House File 779 - Reprinted HOUSE FILE 779 BY COMMITTEE ON WAYS AND MEANS (SUCCESSOR TO HSB 257) (As Amended and Passed by the House April 25, 2019 ) A BILL FOR An Act relating to the administration of the tax and 1 related laws by the department of revenue, including the 2 administration and modification of certain tax credits 3 and refunds, the individual and corporate income taxes, 4 franchise taxes, moneys and credits taxes, sales and use 5 taxes, and automobile rental excise taxes, the assessment of 6 property owned by certain long distance telephone companies, 7 establishing a taxation and exemption of computers task 8 force, extending the utility replacement task force, 9 and providing for other properly related matters, making 10 penalties applicable, and including effective date and 11 retroactive applicability provisions. 12 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 13 HF 779 (3) 88 jm/jh/md

H.F. 779 DIVISION I 1 INCOME TAX 2 Section 1. Section 422.4, subsection 16, paragraph e, 3 unnumbered paragraph 1, Code 2019, is amended to read as 4 follows: 5 Add back the following percentage of the qualified business 6 income deduction deductions under section 199A sections 199A(a) 7 and 199A(g) of the Internal Revenue Code taken and allowable in 8 calculating federal taxable income for the applicable tax year: 9 Sec. 2. Section 422.9, subsection 2A, paragraph a, 10 unnumbered paragraph 1, Code 2019, is amended to read as 11 follows: 12 The following percentage of the qualified business income 13 deduction deductions under section 199A sections 199A(a) and 14 199A(g) of the Internal Revenue Code taken and allowable in 15 calculating federal taxable income for the applicable tax year: 16 Sec. 3. Section 422.9, subsection 2A, paragraph b, Code 17 2019, is amended to read as follows: 18 b. Notwithstanding paragraph “a” , and section 422.4, 19 subsection 16 , paragraph “e” , for an entity electing or 20 required to file a composite return under section 422.13, 21 subsection 5 , the deduction allowed under this subsection for 22 purposes of the composite return shall be an amount equal to 23 the applicable percentage described in paragraph “a” of the 24 deduction deductions that would be allowable for federal income 25 tax purposes under section 199A sections 199A(a) and 199A(g) of 26 the Internal Revenue Code by an individual taxpayer reporting 27 the same items of income and loss that are included in the 28 composite return. 29 Sec. 4. Section 422.11S, subsection 7, paragraph b, Code 30 2019, is amended to read as follows: 31 b. The department shall authorize a school tuition 32 organization to issue tax credit certificates for contributions 33 made to the school tuition organization. The aggregate amount 34 of tax credit certificates that the department shall authorize 35 -1- HF 779 (3) 88 jm/jh/md 1/ 25

H.F. 779 for a school tuition organization for a tax calendar year shall 1 be determined for that organization pursuant to subsection 8 . 2 However, a school tuition organization shall not be authorized 3 to issue tax credit certificates unless the organization is 4 controlled by a board of directors consisting of at least 5 seven members. The names and addresses of the members shall 6 be provided to the department and shall be made available 7 by the department to the public, notwithstanding any state 8 confidentiality restrictions. 9 Sec. 5. Section 422.11S, subsection 8, paragraph a, 10 subparagraph (2), Code 2019, is amended to read as follows: 11 (2) “Total approved tax credits” means for the tax year 12 beginning in the 2006 calendar year, two million five hundred 13 thousand dollars, for the tax year beginning in the 2007 14 calendar year, five million dollars, for tax calendar years 15 beginning on or after January 1, 2008, but before January 1, 16 2012, seven million five hundred thousand dollars, for tax 17 calendar years beginning on or after January 1, 2012, but 18 before January 1, 2014, eight million seven hundred fifty 19 thousand dollars, and for tax calendar years beginning on or 20 after January 1, 2014, but before January 1, 2019, twelve 21 million dollars, and for tax calendar years beginning on or 22 after January 1, 2019, thirteen million dollars. 23 Sec. 6. Section 422.11S, subsection 8, paragraph b, 24 unnumbered paragraph 1, Code 2019, is amended to read as 25 follows: 26 Each year by December 1, the department shall authorize 27 school tuition organizations to issue tax credit certificates 28 for the following tax calendar year. However, for the tax year 29 beginning in the 2006 calendar year only, the department, by 30 September 1, 2006, shall authorize school tuition organizations 31 to issue tax credit certificates for the 2006 calendar tax 32 year. For the tax year beginning in the 2006 calendar year 33 only, each school served by a school tuition organization shall 34 submit a participation form to the department by August 1, 35 -2- HF 779 (3) 88 jm/jh/md 2/ 25

