director including but not limited to 18 the following information: 19 a. The total taxable metric tons of liquefied carbon dioxide 20 transported through or within the state subject to tax imposed 21 pursuant to section 438A.4, subsection 1. 22 b. The total taxable metric tons of liquefied carbon dioxide 23 transported through or within the state subject to tax imposed 24 pursuant to section 438A.4, subsection 2. 25 c. The tax imposed by section 438A.4 due for the tax year. 26 2. In addition to the information under subsection 1, 27 the pipeline company shall submit sufficient information 28 accompanying the tax return, to the satisfaction of the 29 department, that verifies the amount of the liquefied carbon 30 dioxide transported through the state that is subject to tax 31 under section 438A.4, subsection 1 or 2. 32 3. A return shall be signed by an officer, or other person 33 duly authorized by the pipeline company, and must be certified 34 as correct. 35 -2- LSB 5917XS (5) 91 jm/jh 2/ 11

S.F. 2069 Sec. 7. NEW SECTION . 438A.6 Revenues. 1 All revenues received from imposition of the tax under 2 this chapter shall be deposited into the taxpayer relief fund 3 created in section 8.57E. 4 Sec. 8. NEW SECTION . 438A.7 Failure to file return —— 5 incorrect return. 6 1. As soon as practicable after a return required by 7 section 438A.5 is filed, and in any event within three years 8 after such return is filed, the department shall examine the 9 return, determine the tax due if the return is found to be 10 incorrect, and give notice to the taxpayer of the determination 11 as provided in subsection 2. The period for the examination 12 and determination of the correct amount of tax is unlimited in 13 the case of a false or fraudulent return made with the intent 14 to evade any tax or in the case of a failure to file a return. 15 2. If a return required by section 438A.5 is not filed, 16 or if such return when filed is incorrect or insufficient and 17 the taxpayer fails to file a corrected or sufficient return 18 within twenty days after such return is required by notice 19 from the department, the department shall determine the amount 20 of tax due from information as the department may be able to 21 obtain and, if necessary, may estimate the tax due on the 22 basis of external indices. The department shall give notice 23 of the determination to the taxpayer liable for the tax. The 24 determination shall fix the tax unless the taxpayer against 25 whom the tax is levied, within sixty days after notice of the 26 determination, applies to the director for a hearing. At the 27 hearing evidence may be offered to support the determination 28 or to prove that the determination is incorrect. After the 29 hearing the director shall give notice of the decision to the 30 person liable for the tax. 31 3. The three-year period of limitation provided in 32 subsection 1 may be extended by the taxpayer by signing 33 a waiver agreement form provided by the department. The 34 agreement shall stipulate the period of extension and the 35 -3- LSB 5917XS (5) 91 jm/jh 3/ 11

S.F. 2069 tax period to which the extension applies. The agreement 1 shall also provide that a claim for refund may be filed by the 2 taxpayer at any time during the period of extension. 3 Sec. 9. NEW SECTION . 438A.8 Judicial review. 4 1. Judicial review of the actions of the department may 5 be sought pursuant to chapter 17A, the Iowa administrative 6 procedure Act. 7 2. For cause and upon a showing by the department that 8 collection of the tax in dispute is in doubt, the court may 9 order the petitioner to file with the clerk of the district 10 court a bond, with sureties approved by the clerk of the 11 district court, in the amount of the tax appealed from, 12 conditioned upon the performance by the petitioner of any 13 orders of the court. 14 3. An appeal may be taken by the pipeline company or the 15 director to the supreme court irrespective of the amount 16 involved. 17 Sec. 10. NEW SECTION . 438A.9 State tax lien —— actions 18 authorized. 19 1. Whenever a pipeline company who is liable to pay a tax 20 imposed by this chapter refuses or neglects to pay such tax, 21 the amount, including any interest, penalty, or addition to 22 such tax, together with the costs that may accrue, shall be 23 a state tax lien to which the tax is owed upon all property 24 and rights to property, whether real or personal, belonging to 25 the pipeline company. The lien shall be prior to and superior 26 over all subsequent liens upon any personal property within 27 this state, or right to such personal property, belonging 28 to the pipeline company, without the necessity of recording 29 the lien. The requirement for recording, as applied to the 30 tax imposed by this chapter, shall apply only to a lien upon 31 real property. The lien may be preserved against subsequent 32 mortgagees, purchasers, or judgment creditors, for value and 33 without notice of the lien, on any real property situated in 34 the state by filing with the recorder of the county in which 35 -4- LSB 5917XS (5) 91 jm/jh 4/ 11

