SSB 3181 (LSB 6847XC (4) 91)

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 nuclear electric generation facilities, web search portal businesses, and data center businesses contingent upon making contributions to institutions of higher education governed by the state board of regents.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

    Section 1.  NEW SECTION.  15E.371  Nuclear electric generation facility agreement —— agreement —— required contribution.
   1.  a.  As a condition of receiving the nuclear electric generation facilities sales tax exemption under section 423.3, subsection 111, and prior to being eligible to receive the exemption, the nuclear electric generation facility shall enter into an agreement with the authority that provides a minimum contribution for establishing and maintaining a nuclear engineering program at one or more institutions of higher education governed by the state board of regents. The agreement shall, at a minimum, require the nuclear electric generation facility to annually contribute at least five percent of the aggregate value of the sales tax exemption provided in the annual report to the department of revenue pursuant to section 423.3, subsection 111, paragraph “d”, for the previous calendar year. The contribution shall be provided to one or more institutions of higher education governed by the state board of regents that establish and maintain a nuclear engineering program.
   b.  The agreement shall establish the date the exemption begins including whether and to what extent the exemption applies to any tangible personal property or specified digital products sold or to services furnished prior to the agreement date.
   c.  The department of revenue shall annually provide the aggregate value of the exemption contained in the annual report to the authority as required by section 423.3, subsection 111, paragraph “d”.
   2.  The authority shall verify that the nuclear electric generation facility made the contribution that meets the requirements of subsection 1. If the nuclear electric generation facility fails to make the required contribution described in subsection 1, all of the following shall apply:
   a.  The authority shall notify the department of revenue, and the department of revenue shall cancel the registration of the nuclear electric generation facility under section 423.3, subsection 111, and the nuclear electric generation facility shall not be eligible for the exemption under section 423.3, subsection 111.
   b.  The nuclear electric generation facility shall repay the aggregate amount of the sales tax exemptions claimed in the calendar year for which the nuclear electric generation facility did not make the required contribution. Any repayment shall be considered a tax payment due and payable to the department of revenue by the nuclear electric generation facility, and the failure to make the repayment may be treated by the department of revenue in the same manner as a failure to pay the tax shown due, or required to be shown due, with the filing of a return or deposit form.
   3.  The authority may adopt rules pursuant to chapter 17A to administer this section.
    Sec. 2.  NEW SECTION.  15E.372  Web search portal and data center businesses —— agreement —— required contributions.
   1.  As used in this section:
   a.  “Data center business” means the same as defined in section 423.3, subsection 95, that is any of the following:
   (1)  New construction upon property completed on or after January 1, 2027.
   (2)  New construction upon existing property completed on or after January 1, 2027.
   (3)  Additions upon existing property occurring on or after January 1, 2027.
   b.  “Web search portal business” means the same as defined in section 423.3, subsection 92 or 93, that is any of the following:
   (1)  New construction upon property completed on or after January 1, 2027.
   (2)  New construction upon existing property completed on or after January 1, 2027.
   (3)  Additions upon existing property occurring on or after January 1, 2027.
   2.  a.  As a condition of receiving the sales tax exemption under section 423.3, subsection 92, 93, or 95, and prior to being eligible to receive the exemption, a web search portal business or data center business shall enter into an agreement with the authority that provides a minimum contribution for establishing and maintaining a nuclear engineering program at one or more state institutions of higher education governed by the state board of regents. The agreement shall, at a minimum, require the web search portal business or data center business to annually contribute at least five percent of the aggregate value of the sales tax exemption provided in the annual report to the department of revenue pursuant to section 423.3, subsection 92, 93, or 95. The contribution shall be provided to one or more institutions of higher education governed by the state board of regents that establish and maintain a nuclear engineering program.
   b.  The agreement shall establish the date the exemption begins.
   c.  The department of revenue shall annually provide the aggregate value of the exemption provided in the annual report to the authority as required by section 423.3, subsection 92, 93, or 95.
   3.  The authority shall verify that the web search portal business or data center business made that meet the requirements of subsection 2. If a web search portal business or data center business fails to make the required contribution described in subsection 2, all of the following shall apply:
   a.  The authority shall notify the department of revenue, and the department of revenue shall cancel the registration of the web search portal business or data center business under section 423.3, subsection 92, 93, or 95, as applicable, and the web search portal business or data center business shall not be eligible for the sales tax exemption under section 423.3, subsection 92, 93, or 95, as applicable.
   b.  The web search portal business or data center business shall repay the aggregate amount of the sales tax exemptions claimed in the calendar year for which the web search portal business or data center business did not make the required contribution. Any repayment shall be considered a tax payment due and payable to the department of revenue by the web search portal business or data center business, and the failure to make the repayment may be treated by the department of revenue in the same manner as a failure to pay the tax shown due, or required to be shown due, with the filing of a return or deposit form.