H.F. 779 2006, providing the certified enrollment as of the third Friday 1 of September 2005, along with the school tuition organization 2 that represents the school. Tax credit certificates available 3 for issue by each school tuition organization shall be 4 determined in the following manner: 5 Sec. 7. Section 422.11S, subsection 9, unnumbered paragraph 6 1, Code 2019, is amended to read as follows: 7 A school tuition organization that receives a voluntary cash 8 or noncash contribution pursuant to this section shall report 9 to the department, on a form prescribed by the department, 10 by January 12 of each tax calendar year all of the following 11 information: 12 Sec. 8. Section 422.11S, subsection 9, paragraphs b and c, 13 Code 2019, are amended to read as follows: 14 b. The total number and dollar value of contributions 15 received and the total number and dollar value of the tax 16 credits approved during the previous tax calendar year. 17 c. A list of the individual donors for the previous tax 18 calendar year that includes the dollar value of each donation 19 and the dollar value of each approved tax credit. 20 Sec. 9. Section 422.12C, subsection 4, Code 2019, is amended 21 to read as follows: 22 4. Married taxpayers who have filed joint federal returns 23 electing to file separate returns or to file separately on a 24 combined return form must determine the child and dependent 25 care credit under subsection 1 or the early childhood 26 development tax credit under subsection 2 based upon their 27 combined net income and allocate the total credit amount to 28 each spouse in the proportion that each spouse’s respective net 29 income bears to the total combined net income. Nonresidents or 30 part-year residents of Iowa must determine their Iowa child and 31 dependent care credit under subsection 1 or the early childhood 32 development tax credit under subsection 2 in the ratio of 33 their Iowa source net income to their all source net income. 34 Nonresidents or part-year residents who are married and elect 35 -3- HF 779 (3) 88 jm/jh/md 3/ 25

H.F. 779 to file separate returns or to file separately on a combined 1 return form must allocate the Iowa child and dependent care 2 credit under subsection 1 or the early childhood development 3 tax credit under subsection 2 between the spouses in the ratio 4 of each spouse’s Iowa source net income to the combined Iowa 5 source net income of the taxpayers. 6 Sec. 10. Section 422.60, subsection 2, paragraph b, Code 7 2019, is amended by adding the following new subparagraph: 8 NEW SUBPARAGRAPH . (6) For purposes of this paragraph, 9 “Internal Revenue Code” means the Internal Revenue Code of 10 1954, prior to the date of its redesignation as the Internal 11 Revenue Code of 1986 by the Tax Reform Act of 1986, or means 12 the Internal Revenue Code of 1986 as amended and in effect on 13 December 21, 2017. This definition shall not be construed to 14 include any amendment to the Internal Revenue Code enacted 15 after the date specified in the preceding sentence, including 16 any amendment with retroactive applicability or effectiveness. 17 Sec. 11. LIKE-KIND EXCHANGES OF PERSONAL PROPERTY 18 UNDER CORPORATE INCOME TAX AND FRANCHISE TAX FOR TAX YEAR 19 2019. Notwithstanding any other provision of law to the 20 contrary, all of the following shall apply when computing net 21 income for purposes of the corporation income tax or franchise 22 tax under section 422.35 for tax years beginning during the 23 2019 calendar year: 24 1. The rules for nonrecognition of gain or loss from 25 exchanges of real property held for productive use or 26 investment and not held primarily for sale, as provided in 27 section 1031 of the Internal Revenue Code, as amended up to and 28 including March 24, 2018, apply for state income tax purposes 29 with regard to exchanges of real property. 30 2. The rules for nonrecognition of gain or loss from 31 exchanges of property other than real property held for 32 productive use or investment as provided in section 1031 of the 33 Internal Revenue Code, as amended up to and including December 34 21, 2017, apply for state income tax purposes, notwithstanding 35 -4- HF 779 (3) 88 jm/jh/md 4/ 25

