Print
House File 606 - IntroducedA Bill ForAn Act 1providing for the imposition by a county of a local
2option use tax.
3BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
1DIVISION I
2LOCAL OPTION USE TAX
3 Section 1. Section 423B.1, subsections 3, 4, and 5, Code
42017, are amended to read as follows:
53. A local option tax shall be imposed only after an
6election at which a majority of those voting on the question
7favors imposition and shall then be imposed until repealed
8as provided in subsection 6, paragraph “a”. If the tax is a
9local vehicle tax imposed by a county, it shall apply to all
10incorporated and unincorporated areas of the county. If the
11tax is a local sales and services tax imposed by a county,
12it shall only apply to those incorporated areas and the
13unincorporated area of that county in which a majority of those
14voting in the area on the tax favors its imposition. If the
15tax is a local use tax, it shall only be imposed by a county
16if the county is also imposing a local sales and services
17tax, and shall only apply to those incorporated areas and the
18unincorporated area of that county in which a majority of those
19voting in the area on the tax favors imposition, and in which
20the local sales and services tax is also imposed. For purposes
21of the local sales and services tax and the local use tax, all
22cities contiguous to each other shall be treated as part of
23one incorporated area and the tax would be imposed in each of
24those contiguous cities only if the majority of those voting
25in the total area covered by the contiguous cities favors its
26imposition. In the case of a local sales and services tax or a
27local use tax submitted to the registered voters of two or more
28contiguous counties as provided in subsection 4, paragraph “c”,
29all cities contiguous to each other shall be treated as part of
30one incorporated area, even if the corporate boundaries of one
31or more of the cities include areas of more than one county,
32and the tax shall be imposed in each of those contiguous cities
33only if a majority of those voting on the tax in the total area
34covered by the contiguous cities favored its imposition. For
35purposes of the local sales and services tax and the local use
-1-1tax, a city is not contiguous to another city if the only road
2access between the two cities is through another state.
34. a. A county board of supervisors shall direct within
4thirty days the county commissioner of elections to submit the
5question of imposition of a local vehicle tax, or a local sales
6and services tax, or a local use tax to the registered voters
7of the incorporated and unincorporated areas of the county
8upon receipt of a petition, requesting imposition of a local
9vehicle tax, or a local sales and services tax, or a local use
10tax, signed by eligible electors of the whole county equal in
11number to five percent of the persons in the whole county who
12voted at the last preceding general election. In the case of
13a local vehicle tax, the petition requesting imposition shall
14specify the rate of tax and the classes, if any, that are to
15be exempt. If more than one valid petition is received, the
16earliest received petition shall be used.
17b. The question of the imposition of a local sales and
18services tax or a local use tax shall be submitted to the
19registered voters of the incorporated and unincorporated
20areas of the county upon receipt by the county commissioner
21of elections of the motion or motions, requesting such
22submission, adopted by the governing body or bodies of the
23city or cities located within the county or of the county, for
24the unincorporated areas of the county, representing at least
25one half of the population of the county. Upon adoption of
26such motion, the governing body of the city or county, for the
27unincorporated areas, shall submit the motion to the county
28commissioner of elections and in the case of the governing
29body of the city shall notify the board of supervisors of the
30adoption of the motion. The county commissioner of elections
31shall keep a file on all the motions received and, upon
32reaching the population requirements, shall publish notice of
33the ballot proposition concerning the imposition of the local
34sales and services tax or the local use tax. A motion ceases
35to be valid at the time of the holding of the regular election
-2-1for the election of members of the governing body which
2adopted the motion. The county commissioner of elections shall
3eliminate from the file any motion that ceases to be valid.
4The manner provided under this paragraph for the submission of
5the question of imposition of a local sales and services tax
6or a local use tax is an alternative to the manner provided in
7paragraph “a”.
8c. Upon receipt of petitions or motions calling for the
9submission of the question of the imposition of a local sales
10and services tax or a local use tax as described in paragraph
11“a” or “b”, the boards of supervisors of two or more contiguous
12counties in which the question is to be submitted may enter
13into a joint agreement providing that for purposes of this
14chapter, a city whose corporate boundaries include areas of
15more than one county shall be treated as part of the county
16in which a majority of the residents of the city reside. In
17such event, the county commissioners of elections from each
18such county shall cooperate in the selection of a single date
19upon which the election shall be held, and for all purposes of
20this chapter relating to the imposition, repeal, change of use,
21or collection of the tax, such a city shall be deemed to be
22part of the county in which a majority of the residents of the
23city reside. A copy of the joint agreement shall be provided
24promptly to the director of revenue.
255. The county commissioner of elections shall submit the
26question of imposition of a local option tax at an election
27held on a date specified in section 39.2, subsection 4,
28paragraph “a”. The election shall not be held sooner than sixty
29days after publication of notice of the ballot proposition.