   4.  The authority may adopt rules pursuant to chapter 17A to administer this section.
    Sec. 3.  Section 423.3, subsection 92, paragraph a, subparagraph (1), Code 2026, is amended to read as follows:
   (1)  The Except as otherwise provided under section 15E.372, the sales price from the sale of computers and equipment that are necessary for the maintenance and operation of a web search portal and property whether directly or indirectly connected to the computers, including but not limited to cooling systems, cooling towers, and other temperature control infrastructure; power infrastructure for transformation, distribution, or management of electricity used for the maintenance and operation of the web search portal, including but not limited to exterior dedicated business-owned substations, backup power generation systems, battery systems, and related infrastructure; and racking systems, cabling, and trays, which are necessary for the maintenance and operation of the web search portal.
    Sec. 4.  Section 423.3, subsection 92, paragraph b, subparagraph (5), Code 2026, is amended to read as follows:
   (5)  (a)  The web search portal business shall register with the department as a web search portal. To maintain its registration, the web search portal business shall file an annual report with the department, by January 31, 2026, and by each January 31 thereafter. The annual report shall describe the backup power generation fuel and electricity purchased and used in the previous calendar year for the purposes described in paragraph “a”, subparagraphs (2) and (3), and any other information the department requires.
   (b)  (i)  For a web search portal business subject to section 15E.372, beginning with the annual report due on or after January 31, 2027, the annual report shall also contain the aggregate sales price amount of exempt property purchased under paragraph “a”, subparagraphs (1), (2), and (3).
   (ii)  If the economic development authority notifies the department of revenue that the data center business is not in compliance with section 15E.372, the department of revenue shall cancel the registration of the web search portal business, and the web search portal business shall not be eligible for the exemption under this subsection.
    Sec. 5.  Section 423.3, subsection 93, paragraph a, subparagraph (1), Code 2026, is amended to read as follows:
   (1)  The Except as otherwise provided under section 15E.372, the sales price from the sale of computers and equipment that are necessary for the maintenance and operation of a web search portal business and property whether directly or indirectly connected to the computers, including but not limited to cooling systems, cooling towers, and other temperature control infrastructure; power infrastructure for transformation, distribution, or management of electricity used for the maintenance and operation of the web search portal business, including but not limited to exterior dedicated business-owned substations, backup power generation systems, battery systems, and related infrastructure; and racking systems, cabling, and trays, which are necessary for the maintenance and operation of the web search portal business.
    Sec. 6.  Section 423.3, subsection 93, paragraph b, subparagraph (5), Code 2026, is amended to read as follows:
   (5)  (a)  The web search portal business shall register with the department as a web search portal business. To maintain its registration, the web search portal business shall file an annual report with the department, by January 31, 2026, and by each January 31 thereafter. The annual report shall describe the backup power generation fuel and electricity purchased and used in the previous calendar year for the purposes described in paragraph “a”, subparagraphs (2) and (3), and any other information the department requires.
   (b)  (i)  For a web search portal business subject to section 15E.372, beginning with the annual report due on or after January 31, 2027, the annual report shall also contain the aggregate sales price amount of exempt property purchased under paragraph “a”, subparagraphs (1), (2), and (3).
   (ii)  If the economic development authority notifies the department of revenue that the data center business is not in compliance with section 15E.372, the department of revenue shall cancel the registration of the web search portal business, and the web search portal business shall not be eligible for the exemption under this subsection.
    Sec. 7.  Section 423.3, subsection 95, paragraph a, subparagraph (1), Code 2026, is amended to read as follows:
   (1)  The Except as otherwise provided under section 15E.372, the sales price from the sale of computers and equipment that are necessary for the maintenance and operation of a data center business and property whether directly or indirectly connected to the computers, including but not limited to cooling systems, cooling towers, and other temperature control infrastructure; power infrastructure for transformation, distribution, or management of electricity used for the maintenance and operation of the data center business, including but not limited to exterior dedicated business-owned substations, backup power generation systems, battery systems, and related infrastructure; and racking systems, cabling, and trays, which are necessary for the maintenance and operation of the data center business.