H.F. 779 any other provision of law to the contrary. If the taxpayer’s 1 federal taxable income includes gain or loss from property, 2 other than real property described in subsection 1, and the 3 taxpayer elects to have this subsection apply, the following 4 adjustments shall be made: 5 a. (1) Subtract the total amount of gain related to the 6 sale or exchange of the property as properly reported for 7 federal tax purposes under the Internal Revenue Code. 8 (2) Add back any gain related to the sale or exchange of the 9 property to the extent such gain does not qualify for deferral 10 under section 1031 of the Internal Revenue Code, as amended 11 up to and including December 21, 2017, which gain shall be 12 calculated using the taxpayer’s adjusted basis in the property 13 for state tax purposes. 14 b. (1) Add the total amount of loss related to the sale or 15 exchange of the property as properly reported for federal tax 16 purposes under the Internal Revenue Code. 17 (2) Subtract any loss related to the sale or exchange of the 18 property to the extent such loss does not qualify for deferral 19 under section 1031 of the Internal Revenue Code, as amended 20 up to and including December 21, 2017, which loss shall be 21 calculated using the taxpayer’s adjusted basis in the property 22 for state tax purposes. 23 c. Any other adjustments to gains, losses, deductions, or 24 tax basis for the property given up or received in the sale or 25 exchange pursuant to rules adopted by the director. 26 Sec. 12. REFUNDS —— EARLY CHILDHOOD DEVELOPMENT TAX 27 CREDIT. Notwithstanding any provision of law to the contrary, 28 for tax years beginning prior to January 1, 2019, refunds of 29 the early childhood development tax credit provided in section 30 422.12C, subsection 2, requested on or after the effective 31 date of the provision of this division of this Act amending 32 section 422.12C, subsection 4, shall not exceed the amount 33 allowed under section 422.12C, subsection 4, as amended by this 34 division of this Act. 35 -5- HF 779 (3) 88 jm/jh/md 5/ 25

H.F. 779 Sec. 13. LEGISLATIVE INTENT. It is the intent of the 1 general assembly that the provisions of this division of 2 this Act amending section 422.11S are conforming amendments 3 consistent with current state law, and that the amendments do 4 not change the application of current law but instead reflect 5 current law both before and after the enactment of this Act. 6 Sec. 14. EFFECTIVE DATE. The following, being deemed of 7 immediate importance, take effect upon enactment: 8 1. The section of this division of this Act amending section 9 422.12C, subsection 4. 10 2. The section of this division of this Act relating to 11 refunds for the early childhood development tax credit. 12 3. The section of this division of this Act relating to 13 like-kind exchanges of personal property under corporate income 14 tax and franchise tax. 15 Sec. 15. RETROACTIVE APPLICABILITY. The following apply 16 retroactively to January 1, 2019, for tax years beginning on 17 or after that date: 18 1. The section of this division of this Act amending section 19 422.4, subsection 16, paragraph “e”, unnumbered paragraph 1. 20 2. The sections of this division of this Act amending 21 section 422.9, subsection 2A. 22 3. The section of this division of this Act amending section 23 422.12C, subsection 4. 24 4. The section of this division of this Act amending section 25 422.60, subsection 2, paragraph “b”. 26 Sec. 16. RETROACTIVE APPLICABILITY —— LIKE-KIND EXCHANGES 27 OF PERSONAL PROPERTY. The section of this division of this 28 Act relating to like-kind exchanges of personal property under 29 corporate income tax and franchise tax applies retroactively to 30 January 1, 2019, for tax years beginning on or after that date, 31 but before January 1, 2020. 32 DIVISION II 33 ADMINISTRATIVE PROVISIONS 34 Sec. 17. Section 422.20, Code 2019, is amended by adding the 35 -6- HF 779 (3) 88 jm/jh/md 6/ 25