30The ballot proposition shall specify the type and rate of tax
31and in the case of a vehicle tax the classes that will be
32exempt and in the case of a local sales and services tax or
33a local use tax the date it will be imposed which date shall
34not be earlier than ninety days following the election. The
35ballot proposition shall also specify the approximate amount
-3-1of local option tax revenues that will be used for property
2tax relief and shall contain a statement as to the specific
3purpose or purposes for which the revenues shall otherwise be
4expended. If the county board of supervisors decides under
5subsection 6 to specify a date on which the local option sales
6and services tax or a local use tax shall automatically be
7repealed, the date of the repeal shall also be specified on the
8ballot. The rate of the vehicle tax shall be in increments of
9one dollar per vehicle as set by the petition seeking to impose
10the tax. The rate of a local sales and services tax shall not
11be more than one percent as set by the governing body. The rate
12of a local use tax shall be the same as the local sales and
13services tax rate set by the same governing body. The state
14commissioner of elections shall establish by rule the form for
15the ballot proposition which form shall be uniform throughout
16the state.
17 Sec. 2. Section 423B.1, subsection 6, paragraph a, Code
182017, is amended to read as follows:
19a. (1) If a majority of those voting on the question of
20imposition of a local option tax favors imposition of a local
21option tax, the governing body of that county shall impose the
22tax at the rate specified for an unlimited period. However,
23in the case of a local sales and services tax or a local use
24tax, the county shall not impose the tax in any incorporated
25area or the unincorporated area if the majority of those voting
26on the tax in that area did not favor its imposition and, in
27the case of a local use tax, shall not impose the tax in any
28incorporated area or the unincorporated area in which the
29local sales and services tax is not imposed. For purposes of
30the local sales and services tax and the local use tax, all
31cities contiguous to each other shall be treated as part of one
32incorporated area and the tax shall be imposed in each of those
33contiguous cities only if the majority of those voting on the
34tax in the total area covered by the contiguous cities favored
35its imposition. In the case of a local sales and services
-4-1tax or a local use tax submitted to the registered voters of
2two or more contiguous counties as provided in subsection 4,
3paragraph “c”, all cities contiguous to each other shall be
4treated as part of one incorporated area, even if the corporate
5boundaries of one or more of the cities include areas of more
6than one county, and the tax shall be imposed in each of those
7contiguous cities only if a majority of those voting on the tax
8in the total area covered by the contiguous cities favored its
9imposition.
10(2) The local option tax may be repealed or the rate
11increased or decreased or the use thereof changed after an
12election at which a majority of those voting on the question of
13repeal or rate or use change favored the repeal or rate or use
14change. However, if a local sales and services tax is repealed
15or the rate decreased, the local use tax imposed within that
16county, if any, shall be deemed to be repealed or reduced
17by the same action repealing or reducing the local sales and
18services tax. The date on which the repeal, rate, or use
19change is to take effect shall not be earlier than ninety days
20following the election. The election at which the question
21of repeal or rate or use change is offered shall be called
22and held in the same manner and under the same conditions
23as provided in subsections 4 and 5 for the election on the
24imposition of the local option tax. However, in the case of
25a local sales and services tax and a local use tax where the
26tax has not been imposed countywide, the question of repeal or
27imposition or rate or use change shall be voted on only by the
28registered voters of the areas of the county where the tax has
29been imposed or has not been imposed, as appropriate. However,
30the governing body of the incorporated area or unincorporated
31area where the local sales and services tax and the local
32use tax is imposed may, upon its own motion, request the
33county commissioner of elections to hold an election in the
34incorporated or unincorporated area, as appropriate, on the
35question of the change in use of local sales and services tax
-5- 1or the local use tax revenues. The election may be held at
2any time but not sooner than sixty days following publication
3of the ballot proposition. If a majority of those voting
4in the incorporated or unincorporated area on the change in
5use favors the change, the governing body of that area shall
6change the use to which the revenues shall be used. The ballot
7proposition shall list the present use of the revenues, the
8proposed use, and the date after which revenues received will
9be used for the new use.
10(3) When submitting the question of the imposition of a
11local sales and services tax or a local use tax, the county
12board of supervisors may direct that the question contain a
13provision for the repeal, without election, of the local sales
14and services tax or the local use tax on a specific date, which
15date shall be as provided in section 423B.6, subsection 1.
16 Sec. 3. Section 423B.1, subsections 8, 9, and 10, Code 2017,
17are amended to read as follows:
188. Local option taxes authorized to be imposed as provided
19in this chapter are a local sales and services tax, and a local
20vehicle tax, and a local use tax. The rate of the tax shall
21be in increments of one dollar per vehicle for a vehicle tax
22as set on the petition seeking to impose the vehicle tax. The
23rate of a local sales and services tax shall not be more than
24one percent as set by the governing body. The rate of a local
25use tax shall be the same as the local sales and services tax
26rate set by the same governing body.