    Sec. 8.  Section 423.3, subsection 95, paragraph b, subparagraph (5), Code 2026, is amended to read as follows:
   (5)  (a)  The data center business shall register with the department as a data center business. To maintain its registration, the data center business shall file an annual report with the department, by January 31, 2026, and by each January 31 thereafter. The annual report shall describe the backup power generation fuel and electricity purchased in the previous calendar year for the purposes described in paragraph “a”, subparagraphs (2) and (3), and any other information the department requires.
   (b)  (i)  For a data center business subject to section 15E.372, beginning with the annual report due on or after January 31, 2027, the annual report shall also contain the aggregate sales price amount of exempt property purchased under paragraph “a”, subparagraphs (1), (2), and (3).
   (ii)  If the economic development authority notifies the department of revenue that the data center business is not in compliance with section 15E.372, the department of revenue shall cancel the registration of the data center business, and the data center business shall not be eligible for the exemption under this subsection.
    Sec. 9.  Section 423.3, Code 2026, is amended by adding the following new subsection:
   NEW SUBSECTION.  111.  a.  (1)  To the extent permissible in the agreement under section 15E.371, the sales price of tangible personal property or specified digital products sold or services furnished before, during, or after the site preparation, construction, reconstruction, replacement, alteration, repair, safe storage, maintenance, or restarting after decommissioning of a nuclear electric generation facility.
   (2)  The tangible personal property, specified digital products, and services furnished shall be directly and primarily used for the purposes described in subparagraph (1).
   b.  This exemption does not apply to the following:
   (1)  Motor vehicles subject to registration under chapter 321.
   (2)  Tangible personal property or specified digital products sold, or services furnished where the purchasing agent of the nuclear electric generation facility fails to provide the retailer with an exemption certificate.
   c.  This subsection shall not be construed to limit any other exemptions applicable under this chapter.
   d.  (1)  The nuclear electric generation facility shall register with the department. To maintain its registration, the nuclear electric generation facility shall file an annual report with the department by January 31, and by each January 31 thereafter, that contains the following information:
   (a)  The aggregate sales price amount of exempt tangible personal property or digital products sold and services furnished from the previous calendar year.
   (b)  Any other information the department requires.
   (2)  The department shall calculate the aggregate value of the exemption based upon the aggregate sales price amounts disclosed in the annual report, and provide the aggregate value of the exemption to the economic development authority as required in section 15E.371.
   (3)  A nuclear electric generation facility that is not registered with the department is not eligible to receive an exemption under this subsection.
   e.  The department may adopt rules pursuant to chapter 17A to administer this subsection.
   f.  For purposes of this subsection, “nuclear electric generation facility” means a facility located in this state that uses nuclear fission, fusion, or other nuclear processes to generate electricity for sale or for use in the transmission or distribution grid and is licensed by the federal nuclear regulatory commission. A “nuclear electric generation facility” includes facilities undergoing restart after a decommissioning period and facilities in advanced stages of development or obtaining federal licensing from the United States nuclear regulatory commission. A “nuclear electric generation facility” includes all of the following:
   (1)  Nuclear reactors, reactor fuel cores, reactor vessels, steam generators, heat exchangers, turbine systems, control rods, instrumentation, cooling systems, fuel handling and storage systems, radiation shielding, radiation sources and other primary nuclear generation components, and spent fuel storage.
   (2)  Structures and buildings housing nuclear generation systems, including containment buildings, auxiliary buildings, cooling towers, water intake or discharge structures, and on-site storage facilities directly related to nuclear operations.
   (3)  Electrical generation and transformation equipment, including turbines, generators, switchgear, transformers, inverters, transmission structures, conductors, substations, and associated power conditioning and control equipment.
   (4)  Equipment and systems used for safety, security, radiation monitoring, emergency power, operator training, maintenance training, safety-related equipment storage, and warehousing.
   (5)  Environmental protection required for operation of the facility.
   (6)  System materials, components, equipment, storage, structures, and buildings associated with integrated systems that enhance the flexibility of the system in delivering energy to the electrical grid, including but not limited to the following:
   (a)  Systems that store and utilize thermal energy or electrical energy from the nuclear electric generating facility prior to delivering energy to the grid.
   (b)  Energy storage systems that utilize a transmission system interconnection to the same physical substation as the nuclear electric generating facility.
   (7)  Materials, supplies, and components permanently incorporated into or consumed in the construction, repair, or maintenance of a nuclear electric generation facility.