H.F. 779 following new subsection: 1 NEW SUBSECTION . 5. The department may permit, by rule, the 2 disclosure of state tax information to a person a taxpayer has 3 authorized to receive such state tax information, in the manner 4 prescribed by the department. 5 Sec. 18. Section 422.72, Code 2019, is amended by adding the 6 following new subsection: 7 NEW SUBSECTION . 8. The department may permit, by rule, the 8 disclosure of state tax information to a person a taxpayer has 9 authorized to receive such state tax information, in the manner 10 prescribed by the department. 11 DIVISION III 12 SALES AND USE TAX 13 Sec. 19. Section 423.1, subsection 2, paragraphs b and c, 14 Code 2019, are amended to read as follows: 15 b. Is directly, indirectly, or constructively controlled by 16 another entity person . 17 c. Is subject to the control of a common entity person . A 18 common entity person is one which a person who owns directly 19 or individually indirectly more than ten percent of the voting 20 securities of the entity. 21 Sec. 20. Section 423.2, subsection 1, paragraph a, 22 subparagraph (5), subparagraph division (a), Code 2019, is 23 amended to read as follows: 24 (a) If a service or warranty contract does not specify a fee 25 amount for nontaxable services or taxable personal property, 26 the tax imposed pursuant to this section shall be imposed upon 27 an amount equal to one-half of the sales price of the contract. 28 Sec. 21. Section 423.2, subsection 6, paragraph k, Code 29 2019, is amended to read as follows: 30 k. Carpentry repair and installation . 31 Sec. 22. Section 423.3, Code 2019, is amended by adding the 32 following new subsection: 33 NEW SUBSECTION . 16A. a. The sales price from the sale of 34 a grain bin, including material or replacement parts used to 35 -7- HF 779 (3) 88 jm/jh/md 7/ 25

H.F. 779 construct or repair a grain bin. 1 b. For purposes of this subsection, “grain bin” means 2 property that is vented and covered with corrugated metal or 3 similar material, and that is primarily used to hold loose 4 grain for drying or storage. 5 Sec. 23. Section 423.3, subsection 47, paragraph c, 6 subparagraph (3), Code 2019, is amended by striking the 7 subparagraph and inserting in lieu thereof the following: 8 (3) The following within the scope of section 427A.1, 9 subsection 1, paragraphs “h” and “i” : 10 (a) Computers. 11 (b) Machinery. 12 (c) Equipment, including pollution control equipment. 13 (d) Replacement parts. 14 (e) Supplies. 15 (f) Materials used to construct or self-construct the 16 following: 17 (i) Computers. 18 (ii) Machinery. 19 (iii) Equipment, including pollution control equipment. 20 (iv) Replacement parts. 21 (v) Supplies. 22 Sec. 24. Section 423.3, subsection 104, paragraph a, Code 23 2019, is amended to read as follows: 24 a. The sales price of specified digital products and of 25 prewritten computer software sold, and of enumerated services 26 described in section 423.2, subsection 1, paragraph “a” , 27 subparagraph (5), or section 423.2, subsection 6 , paragraphs 28 “bq” , “br” , “bs” , and “bu” furnished, to a commercial enterprise 29 for use exclusively by the commercial enterprise. The use of 30 prewritten computer software, a specified digital product, or 31 service fails to qualify as a use exclusively by the commercial 32 enterprise if its use for noncommercial purposes is more than 33 de minimis. 34 Sec. 25. Section 423.14A, subsection 3, paragraph b, Code 35 -8- HF 779 (3) 88 jm/jh/md 8/ 25

H.F. 779 2019, is amended by striking the paragraph. 1 Sec. 26. Section 423.14A, subsection 3, paragraph d, 2 subparagraph (1), Code 2019, is amended to read as follows: 3 (1) A marketplace facilitator that makes or facilitates 4 Iowa sales on its own behalf or for one or more marketplace 5 sellers equal to or exceeding one hundred thousand dollars , 6 or in two hundred or more separate transactions, for an 7 immediately preceding calendar year or a current calendar year. 8 Sec. 27. Section 423.14A, subsection 3, paragraph e, 9 subparagraph (1), unnumbered paragraph 1, Code 2019, is amended 10 to read as follows: 11 A referrer if, for any immediately preceding calendar year 12 or a current calendar year, one hundred thousand dollars or 13 more in Iowa sales or two hundred or more separate Iowa sales 14 transactions result from referrals from a platform of the 15 referrer. A referrer is not required to collect and remit 16 sales and use tax pursuant to this paragraph if the referrer 17 does all of the following: 18 Sec. 28. Section 423.14A, subsection 3, paragraph e, 19 subparagraph (1), subparagraph division (c), unnumbered 20 paragraph 1, Code 2019, is amended to read as follows: 21 The referrer provides the department with monthly annual 22 reports in an electronic format and in the manner prescribed 23 by the department, which monthly annual reports contain all of 24 the following: 25 Sec. 29. Section 423.14A, subsection 3, paragraph e, Code 26 2019, is amended by adding the following new subparagraph: 27 NEW SUBPARAGRAPH . (5) This paragraph is subject to 28 implementation by the department by rule and shall not require 29 a referrer to collect tax or comply with the notice and 30 reporting requirements and other provisions of this paragraph 31 unless and until such administrative rules take effect. 32 Sec. 30. Section 423.48, subsection 2, paragraph c, Code 33 2019, is amended by striking the paragraph. 34 Sec. 31. TAXATION AND EXEMPTION OF COMPUTERS TASK FORCE. A 35 -9- HF 779 (3) 88 jm/jh/md 9/ 25

