SF 2354 (LSB 6120XS (2) 91)

SENATE FILE 2354

BY  WESTRICH

A BILL FOR

An Act relating to assistance animals in residential rental housing, including damage reimbursement, refundable income tax credits, and a landlord insurance risk pool, and providing penalties and effective date provisions.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

    Section 1.  NEW SECTION.  562A.9A  Assistance animals —— damage reimbursement —— deposits —— misrepresentation.
   1.  For purposes of this section, unless the context otherwise requires:
   a.  “Assistance animal” means the same as defined in section 216.8B.
   b.  “Emotional support animal” means an animal that is covered by the exclusion specified in 24 C.F.R. §5.303 and that is not a service animal.
   c.  “Service animal” means the same as defined in section 216.8B.
   d.  “Therapy animal” means an animal that provides therapeutic benefit but is not individually trained to perform tasks for a person with a disability and is not a service animal.
   2.  If a landlord suffers unreimbursed damage to a dwelling unit due to a tenant’s assistance animal, emotional support animal, service animal, or therapy animal, the landlord may seek compensation pursuant to any of the following:
   a.  A landlord may notify the department of revenue of the amount of unreimbursed damage caused to the landlord’s dwelling unit by a tenant’s assistance animal, emotional support animal, service animal, or therapy animal. Upon the landlord providing verification of the amount of damage to the satisfaction of the department of revenue, the department of revenue shall provide notice to the tenant of the claim and provide the tenant opportunity to dispute the amount. If, after providing notice to the tenant and receiving any evidence from the tenant, the department of revenue determines that the landlord’s claim is substantiated, the department of revenue shall use the setoff program pursuant to section 421.65 to pay over to the landlord the amount owed. A landlord shall not request a setoff for the same damages if the landlord is reimbursed pursuant to the tax credit established pursuant to paragraph “b” or a claim under the insurance pool pursuant to paragraph “c”. The department of revenue shall adopt rules to administer this paragraph.
   b.  A landlord may claim a tax credit under section 422.12R for unreimbursed damage caused by an assistance animal, emotional support animal, service animal, or therapy animal to the extent that the landlord has not made a claim for reimbursement for the same damage pursuant to paragraph “a” or “c”.
   c.  (1)  The director of the department of administrative services may establish plans for and procure group insurance to establish a state risk pool for landlords to be reimbursed for damage caused by tenants’ assistance animals, emotional support animals, service animals, and therapy animals.
   (2)  The funds for such plans shall be created solely from the contributions of participating landlords. All landlords participating in the plan shall be assessed and required to pay an amount to be fixed by the director of the department of administrative services. Participation in the plan is optional.
   (3)  Election to participate shall be in writing on forms provided by the department of administrative services.
   (4)  The director of the department of administrative services may contract with any insurance company having a certificate of authority to transact an insurance business in this state with respect to a group insurance plan.
   (5)  The department of administrative services shall adopt rules to administer this paragraph.
   3.  a.  Unless prohibited by state or federal law, a landlord may require a reasonable, refundable damage deposit for an emotional support animal or a therapy animal.
   b.  A deposit collected under this subsection shall only be used for damage beyond ordinary wear and tear.
   c.  A landlord shall not require a damage deposit for a service animal.
   4.  Unless required by federal law, a landlord is not required to allow a tenant to keep in the dwelling unit an emotional support animal or therapy animal as accommodation that is not a dog.
   5.  a.  A person who intentionally misrepresents an animal as an assistance animal, therapy animal, or emotional support animal is guilty of a simple misdemeanor.
   b.  A person commits the offense of intentional misrepresentation of an animal as an assistance animal, therapy animal, or emotional support animal if, for the purpose of obtaining any of the rights or privileges set forth in state or federal law, the person intentionally misrepresents an animal in one’s possession as one’s assistance animal, therapy animal, or emotional support animal.
    Sec. 2.  NEW SECTION.  422.12R  Landlord reimbursement tax credit.
   1.  For purposes of this section:
   a.  “Assistance animal” means the same as defined in section 216.8B.
   b.  “Dwelling unit” means the same as defined in section 562A.6.
   c.  “Emotional support animal” means the same as defined in section 562A.9A.
   d.  “Landlord” means the same as defined in section 562A.6.
   e.  “Service animal” means the same as defined in section 562A.9A.