   (8)  Digital control systems, software, cybersecurity, infrastructure, and physical security systems and equipment used in the safe and compliant operation of the nuclear electric generation facility.
   (9)  Equipment, materials, systems, and services required to restart operations at a previously operational nuclear electric generation facility that has ceased commercial operation, including but not limited to refurbishment, modernization, regulatory compliance upgrades, and relicensing activities.
EXPLANATION
The inclusion of this explanation does not constitute agreement with
the explanation’s substance by the members of the general assembly.
   This bill makes certain sales and use tax exemptions relating to nuclear electric generation facilities, web search portal businesses, and data center businesses contingent upon making contributions to institutions of higher education governed by the state board of regents.
   NUCLEAR ELECTRIC GENERATION FACILITY —— EXEMPTION. To the extent permissible under an agreement required by the bill, tangible personal property or specified digital products sold and services furnished are exempted from the state sales and use tax (exemption) before, during, or after the site preparation, construction, reconstruction, replacement, alteration, repair, safe storage, maintenance, or the restarting after decommissioning of a nuclear electric generation facility. The tangible personal property, specified digital products, and services exempted are required to be directly and primarily used for these purposes.
   The bill defines “nuclear electric generation facility” (facility) to mean a facility located in this state that uses nuclear fission, fusion, or other nuclear processes to generate electricity for sale or for use in the transmission or distribution grid and is licensed by the federal nuclear regulatory commission. The definition of facility in the bill is comprehensive and includes but is not limited to nuclear reactors, storage facilities, equipment, electrical generation, and other structures.
   AGREEMENT BY FACILITY. As a condition of receiving the exemption created in the bill, a facility is required to enter into an agreement with the economic development authority (authority) that requires the facility to make a minimum contribution for establishing and maintaining a nuclear engineering program at an institution of higher education governed by the state board of regents (regents institution). The agreement shall, at a minimum, require the facility to contribute at least 5 percent of the aggregate value of the exemption received pursuant to the bill for the purpose of establishing and maintaining a nuclear engineering program at a regents institution.
   The agreement with the authority shall establish the date the exemption begins, including whether and to what extent the exemption applies to any tangible personal property or specified digital products sold, or services furnished prior to the agreement date.
   REPORTING BY FACILITY. The bill requires a facility to register with the department. Beginning January 31, and each January 31 thereafter, a facility receiving exemption is required to file an annual report with the department of revenue (DOR). The annual report shall provide the aggregate sales price amount of tangible personal property, specified digital products, and services that received an exemption in the previous calendar year.
   The bill requires DOR to calculate the aggregate value of the exemption based upon the aggregate sales price amounts disclosed in the annual report, and provide the aggregate value of the exemption to the authority, for purposes of calculating the 5 percent contribution for establishing and maintaining a nuclear engineering program at a regents institution.
   WEB SEARCH PORTAL AND DATA CENTER BUSINESSES —— AGREEMENT.  For a web search portal business or data center business (business) that is new construction or an addition to an existing property on or after January 1, 2027, and as a condition of receiving the existing sales and use tax exemption, the business is required to enter into an agreement with the authority that requires the business to make the same minimum contribution for establishing and maintaining a nuclear engineering program at a regents institution as a nuclear electric generation facility. The agreement shall, at a minimum, require the business to contribute at least 5 percent of the aggregate value of the exemption received pursuant to the bill for the purpose of establishing and maintaining a nuclear engineering program at a regents institution.
   REPORTING. Currently, the sales and use tax exemption exists for a business in Code section 423.3, subsection 92, 93, or 95. Beginning January 31, 2026, a business receiving a sales and use tax exemption is required to register with DOR and file an annual report with DOR. The annual report shall describe the aggregate sales price amount of fuel or electricity purchased that is exempt from sales and use tax in the previous calendar year.
   For a business that is new construction or an addition to an existing property on or after January 1, 2027, the bill requires the annual report to contain more information about the sales and use tax exemption provided to the business by requiring the annual report to contain the aggregate sales price amount of all exempt property, including but not limited to computers, equipment, cooling systems, and power systems.
   In the same manner as the nuclear electric generation facility exemption, the bill requires DOR to calculate the aggregate value of the exemption based upon the aggregate sales price amounts disclosed in the annual report, and provide the aggregate value of the exemption to the authority, for purposes of calculating the 5 percent contribution for establishing and maintaining a nuclear engineering program at a regents institution.