S.F. 2069 the real property is located a notice of the lien. 1 2. The county recorder of each county shall index each lien 2 showing the applicable entries specified in sections 558.49 3 and 558.52 and showing, under the names of taxpayers arranged 4 alphabetically, all of the following: 5 a. The name of the pipeline company. 6 b. The state of Iowa as claimant. 7 c. Time the notice of lien was filed for recording. 8 d. Date of notice. 9 e. Amount of lien then due. 10 f. Date of assessment. 11 g. Date when the lien is satisfied. 12 3. The recorder shall endorse on each notice of lien the 13 day, hour, and minute when filed for recording and the document 14 reference number, shall preserve such notice, shall index the 15 notice in the index, and shall promptly record the lien in the 16 manner provided for recording real estate mortgages. The lien 17 is effective from the time of the indexing of the lien. 18 4. The state shall pay recording fees as provided in 19 section 331.604, for the recording of the lien, or for its 20 satisfaction. 21 5. Upon the payment of the tax as to which state has filed 22 notice with a county recorder, the state shall promptly file 23 with the recorder a satisfaction of the tax. The recorder 24 shall record the notice of satisfaction showing the applicable 25 entries specified in sections 558.49 and 558.52, and the 26 revenues shall be distributed as provided in section 438A.6. 27 6. Section 445.3 applies with respect to taxes, penalties, 28 and interest imposed by this chapter, except for the provisions 29 limiting the commencement of actions. In addition, chapters 30 446, 447, and 448 apply in the enforcement of the taxes imposed 31 by this chapter, but any tax deed issued shall not extinguish a 32 tax lien or judgment lien for taxes that have attached to the 33 property. 34 Sec. 11. NEW SECTION . 438A.10 Service of notice —— no 35 -5- LSB 5917XS (5) 91 jm/jh 5/ 11

S.F. 2069 limitation on enforcement. 1 1. A notice authorized or required under this chapter may be 2 given by mailing the notice to the pipeline company, addressed 3 to the pipeline company at the address given in the last return 4 filed by the pipeline company pursuant to this chapter, or if 5 no return has been filed, then to the most recent address of 6 the pipeline company obtainable. The mailing of the notice 7 is presumptive evidence of the receipt of the notice by the 8 pipeline company to whom the notice is addressed. A period of 9 time within which some action must be taken for which notice is 10 provided under this section commences to run from the date of 11 mailing of the notice. 12 2. There is no limitation for the enforcement of a civil 13 remedy pursuant to any proceeding or action taken to levy, 14 assess, determine, or enforce the collection of any tax or 15 penalty due under this chapter. 16 Sec. 12. NEW SECTION . 438A.11 Penalties —— offenses —— 17 limitation. 18 1. A pipeline company is subject to the penalty provisions 19 in section 421.27 with respect to any tax due under this 20 chapter. A pipeline company shall also pay interest on the 21 delinquent tax at the rate in effect under section 421.7 for 22 each month computed from the date the payment was due, counting 23 each fraction of a month as an entire month. The penalty and 24 interest shall be paid to the department of revenue. Unpaid 25 penalties and interest may be enforced in the same manner as 26 provided for unpaid replacement tax under this chapter. 27 2. A pipeline company, or officer, member, or employee 28 of the pipeline company, who willfully attempts to evade the 29 tax imposed or the payment of the tax is guilty of a class “D” 30 felony. 31 3. The issuance of a certificate by the department stating 32 that a tax has not been paid, that a return has not been filed, 33 or that information has not been supplied pursuant to this 34 chapter is prima facie evidence of such failure. 35 -6- LSB 5917XS (5) 91 jm/jh 6/ 11