   f.  “Tenant” means the same as defined in section 562A.6.
   g.  “Therapy animal” means the same as defined in section 562A.9A.
   2.  The taxes imposed under this subchapter, less the credits allowed under section 422.12, shall be reduced by a landlord reimbursement tax credit.
   3.  The amount of the credit shall be equal to the amount of verifiable damage, above normal wear and tear, to a dwelling unit that was caused by an assistance animal, emotional support animal, service animal, or therapy animal owned by a tenant, to the extent that the damage is not compensated by a damage deposit or setoff or reimbursement from the risk pool pursuant to section 562A.9A.
   4.  A landlord may claim the credit under this section by providing the department with evidence of the damage caused by the animal to the satisfaction of the department.
   5.  An individual may claim the tax credit allowed a partnership, S corporation, limited liability company, estate, or trust electing to have the income taxed directly to the individual. The amount claimed by the individual shall be based upon the pro rata share of the individual’s earnings of a partnership, S corporation, limited liability company, estate, or trust.
   6.  Any credit in excess of the tax liability is refundable. In lieu of claiming a refund, the taxpayer may elect to have the overpayment shown on the taxpayer’s final, completed return credited to the tax liability for the following tax year.
   7.  The director shall adopt rules to implement this section.
    Sec. 3.  EFFECTIVE DATE.  This Act takes effect July 1, 2027.
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 landlord reimbursement for damage to dwelling units caused by a tenant’s assistance animal, emotional support animal, service animal, or therapy animal, including a refundable income tax credit and a landlord insurance risk pool.
   The bill provides that if a landlord suffers unreimbursed damage to a dwelling unit due to a tenant’s assistance animal, emotional support animal, service animal, or therapy animal, the landlord may seek compensation through one of three methods. First, the landlord may notify the department of revenue of the amount of unreimbursed damage. Upon satisfactory verification, the department of revenue must notify the tenant and provide an opportunity to dispute the claim. If the claim is substantiated, the department must use the income tax refund setoff program under Code section 421.65 (setoff procedures) to pay the landlord the amount owed. A landlord may not seek a setoff for damages that are reimbursed through the tax credit or insurance risk pool established in the bill. The department of revenue is required to adopt rules to administer these procedures.
   Second, the landlord may claim a refundable income tax credit for unreimbursed damage under the bill, to the extent the landlord has not received reimbursement for the same damage through the setoff process or the insurance risk pool. The credit equals the amount of verifiable damage above normal wear and tear to a dwelling unit caused by a tenant’s assistance animal, emotional support animal, service animal, or therapy animal, to the extent the damage is not compensated by a damage deposit, setoff, or reimbursement from the risk pool. Taxpayers claiming the credit must provide evidence of the damage to the satisfaction of the department of revenue. The credit may be claimed by individuals and by pass-through entity owners based on the individual’s pro rata share of earnings. Any excess credit may be refunded or applied to the following tax year. The director of revenue is required to adopt rules to implement the tax credit.
   Third, the bill authorizes the director of the department of administrative services to establish and procure group insurance plans to create a voluntary state risk pool to reimburse landlords for damage caused by such animals. The risk pool is funded solely by contributions from participating landlords, who must elect to participate in writing and pay assessments determined by the director. The director may contract with authorized insurers and must adopt rules to administer the program.
   The bill provides that, unless prohibited by state or federal law, a landlord may require a reasonable, refundable damage deposit for an emotional support animal or therapy animal. The deposit may be used only for damage beyond ordinary wear and tear. A landlord may not require a damage deposit for a service animal.
   The bill provides that, unless required by federal law, a landlord is not required to allow a tenant to keep an emotional support animal or therapy animal that is not a dog as a housing accommodation.
   Current law provides that a person who intentionally misrepresents an animal as a service animal or a service-animal-in-training for the purpose of obtaining rights or privileges under state or federal law is guilty of a simple misdemeanor. The bill creates a new criminal offense, punishable as a simple misdemeanor, when a person intentionally misrepresents an animal as an assistance animal, therapy animal, or emotional support animal for the purpose of obtaining rights or privileges under state or federal law.
   The bill takes effect July 1, 2027.