Senate Study Bill 3181 - Introduced SENATE FILE _____ BY (PROPOSED COMMITTEE ON WAYS AND MEANS BILL BY CHAIRPERSON DAWSON) A BILL FOR An Act making certain sales and use tax exemptions relating to 1 nuclear electric generation facilities, web search portal 2 businesses, and data center businesses contingent upon 3 making contributions to institutions of higher education 4 governed by the state board of regents. 5 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 6 TLSB 6847XC (4) 91 jm/jh

S.F. _____ Section 1. NEW SECTION . 15E.371 Nuclear electric generation 1 facility agreement —— agreement —— required contribution. 2 1. a. As a condition of receiving the nuclear electric 3 generation facilities sales tax exemption under section 423.3, 4 subsection 111, and prior to being eligible to receive the 5 exemption, the nuclear electric generation facility shall 6 enter into an agreement with the authority that provides 7 a minimum contribution for establishing and maintaining a 8 nuclear engineering program at one or more institutions of 9 higher education governed by the state board of regents. The 10 agreement shall, at a minimum, require the nuclear electric 11 generation facility to annually contribute at least five 12 percent of the aggregate value of the sales tax exemption 13 provided in the annual report to the department of revenue 14 pursuant to section 423.3, subsection 111, paragraph “d” , for 15 the previous calendar year. The contribution shall be provided 16 to one or more institutions of higher education governed by the 17 state board of regents that establish and maintain a nuclear 18 engineering program. 19 b. The agreement shall establish the date the exemption 20 begins including whether and to what extent the exemption 21 applies to any tangible personal property or specified digital 22 products sold or to services furnished prior to the agreement 23 date. 24 c. The department of revenue shall annually provide the 25 aggregate value of the exemption contained in the annual report 26 to the authority as required by section 423.3, subsection 111, 27 paragraph “d” . 28 2. The authority shall verify that the nuclear electric 29 generation facility made the contribution that meets the 30 requirements of subsection 1. If the nuclear electric 31 generation facility fails to make the required contribution 32 described in subsection 1, all of the following shall apply: 33 a. The authority shall notify the department of revenue, 34 and the department of revenue shall cancel the registration of 35 -1- LSB 6847XC (4) 91 jm/jh 1/ 13

S.F. _____ the nuclear electric generation facility under section 423.3, 1 subsection 111, and the nuclear electric generation facility 2 shall not be eligible for the exemption under section 423.3, 3 subsection 111. 4 b. The nuclear electric generation facility shall repay 5 the aggregate amount of the sales tax exemptions claimed in 6 the calendar year for which the nuclear electric generation 7 facility did not make the required contribution. Any repayment 8 shall be considered a tax payment due and payable to the 9 department of revenue by the nuclear electric generation 10 facility, and the failure to make the repayment may be treated 11 by the department of revenue in the same manner as a failure to 12 pay the tax shown due, or required to be shown due, with the 13 filing of a return or deposit form. 14 3. The authority may adopt rules pursuant to chapter 17A to 15 administer this section. 16 Sec. 2. NEW SECTION . 15E.372 Web search portal and data 17 center businesses —— agreement —— required contributions. 18 1. As used in this section: 19 a. “Data center business” means the same as defined in 20 section 423.3, subsection 95, that is any of the following: 21 (1) New construction upon property completed on or after 22 January 1, 2027. 23 (2) New construction upon existing property completed on or 24 after January 1, 2027. 25 (3) Additions upon existing property occurring on or after 26 January 1, 2027. 27 b. “Web search portal business” means the same as defined 28 in section 423.3, subsection 92 or 93, that is any of the 29 following: 30 (1) New construction upon property completed on or after 31 January 1, 2027. 32 (2) New construction upon existing property completed on or 33 after January 1, 2027. 34 (3) Additions upon existing property occurring on or after 35 -2- LSB 6847XC (4) 91 jm/jh 2/ 13