S.F. 2069 4. A pipeline company, or officer, member, or employee 1 of the pipeline company, required to pay a replacement 2 tax, or required to make, sign, or file an annual return or 3 supplemental return, who willfully makes a false or fraudulent 4 annual return, or who willfully fails to pay at least ninety 5 percent of the tax or willfully fails to make, sign, or file 6 the annual return, as required, is guilty of a fraudulent 7 practice. 8 5. For purposes of determining the place of trial for a 9 violation of this section, the situs of an offense is in the 10 county of the residence of the taxpayer, officer, member, or 11 employee of the taxpayer charged with the offense, unless 12 the taxpayer, officer, member, or employee of the taxpayer 13 is a nonresident of this state or the residence cannot be 14 established, in which event the situs of the offense is in Polk 15 county. 16 6. Prosecution for an offense specified in this section 17 shall be commenced within six years after the commission of the 18 offense. 19 Sec. 13. NEW SECTION . 438A.12 Correction of errors —— 20 refunds or credits of tax paid —— information confidential —— 21 penalty. 22 1. a. If an amount of tax, penalty, or interest has been 23 paid which was not due under this chapter, the department shall 24 do one of the following: 25 (1) Credit the amount of the erroneous payment against any 26 tax due, or to become due, from the pipeline company. 27 (2) Refund the amount of the erroneous payment to the 28 pipeline company. 29 b. Claims for refund or credit of taxes paid shall be 30 filed with the director. A claim for refund or credit that 31 is not filed with the department within three years after the 32 tax payment upon which a refund or credit is claimed became 33 due, or one year after the tax payment was made, whichever 34 time is later, shall not be allowed. A claim for refund or 35 -7- LSB 5917XS (5) 91 jm/jh 7/ 11

S.F. 2069 credit of tax alleged to be unconstitutional not filed with 1 the department within ninety days after the tax payment upon 2 which a refund or credit is claimed became due shall not be 3 allowed. As a precondition for claiming a refund or credit of 4 alleged unconstitutional taxes, such taxes must be paid under 5 written protest which specifies the particulars of the alleged 6 unconstitutionality. Claims for refund or credit may only be 7 made by, and refunds or credits may only be made to, the person 8 responsible for paying the tax, or such person’s successors. 9 Section 421.10 applies to denied claims. 10 2. It is unlawful for any present or former officer or 11 employee of the state to divulge or to make known in any 12 manner to any person the amount of liquefied carbon dioxide 13 delivered by a pipeline company disclosed on a tax return, 14 return information, or investigative or audit information. 15 A person who violates this section is guilty of a serious 16 misdemeanor. If the offender is an officer or employee of the 17 state, such person, in addition to any other penalty, shall 18 also be dismissed from office or discharged from employment. 19 This section does not prohibit turning over to duly authorized 20 officers of the United States or tax officials of other states 21 such information pursuant to agreement between the director 22 and the secretary of the treasury of the United States or the 23 secretary’s delegate or pursuant to a reciprocal agreement with 24 another state. 25 3. Unless otherwise expressly permitted by a section 26 referencing this chapter, the amount of liquefied carbon 27 dioxide delivered by a taxpayer in a service area shall not be 28 divulged to any person or entity, other than the taxpayer, the 29 department of revenue, or the internal revenue service for use 30 in a matter unrelated to tax administration. This prohibition 31 precludes persons or entities other than the taxpayer, the 32 department of revenue, or the internal revenue service from 33 obtaining such information from the department of revenue. A 34 subpoena, order, or process which requires the department of 35 -8- LSB 5917XS (5) 91 jm/jh 8/ 11