H.F. 779 taxation and exemption of computers task force is created. The 1 department of revenue shall initiate and coordinate the task 2 force and provide staff assistance. It is the intent of the 3 general assembly that the task force include representatives of 4 the department of revenue; a commercial enterprise that claims 5 an exemption for computers under section 423.3, subsection 6 47; an association that represents manufacturers and other 7 industrial producers; and an association that represents 8 business tax issues. The director of revenue or the director’s 9 designee shall serve as chairperson of the task force. 10 The task force shall be charged with reviewing the 11 definition of “computer” as used throughout the portions of the 12 Iowa Code and the Iowa Administrative Code administered by the 13 department of revenue including the exemption for computers 14 provided in section 423.3, subsection 47, paragraph “a”, 15 subparagraph (4). If the task force recommends modifications 16 to the current definition of “computer” including the exemption 17 for computers provided in section 423.3, subsection 47, 18 paragraph “a”, subparagraph (4), the department of revenue 19 shall provide any recommendations to the general assembly by 20 January 1, 2020. 21 Sec. 32. EFFECTIVE DATE. The following, being deemed of 22 immediate importance, take effect upon enactment: 23 1. The section of this division of this Act amending section 24 423.1, subsection 2, paragraphs “b” and “c”. 25 2. The section of this division of this Act amending section 26 423.3, subsection 47, paragraph “c”, subparagraph (3). 27 Sec. 33. RETROACTIVE APPLICABILITY. The following applies 28 retroactively to January 1, 2019, for tax years beginning on 29 or after that date: 30 The section of this division of this Act amending section 31 423.1, subsection 2, paragraphs “b” and “c”. 32 Sec. 34. RETROACTIVE APPLICABILITY. The following applies 33 retroactively to January 1, 2016, for tax years beginning on 34 or after that date: 35 -10- HF 779 (3) 88 jm/jh/md 10/ 25

H.F. 779 The section of this division of this Act amending section 1 423.3, subsection 47, paragraph “c”, subparagraph (3). 2 DIVISION IV 3 AUTOMOBILE RENTAL EXCISE TAX 4 Sec. 35. Section 423.14A, subsection 1, paragraph b, 5 subparagraph (3), Code 2019, is amended to read as follows: 6 (3) A “rental platform” , as defined in section 423C.2 , that 7 meets the requirements described in person who is not required 8 to collect and remit automobile rental excise tax pursuant to 9 section 423C.3, subsection 3 , paragraph “c” , subparagraph (2), 10 shall not be considered a “marketplace facilitator” with respect 11 to any sale of a transportation service under section 423.2, 12 subsection 6 , paragraph “bf” , or section 423.5, subsection 1 , 13 paragraph “e” , consisting of the rental of vehicles subject 14 to registration which are registered for a gross weight of 15 thirteen tons or less for a period of sixty days or less. 16 Sec. 36. Section 423C.2, subsection 3, paragraphs a and b, 17 Code 2019, are amended to read as follows: 18 a. A person or any affiliate of a person that owns or 19 controls an automobile and makes the automobile available for 20 rent through the person or any affiliate, or through a rental 21 platform or rental facilitator any other person . 22 b. A person or any affiliate of a person who possesses or 23 acquires a right or interest in any automobile with an intent 24 to rent the automobile to another person , or through the person 25 or any affiliate, or through a rental platform or a rental 26 facilitator any other person . 27 Sec. 37. Section 423C.2, subsection 6, Code 2019, is amended 28 to read as follows: 29 6. “Facilitation fee” means any consideration, by whatever 30 name called, that a rental facilitator or a rental platform 31 person charges to a user for facilitating the user’s rental 32 of an automobile. “Facilitation fee” does not include any 33 commission an automobile provider pays to a rental facilitator 34 or a rental platform person for facilitating the rental of an 35 -11- HF 779 (3) 88 jm/jh/md 11/ 25