S.F. _____ January 1, 2027. 1 2. a. As a condition of receiving the sales tax exemption 2 under section 423.3, subsection 92, 93, or 95, and prior to 3 being eligible to receive the exemption, a web search portal 4 business or data center business shall enter into an agreement 5 with the authority that provides a minimum contribution for 6 establishing and maintaining a nuclear engineering program at 7 one or more state institutions of higher education governed by 8 the state board of regents. The agreement shall, at a minimum, 9 require the web search portal business or data center business 10 to annually contribute at least five percent of the aggregate 11 value of the sales tax exemption provided in the annual 12 report to the department of revenue pursuant to section 423.3, 13 subsection 92, 93, or 95. The contribution shall be provided 14 to one or more institutions of higher education governed by the 15 state board of regents that establish and maintain a nuclear 16 engineering program. 17 b. The agreement shall establish the date the exemption 18 begins. 19 c. The department of revenue shall annually provide the 20 aggregate value of the exemption provided in the annual report 21 to the authority as required by section 423.3, subsection 92, 22 93, or 95. 23 3. The authority shall verify that the web search 24 portal business or data center business made that meet the 25 requirements of subsection 2. If a web search portal business 26 or data center business fails to make the required contribution 27 described in subsection 2, all of the following shall apply: 28 a. The authority shall notify the department of revenue, 29 and the department of revenue shall cancel the registration of 30 the web search portal business or data center business under 31 section 423.3, subsection 92, 93, or 95, as applicable, and the 32 web search portal business or data center business shall not 33 be eligible for the sales tax exemption under section 423.3, 34 subsection 92, 93, or 95, as applicable. 35 -3- LSB 6847XC (4) 91 jm/jh 3/ 13

S.F. _____ b. The web search portal business or data center business 1 shall repay the aggregate amount of the sales tax exemptions 2 claimed in the calendar year for which the web search portal 3 business or data center business did not make the required 4 contribution. Any repayment shall be considered a tax payment 5 due and payable to the department of revenue by the web search 6 portal business or data center business, and the failure to 7 make the repayment may be treated by the department of revenue 8 in the same manner as a failure to pay the tax shown due, 9 or required to be shown due, with the filing of a return or 10 deposit form. 11 4. The authority may adopt rules pursuant to chapter 17A to 12 administer this section. 13 Sec. 3. Section 423.3, subsection 92, paragraph a, 14 subparagraph (1), Code 2026, is amended to read as follows: 15 (1) The Except as otherwise provided under section 15E.372, 16 the sales price from the sale of computers and equipment that 17 are necessary for the maintenance and operation of a web search 18 portal and property whether directly or indirectly connected to 19 the computers, including but not limited to cooling systems, 20 cooling towers, and other temperature control infrastructure; 21 power infrastructure for transformation, distribution, 22 or management of electricity used for the maintenance and 23 operation of the web search portal, including but not limited 24 to exterior dedicated business-owned substations, backup 25 power generation systems, battery systems, and related 26 infrastructure; and racking systems, cabling, and trays, which 27 are necessary for the maintenance and operation of the web 28 search portal. 29 Sec. 4. Section 423.3, subsection 92, paragraph b, 30 subparagraph (5), Code 2026, is amended to read as follows: 31 (5) (a) The web search portal business shall register 32 with the department as a web search portal. To maintain its 33 registration, the web search portal business shall file an 34 annual report with the department, by January 31, 2026, and by 35 -4- LSB 6847XC (4) 91 jm/jh 4/ 13

S.F. _____ each January 31 thereafter. The annual report shall describe 1 the backup power generation fuel and electricity purchased and 2 used in the previous calendar year for the purposes described 3 in paragraph “a” , subparagraphs (2) and (3), and any other 4 information the department requires. 5 (b) (i) For a web search portal business subject to section 6 15E.372, beginning with the annual report due on or after 7 January 31, 2027, the annual report shall also contain the 8 aggregate sales price amount of exempt property purchased under 9 paragraph “a” , subparagraphs (1), (2), and (3). 10 (ii) If the economic development authority notifies 11 the department of revenue that the data center business is 12 not in compliance with section 15E.372, the department of 13 revenue shall cancel the registration of the web search portal 14 business, and the web search portal business shall not be 15 eligible for the exemption under this subsection. 16 Sec. 5. Section 423.3, subsection 93, paragraph a, 17 subparagraph (1), Code 2026, is amended to read as follows: 18 (1) The Except as otherwise provided under section 15E.372, 19 the sales price from the sale of computers and equipment that 20 are necessary for the maintenance and operation of a web search 21 portal business and property whether directly or indirectly 22 connected to the computers, including but not limited to 23 cooling systems, cooling towers, and other temperature control 24 infrastructure; power infrastructure for transformation, 25 distribution, or management of electricity used for the 26 maintenance and operation of the web search portal business, 27 including but not limited to exterior dedicated business-owned 28 substations, backup power generation systems, battery systems, 29 and related infrastructure; and racking systems, cabling, and 30 trays, which are necessary for the maintenance and operation of 31 the web search portal business. 32 Sec. 6. Section 423.3, subsection 93, paragraph b, 33 subparagraph (5), Code 2026, is amended to read as follows: 34 (5) (a) The web search portal business shall register with 35 -5- LSB 6847XC (4) 91 jm/jh 5/ 13