S.F. 2069 revenue to produce such information to a person or entity, 1 other than the taxpayer, the department of revenue, or internal 2 revenue service, for use in a nontax proceeding is void. 3 Sec. 14. NEW SECTION . 438A.13 Records. 4 Each pipeline company that is subject to the tax imposed 5 under this chapter shall maintain records associated with 6 the tax for a period of five years following the later of 7 the original due date for filing a return pursuant to this 8 chapter in which such taxes are reported, or the date on which 9 either such return is filed. Such records shall include those 10 associated with any additions or dispositions of property. 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 imposes a tax on the transportation of liquefied 15 carbon dioxide (carbon dioxide) through pipelines. 16 In addition to any other tax imposed in this state, the 17 bill imposes a tax on a pipeline company at a rate of $2.50 18 per metric ton of carbon dioxide transported by the pipeline 19 company within or through this state through a pipeline to any 20 recipient located within or outside the state. 21 The bill reduces the tax rate to $1 per metric ton of carbon 22 dioxide transported through or within the state if the carbon 23 dioxide is used in enhanced oil recovery. The bill defines 24 “enhanced oil recovery” to mean an advanced oil extraction 25 technique to remove stranded crude oil from a reservoir after 26 the use of primary or secondary extraction techniques. 27 The bill directs the department of revenue (department) to 28 administer and enforce the tax, and requires the department to 29 adopt rules to administer the bill. 30 Beginning in 2027, every pipeline company having pipelines 31 in the state, along with other annual disclosures to the 32 department under Code section 438.3, shall disclose to the 33 department whether carbon dioxide is transported though or 34 within the state through the pipelines owned, operated, or 35 -9- LSB 5917XS (5) 91 jm/jh 9/ 11

S.F. 2069 leased by the pipeline company, and whether the carbon dioxide 1 being transported is used in enhanced oil recovery. 2 The bill requires each pipeline company to file a return 3 before March 31 following the tax year in which a pipeline 4 company transported liquefied carbon dioxide subject to the tax 5 imposed under the bill. The return shall include all of the 6 following and any other requested information: (1) the total 7 taxable metric tons of liquefied carbon dioxide transported 8 through or within the state subject to the $2.50 metric ton 9 rate; (2) the total taxable metric tons of liquefied carbon 10 dioxide transported through or within the state subject to the 11 $1 metric ton rate; and (3) the amount of tax due for the year. 12 The revenues received from imposition of the tax under the 13 bill are credited to the taxpayer relief fund created in Code 14 section 8.57E. 15 The bill establishes procedures for the failure to file a 16 return or for filing an incorrect return. 17 The bill specifies the actions of the department are 18 subject to judicial review pursuant to Code chapter 17A (Iowa 19 administrative procedures Act). The bill also establishes 20 procedures for posting a bond when the amount of tax is in 21 dispute, and specifies an appeal may be taken by the pipeline 22 company or the director to the supreme court irrespective of 23 the amount involved. 24 The bill establishes procedures for a state tax lien if the 25 tax imposed is not paid. The lien is prior to and superior 26 to all subsequent liens on personal property within the 27 state, without the necessity of recording the lien. The bill 28 requires a lien on real property to be recorded. The lien may 29 be preserved against subsequent mortgagees, purchasers, or 30 judgment creditors, for value and without notice of the lien, 31 on any real property situated in the state by filing with the 32 recorder of the county in which the real property is located a 33 notice of the lien. 34 The bill specifies there is no limitation for the 35 -10- LSB 5917XS (5) 91 jm/jh 10/ 11

S.F. 2069 enforcement of a civil remedy pursuant to any proceeding or 1 action taken to levy, appraise, assess, determine, or enforce 2 the collection of any tax or penalty due under the bill. 3 A pipeline company, or officer, member, or employee of the 4 pipeline company, who willfully attempts to evade the tax 5 imposed or the payment of the tax is guilty of a class “D” 6 felony. A class “D” felony is punishable by confinement for 7 no more than five years and a fine of at least $1,025 but 8 not more than $10,245. The bill also specifies a person is 9 guilty of a fraudulent practice if the person willfully files a 10 fraudulent return, who willfully fails to pay 90 percent of the 11 tax, or does not sign or file the return. The bill requires a 12 prosecution for a criminal offense to be commenced within six 13 years after the commission of the offense. 14 The bill establishes procedures for correcting errors or 15 overpayment of taxes by allowing for refunds or crediting 16 overpayment on the return for the following tax year. 17 The bill also specifies the information provided on the 18 return is confidential information and employees of the 19 department that may have access to the return commit a serious 20 misdemeanor for improperly disclosing information about a 21 pipeline company’s return. A serious misdemeanor is punishable 22 by confinement for no more than one year and a fine of at least 23 $430 but not more than $2,560. 24 The bill requires each pipeline company that is subject 25 to the tax to maintain records associated with the tax for 26 a period of five years. The records shall include those 27 associated with any additions or dispositions of property. 28 -11- LSB 5917XS (5) 91 jm/jh 11/ 11