H.F. 779 automobile. 1 Sec. 38. Section 423C.2, Code 2019, is amended by adding the 2 following new subsection: 3 NEW SUBSECTION . 6A. “Host” means the registered owner of an 4 automobile made available for sharing through a peer-to-peer 5 automobile sharing marketplace. 6 Sec. 39. Section 423C.2, subsections 9 and 10, Code 2019, 7 are amended by striking the subsections. 8 Sec. 40. Section 423C.2, subsection 11, Code 2019, is 9 amended to read as follows: 10 11. “Rental price” means all consideration charged for 11 the renting and facilitation of renting of an automobile 12 before taxes, including but not limited to facilitation fees, 13 reservation fees, services fees, nonrefundable deposits, and 14 any other direct or indirect charge made or consideration 15 provided in connection with the renting or facilitation of 16 renting of an automobile the same as “sales price” as defined 17 in section 423.1, which term includes but is not limited 18 to facilitation fees, reservation fees, services fees, 19 nonrefundable deposits, and any other direct or indirect charge 20 made or consideration provided in connection with the renting 21 or facilitation of renting an automobile . 22 Sec. 41. Section 423C.3, Code 2019, is amended to read as 23 follows: 24 423C.3 Tax on rental of automobiles —— collection and 25 remittance of tax. 26 1. For purposes of this section : 27 a. “Discount rental charge” means the amount an automobile 28 provider charges to a rental facilitator for the rental of an 29 automobile, excluding any applicable tax. 30 b. “Travel package” means an automobile rental bundled 31 with one or more separate components such as lodging, air 32 transportation, or similar items and charged for a single 33 retail price. 34 2. 1. A tax of five percent is imposed upon the rental 35 -12- HF 779 (3) 88 jm/jh/md 12/ 25

H.F. 779 price of an automobile if the rental transaction is subject to 1 the sales and services tax under chapter 423, subchapter II , or 2 the use tax under chapter 423, subchapter III . The tax shall 3 not be imposed on any rental transaction not taxable under the 4 state sales and services tax, as provided in section 423.3 , or 5 the state use tax, as provided in section 423.6 , on automobile 6 rental receipts. 7 3. 2. This subsection shall govern the collection and 8 remittance of the tax imposed under subsection 2 The tax 9 imposed under subsection 1 shall be collected and remitted to 10 the department by all persons required to collect state sales 11 and use tax on the rental transaction under chapter 423 . 12 a. Unless otherwise provided in this subsection , the 13 automobile provider shall collect the tax by adding the tax to 14 the rental price of the automobile and the tax, when collected, 15 shall be stated as a distinct item separate and apart from 16 the rental price of the automobile and the sales and services 17 tax imposed under chapter 423, subchapter II , or the use tax 18 imposed under chapter 423, subchapter III . 19 b. If a transaction for the rental of an automobile involves 20 a rental facilitator, all of the following shall occur in the 21 order prescribed: 22 (1) The rental facilitator shall collect the tax on any 23 rental price that the user pays to the rental facilitator in 24 the same manner as an automobile provider under paragraph “a” . 25 (2) (a) Unless otherwise required by rule or order of 26 the department, the rental facilitator shall remit to the 27 automobile provider that portion of the tax collected on the 28 rental price that represents the discount rental charge. 29 (b) No assessment shall be made against a rental facilitator 30 for tax due on a discount rental charge if the rental 31 facilitator collected the tax and remitted it to an automobile 32 provider that has a valid tax permit required under this 33 chapter or under chapter 423 . This subparagraph division shall 34 not apply if the rental facilitator and automobile provider 35 -13- HF 779 (3) 88 jm/jh/md 13/ 25