S.F. _____ the department as a web search portal business. To maintain 1 its registration, the web search portal business shall file an 2 annual report with the department, by January 31, 2026, and by 3 each January 31 thereafter. The annual report shall describe 4 the backup power generation fuel and electricity purchased and 5 used in the previous calendar year for the purposes described 6 in paragraph “a” , subparagraphs (2) and (3), and any other 7 information the department requires. 8 (b) (i) For a web search portal business subject to section 9 15E.372, beginning with the annual report due on or after 10 January 31, 2027, the annual report shall also contain the 11 aggregate sales price amount of exempt property purchased under 12 paragraph “a” , subparagraphs (1), (2), and (3). 13 (ii) If the economic development authority notifies 14 the department of revenue that the data center business is 15 not in compliance with section 15E.372, the department of 16 revenue shall cancel the registration of the web search portal 17 business, and the web search portal business shall not be 18 eligible for the exemption under this subsection. 19 Sec. 7. Section 423.3, subsection 95, paragraph a, 20 subparagraph (1), Code 2026, is amended to read as follows: 21 (1) The Except as otherwise provided under section 15E.372, 22 the sales price from the sale of computers and equipment that 23 are necessary for the maintenance and operation of a data 24 center business and property whether directly or indirectly 25 connected to the computers, including but not limited to 26 cooling systems, cooling towers, and other temperature control 27 infrastructure; power infrastructure for transformation, 28 distribution, or management of electricity used for the 29 maintenance and operation of the data center business, 30 including but not limited to exterior dedicated business-owned 31 substations, backup power generation systems, battery systems, 32 and related infrastructure; and racking systems, cabling, and 33 trays, which are necessary for the maintenance and operation of 34 the data center business. 35 -6- LSB 6847XC (4) 91 jm/jh 6/ 13

S.F. _____ Sec. 8. Section 423.3, subsection 95, paragraph b, 1 subparagraph (5), Code 2026, is amended to read as follows: 2 (5) (a) The data center business shall register with 3 the department as a data center business. To maintain its 4 registration, the data center business shall file an annual 5 report with the department, by January 31, 2026, and by each 6 January 31 thereafter. The annual report shall describe the 7 backup power generation fuel and electricity purchased in the 8 previous calendar year for the purposes described in paragraph 9 “a” , subparagraphs (2) and (3), and any other information the 10 department requires. 11 (b) (i) For a data center business subject to section 12 15E.372, beginning with the annual report due on or after 13 January 31, 2027, the annual report shall also contain the 14 aggregate sales price amount of exempt property purchased under 15 paragraph “a” , subparagraphs (1), (2), and (3). 16 (ii) If the economic development authority notifies the 17 department of revenue that the data center business is not in 18 compliance with section 15E.372, the department of revenue 19 shall cancel the registration of the data center business, 20 and the data center business shall not be eligible for the 21 exemption under this subsection. 22 Sec. 9. Section 423.3, Code 2026, is amended by adding the 23 following new subsection: 24 NEW SUBSECTION . 111. a. (1) To the extent permissible 25 in the agreement under section 15E.371, the sales price of 26 tangible personal property or specified digital products 27 sold or services furnished before, during, or after the 28 site preparation, construction, reconstruction, replacement, 29 alteration, repair, safe storage, maintenance, or restarting 30 after decommissioning of a nuclear electric generation 31 facility. 32 (2) The tangible personal property, specified digital 33 products, and services furnished shall be directly and 34 primarily used for the purposes described in subparagraph (1). 35 -7- LSB 6847XC (4) 91 jm/jh 7/ 13