H.F. 779 are affiliates, or if the department requires the rental 1 facilitator to remit taxes collected on that portion of the 2 sales price that represents the discount rental charge directly 3 to the department. 4 (3) The rental facilitator shall remit any remaining tax it 5 collected to the department. 6 (4) (a) The automobile provider shall collect and remit 7 to the department any taxes the rental facilitator remitted to 8 the automobile provider, and shall collect and remit to the 9 department any taxes due on any amount of rental price the user 10 paid to the automobile provider. 11 (b) No assessment shall be made against an automobile 12 provider for any tax due on a discount rental charge that 13 was not remitted to the automobile provider by a rental 14 facilitator. This subparagraph division shall not apply if the 15 automobile provider and the rental facilitator are affiliates. 16 (5) Notwithstanding any other provision of this paragraph 17 to the contrary, if a rental facilitator and its affiliates 18 facilitate total rentals under this chapter and chapter 19 423A that are equal to or less than an aggregate amount of 20 rental price and sales price of ten thousand dollars for an 21 immediately preceding calendar year or a current calendar year, 22 or in ten or fewer separate transactions for an immediately 23 preceding calendar year or a current calendar year, the 24 rental facilitator shall not be required to collect tax on the 25 amount of sales price that represents the rental facilitator’s 26 facilitation fee. 27 c. (1) If a transaction for the rental of an automobile 28 involves a rental platform, other than a rental platform 29 described in subparagraph (2), the rental platform shall 30 collect and remit the tax imposed under this chapter in the 31 same manner as an automobile provider under paragraph “a” . 32 (2) 3. A rental platform person is not required to collect 33 and remit the tax imposed under this chapter in the same manner 34 as an automobile provider under paragraph “a” if the rental 35 -14- HF 779 (3) 88 jm/jh/md 14/ 25

H.F. 779 platform person meets all of the following requirements: 1 a. The person or any affiliate of the person is not an 2 automobile provider. 3 b. The person or any affiliate of the person facilitates 4 the renting or sharing of an automobile by doing all of the 5 following: 6 (1) The person owns, operates, or controls a peer-to-peer 7 automobile sharing marketplace that allows a host or an 8 automobile provider who is not an affiliate of the person 9 to offer or list an automobile for sharing or rent on the 10 marketplace. For purposes of this paragraph, it is immaterial 11 whether or not the automobile provider has a tax permit under 12 this chapter or chapter 423 or whether the automobile is owned 13 by a natural person or by a business entity. 14 (2) The person or affiliate of the person collects or 15 processes the rental price charged to the user. 16 (a) c. The only sales the rental platform person and 17 its affiliates of the person facilitate that are subject to 18 tax under chapter 423 are sales of a transportation service 19 under section 423.2, subsection 6 , paragraph “bf” , or section 20 423.5, subsection 1 , paragraph “e” , consisting of the rental 21 of vehicles subject to registration which are registered for 22 a gross weight of thirteen tons or less for a period of sixty 23 days or less. 24 (b) The rental platform operates a peer-to-peer automobile 25 sharing marketplace. 26 (3) 4. For any rental transaction for which the rental 27 platform a person is required to or elects to collect and 28 remit the tax under this chapter , the rental platform person 29 shall also be liable for the collection and remittance of any 30 sales or use tax due on that transaction under section 423.2, 31 subsection 6 , paragraph “bf” , or section 423.5, subsection 32 1 , paragraph “e” , notwithstanding any other provision to the 33 contrary in chapter 423 . 34 (4) 5. For any rental transaction for which the rental 35 -15- HF 779 (3) 88 jm/jh/md 15/ 25

H.F. 779 platform person is not required to collect and remit the 1 tax under this chapter as provided under subparagraph (2) 2 subsection 3 , the automobile provider shall be solely liable 3 for any amount of uncollected or unremitted tax under this 4 chapter and chapter 423 . 5 DIVISION V 6 TELEPHONE COMPANY PROPERTY 7 Sec. 42. NEW SECTION . 433.4A Competitive long distance 8 telephone company property. 9 For assessment years beginning before January 1, 2022, 10 the director of revenue shall assess the property of a long 11 distance telephone company, as defined in section 476.1D, 12 subsection 10, Code 2018, previously classified by the 13 utilities board as a competitive long distance telephone 14 company under section 476.1D, subsection 10, Code 2018, which 15 property is first assessed for taxation in this state on or 16 after January 1, 1996, in the same manner as all other property 17 assessed as commercial property by the local assessor under 18 chapters 427, 427A, 427B, 428, and 441. 19 Sec. 43. EFFECTIVE DATE. This division of this Act, being 20 deemed of immediate importance, takes effect upon enactment. 21 Sec. 44. RETROACTIVE APPLICABILITY. This division of this 22 Act applies retroactively to July 1, 2018. 23 DIVISION VI 24 TARGETED JOBS WITHHOLDING CREDIT 25 Sec. 45. Section 403.19A, subsection 3, paragraph c, 26 subparagraph (2), Code 2019, is amended to read as follows: 27 (2) The pilot project city and the economic development 28 authority shall not enter into a withholding agreement after 29 June 30, 2019 2021 . 30 DIVISION VII 31 SCHOOL TUITION ORGANIZATION TAX CREDITS 32 Sec. 46. Section 422.11S, subsection 8, paragraph a, 33 subparagraph (2), Code 2019, is amended to read as follows: 34 (2) “Total approved tax credits” means for the tax year 35 -16- HF 779 (3) 88 jm/jh/md 16/ 25