S.F. _____ b. This exemption does not apply to the following: 1 (1) Motor vehicles subject to registration under chapter 2 321. 3 (2) Tangible personal property or specified digital 4 products sold, or services furnished where the purchasing agent 5 of the nuclear electric generation facility fails to provide 6 the retailer with an exemption certificate. 7 c. This subsection shall not be construed to limit any other 8 exemptions applicable under this chapter. 9 d. (1) The nuclear electric generation facility shall 10 register with the department. To maintain its registration, 11 the nuclear electric generation facility shall file an annual 12 report with the department by January 31, and by each January 13 31 thereafter, that contains the following information: 14 (a) The aggregate sales price amount of exempt tangible 15 personal property or digital products sold and services 16 furnished from the previous calendar year. 17 (b) Any other information the department requires. 18 (2) The department shall calculate the aggregate value of 19 the exemption based upon the aggregate sales price amounts 20 disclosed in the annual report, and provide the aggregate 21 value of the exemption to the economic development authority 22 as required in section 15E.371. 23 (3) A nuclear electric generation facility that is not 24 registered with the department is not eligible to receive an 25 exemption under this subsection. 26 e. The department may adopt rules pursuant to chapter 17A 27 to administer this subsection. 28 f. For purposes of this subsection, “nuclear electric 29 generation facility” means a facility located in this state that 30 uses nuclear fission, fusion, or other nuclear processes to 31 generate electricity for sale or for use in the transmission 32 or distribution grid and is licensed by the federal nuclear 33 regulatory commission. A “nuclear electric generation facility” 34 includes facilities undergoing restart after a decommissioning 35 -8- LSB 6847XC (4) 91 jm/jh 8/ 13

S.F. _____ period and facilities in advanced stages of development or 1 obtaining federal licensing from the United States nuclear 2 regulatory commission. A “nuclear electric generation facility” 3 includes all of the following: 4 (1) Nuclear reactors, reactor fuel cores, reactor vessels, 5 steam generators, heat exchangers, turbine systems, control 6 rods, instrumentation, cooling systems, fuel handling and 7 storage systems, radiation shielding, radiation sources and 8 other primary nuclear generation components, and spent fuel 9 storage. 10 (2) Structures and buildings housing nuclear generation 11 systems, including containment buildings, auxiliary buildings, 12 cooling towers, water intake or discharge structures, and 13 on-site storage facilities directly related to nuclear 14 operations. 15 (3) Electrical generation and transformation equipment, 16 including turbines, generators, switchgear, transformers, 17 inverters, transmission structures, conductors, substations, 18 and associated power conditioning and control equipment. 19 (4) Equipment and systems used for safety, security, 20 radiation monitoring, emergency power, operator training, 21 maintenance training, safety-related equipment storage, and 22 warehousing. 23 (5) Environmental protection required for operation of the 24 facility. 25 (6) System materials, components, equipment, storage, 26 structures, and buildings associated with integrated systems 27 that enhance the flexibility of the system in delivering energy 28 to the electrical grid, including but not limited to the 29 following: 30 (a) Systems that store and utilize thermal energy or 31 electrical energy from the nuclear electric generating facility 32 prior to delivering energy to the grid. 33 (b) Energy storage systems that utilize a transmission 34 system interconnection to the same physical substation as the 35 -9- LSB 6847XC (4) 91 jm/jh 9/ 13

S.F. _____ nuclear electric generating facility. 1 (7) Materials, supplies, and components permanently 2 incorporated into or consumed in the construction, repair, or 3 maintenance of a nuclear electric generation facility. 4 (8) Digital control systems, software, cybersecurity, 5 infrastructure, and physical security systems and equipment 6 used in the safe and compliant operation of the nuclear 7 electric generation facility. 8 (9) Equipment, materials, systems, and services required to 9 restart operations at a previously operational nuclear electric 10 generation facility that has ceased commercial operation, 11 including but not limited to refurbishment, modernization, 12 regulatory compliance upgrades, and relicensing activities. 13 EXPLANATION 14 The inclusion of this explanation does not constitute agreement with 15 the explanation’s substance by the members of the general assembly. 16 This bill makes certain sales and use tax exemptions 17 relating to nuclear electric generation facilities, web search 18 portal businesses, and data center businesses contingent upon 19 making contributions to institutions of higher education 20 governed by the state board of regents. 21 NUCLEAR ELECTRIC GENERATION FACILITY —— EXEMPTION. To 22 the extent permissible under an agreement required by 23 the bill, tangible personal property or specified digital 24 products sold and services furnished are exempted from 25 the state sales and use tax (exemption) before, during, or 26 after the site preparation, construction, reconstruction, 27 replacement, alteration, repair, safe storage, maintenance, 28 or the restarting after decommissioning of a nuclear electric 29 generation facility. The tangible personal property, specified 30 digital products, and services exempted are required to be 31 directly and primarily used for these purposes. 32 The bill defines “nuclear electric generation facility” 33 (facility) to mean a facility located in this state that 34 uses nuclear fission, fusion, or other nuclear processes to 35 -10- LSB 6847XC (4) 91 jm/jh 10/ 13