H.F. 779 beginning in the 2006 calendar year, two million five hundred 1 thousand dollars, for the tax year beginning in the 2007 2 calendar year, five million dollars, for tax years beginning 3 on or after January 1, 2008, but before January 1, 2012, seven 4 million five hundred thousand dollars, for tax years beginning 5 on or after January 1, 2012, but before January 1, 2014, eight 6 million seven hundred fifty thousand dollars, and for tax years 7 beginning on or after January 1, 2014, but before January 1, 8 2019, twelve million dollars, and for tax years beginning on 9 or after January 1, 2019, but before January 1, 2020, thirteen 10 million dollars , and for tax years beginning on or after 11 January 1, 2020, fifteen million dollars . 12 Sec. 47. CONTINGENT CODE EDITOR DIRECTIVE. The Code editor 13 is directed to harmonize the section of this division of this 14 Act amending section 422.11S with the other division of this 15 Act amending section 422.11S, if enacted, by changing tax year 16 to calendar year where appropriate and to make other related 17 changes, if necessary, to effectuate such changes. 18 DIVISION VIII 19 INCOME TAX CHECKOFFS 20 Sec. 48. Section 173.22, subsection 2, Code 2019, is amended 21 to read as follows: 22 2. A foundation fund is created within the state treasury 23 composed of moneys appropriated or available to and obtained or 24 accepted by the foundation. The foundation fund shall include 25 moneys credited to the fund as provided in section 422.12D 26 422.12I . 27 Sec. 49. Section 422.12E, Code 2019, is amended to read as 28 follows: 29 422.12E Income tax return checkoffs limited. 30 1. For tax years beginning on or after January 1, 2019, 31 there There shall be allowed no more than four income tax 32 return checkoffs on each income tax return. For tax years 33 beginning on or after January 1, 2017, when the same four 34 income tax return checkoffs have been provided on the income 35 -17- HF 779 (3) 88 jm/jh/md 17/ 25

H.F. 779 tax return for two consecutive tax years, the two checkoffs for 1 which the least amount has been contributed, in the aggregate 2 for the first tax year and through March 15 after the end of the 3 second tax year, are repealed on December 31 after the end of 4 the second tax year and shall be removed from the return form . 5 2. If more checkoffs are enacted in the same session of 6 the general assembly than there is space for inclusion on the 7 individual tax return form, the checkoffs with the earliest 8 enacted checkoffs date of enactment as determined pursuant 9 to section 3.7 for which there is space for inclusion on the 10 return form shall be included on the return form, and all other 11 checkoffs enacted during that session of the general assembly 12 are repealed on December 31 of the year of enactment . If 13 more checkoffs are enacted in the same session of the general 14 assembly than there is space for inclusion on the individual 15 income tax form and the additional checkoffs are enacted on 16 the same day and it is indeterminable which checkoffs have 17 the earliest date of enactment pursuant to section 3.7 , the 18 director shall determine which checkoffs shall be included on 19 the return form , and all other checkoffs not included on the 20 return form shall be repealed on December 31 of the year of 21 enactment and shall not be included on the return form . 22 3. a. By July 1 of the year in which two checkoffs are 23 repealed pursuant to subsection 1, the department shall notify 24 the Iowa Code editor which two checkoffs received the least 25 amount of contributions and are repealed. 26 b. By September 1 of any applicable year, the department 27 shall notify the Iowa Code editor of any repeal pursuant to 28 subsection 2. 29 Sec. 50. NEW SECTION . 422.12G Joint income tax checkoff for 30 veterans trust fund and volunteer fire fighter preparedness fund. 31 1. A person who files an individual or a joint income tax 32 return with the department of revenue under section 422.13 may 33 designate one dollar or more to be paid jointly to the veterans 34 trust fund created in section 35A.13 and to the volunteer fire 35 -18- HF 779 (3) 88 jm/jh/md 18/ 25