S.F. _____ generate electricity for sale or for use in the transmission 1 or distribution grid and is licensed by the federal nuclear 2 regulatory commission. The definition of facility in the bill 3 is comprehensive and includes but is not limited to nuclear 4 reactors, storage facilities, equipment, electrical generation, 5 and other structures. 6 AGREEMENT BY FACILITY. As a condition of receiving the 7 exemption created in the bill, a facility is required to enter 8 into an agreement with the economic development authority 9 (authority) that requires the facility to make a minimum 10 contribution for establishing and maintaining a nuclear 11 engineering program at an institution of higher education 12 governed by the state board of regents (regents institution). 13 The agreement shall, at a minimum, require the facility to 14 contribute at least 5 percent of the aggregate value of the 15 exemption received pursuant to the bill for the purpose of 16 establishing and maintaining a nuclear engineering program at 17 a regents institution. 18 The agreement with the authority shall establish the date 19 the exemption begins, including whether and to what extent 20 the exemption applies to any tangible personal property or 21 specified digital products sold, or services furnished prior 22 to the agreement date. 23 REPORTING BY FACILITY. The bill requires a facility to 24 register with the department. Beginning January 31, and 25 each January 31 thereafter, a facility receiving exemption 26 is required to file an annual report with the department of 27 revenue (DOR). The annual report shall provide the aggregate 28 sales price amount of tangible personal property, specified 29 digital products, and services that received an exemption in 30 the previous calendar year. 31 The bill requires DOR to calculate the aggregate value of 32 the exemption based upon the aggregate sales price amounts 33 disclosed in the annual report, and provide the aggregate value 34 of the exemption to the authority, for purposes of calculating 35 -11- LSB 6847XC (4) 91 jm/jh 11/ 13

S.F. _____ the 5 percent contribution for establishing and maintaining a 1 nuclear engineering program at a regents institution. 2 WEB SEARCH PORTAL AND DATA CENTER BUSINESSES —— AGREEMENT. 3 For a web search portal business or data center business 4 (business) that is new construction or an addition to an 5 existing property on or after January 1, 2027, and as a 6 condition of receiving the existing sales and use tax 7 exemption, the business is required to enter into an agreement 8 with the authority that requires the business to make the same 9 minimum contribution for establishing and maintaining a nuclear 10 engineering program at a regents institution as a nuclear 11 electric generation facility. The agreement shall, at a 12 minimum, require the business to contribute at least 5 percent 13 of the aggregate value of the exemption received pursuant to 14 the bill for the purpose of establishing and maintaining a 15 nuclear engineering program at a regents institution. 16 REPORTING. Currently, the sales and use tax exemption 17 exists for a business in Code section 423.3, subsection 92, 18 93, or 95. Beginning January 31, 2026, a business receiving 19 a sales and use tax exemption is required to register with 20 DOR and file an annual report with DOR. The annual report 21 shall describe the aggregate sales price amount of fuel or 22 electricity purchased that is exempt from sales and use tax in 23 the previous calendar year. 24 For a business that is new construction or an addition to 25 an existing property on or after January 1, 2027, the bill 26 requires the annual report to contain more information about 27 the sales and use tax exemption provided to the business by 28 requiring the annual report to contain the aggregate sales 29 price amount of all exempt property, including but not limited 30 to computers, equipment, cooling systems, and power systems. 31 In the same manner as the nuclear electric generation 32 facility exemption, the bill requires DOR to calculate the 33 aggregate value of the exemption based upon the aggregate sales 34 price amounts disclosed in the annual report, and provide the 35 -12- LSB 6847XC (4) 91 jm/jh 12/ 13