279. In a county that has imposed a local option sales
28and services tax or a local option use tax, the board of
29supervisors shall, notwithstanding any contrary provision of
30this chapter, repeal the local option sales and services tax or
31the local option use tax in the unincorporated areas or in an
32incorporated city area in which the tax has been imposed upon
33adoption of its own motion for repeal in the unincorporated
34areas or upon receipt of a motion adopted by the governing
35body of that incorporated city area requesting repeal. If a
-6-1local sales and services tax is repealed pursuant to such a
2motion, the local use tax imposed within the same incorporated
3city area or the unincorporated area, if any, shall be deemed
4to be repealed by the same motion repealing the local sales
5and services tax. The board of supervisors shall repeal the
6local option sales and services tax or the local option use
7tax effective on the later of the date of the adoption of the
8repeal motion or the earliest date specified in section 423B.6,
9subsection 1. For purposes of this subsection, incorporated
10city area includes an incorporated city which is contiguous to
11another incorporated city.
1210. Notwithstanding subsection 9 or any other contrary
13provision of this chapter, a local option sales and services
14tax and a local use tax shall not be repealed or reduced in rate
15if obligations are outstanding which are payable as provided in
16section 423B.9, unless funds sufficient to pay the principal,
17interest, and premium, if any, on the outstanding obligations
18at and prior to maturity have been properly set aside and
19pledged for that purpose.
20 Sec. 4. NEW SECTION. 423B.5A Local use tax.
211. A county that is imposing a local sales and services tax
22under section 423B.5 may impose a local use tax at the same
23rate on the purchase price or installed purchase price taxed by
24the state under chapter 423, subchapter III. A local use tax
25shall be imposed on the same basis as the state use tax except
26it shall not be imposed on any of the following:
27a. The purchase price on the use of natural gas, natural gas
28service, electricity, or electric service.
29b. The purchase price on the use of any property or on the
30use of any service not taxed by the state.
31c. The purchase price from the use of motor fuel or special
32fuel as defined in chapter 452A which is consumed for highway
33use or in watercraft or aircraft if the fuel tax is paid on the
34transaction and a refund has not or will not be allowed.
35d. The purchase price from the use of equipment by the state
-7-1department of transportation.
22. A local use tax is applicable to uses of property or
3services within those incorporated and unincorporated areas
4of the county where it is imposed and shall be collected by
5all persons required to collect state use taxes, and if not
6collected by such persons shall be paid by the person using
7the property or service. All cities contiguous to each other
8shall be treated as part of one incorporated area and the tax
9is imposed in each of those contiguous cities only if the
10majority of those voting in the total area covered by the
11contiguous cities favors its imposition. In the case of a
12local use tax submitted to the registered voters of two or more
13contiguous counties as provided in section 423B.1, subsection
144, paragraph “c”, all cities contiguous to each other shall be
15treated as part of one incorporated area, even if the corporate
16boundaries of one or more of the cities include areas of more
17than one county, and the tax shall be imposed in each of those
18contiguous cities only if a majority of those voting on the tax
19in the total area covered by the contiguous cities favor its
20imposition.
213. For purposes of the proper administration of the local
22use tax and to prevent its evasion, evidence that tangible
23personal property was sold by any person for delivery to a
24location in this state shall be prima facie evidence that such
25tangible personal property was sold for use at that location
26in this state.
274. The amount of the purchase price, for purposes of
28determining the amount of the local use tax, does not include
29the amount of any state use tax.
305. A tax permit other than the state use tax permit
31required under section 423.36 shall not be required by local
32authorities.
33 Sec. 5. Section 423B.6, Code 2017, is amended to read as
34follows:
35423B.6 Administration.
-8- 11. a. A local sales and services tax or a local use tax
2 shall be imposed either January 1 or July 1 following the
3notification of the director of revenue but not sooner than
4ninety days following the favorable election and not sooner
5than sixty days following notice to sellers, as defined in
6section 423.1. However, a jurisdiction which has voted to
7continue imposition of the tax may impose that tax without
8repeal of the prior tax.
9b. A local sales and services tax or a local use tax shall
10be repealed only on June 30 or December 31 but not sooner than
11ninety days following the favorable election if one is held.
12However, a local sales and services tax shall not be repealed
13before the tax has been in effect for one year. At least forty
14days before the imposition or repeal of the tax, a county shall
15provide notice of the action by certified mail to the director
16of revenue.
17c. The imposition of or a rate change for a local sales
18and services tax or a local use tax shall not be applied to
19purchases from a printed catalog wherein a purchaser computes
20the local tax based on rates published in the catalog unless a
21minimum of one hundred twenty days’ notice of the imposition or
22rate change has been given to the seller from the catalog and
23the first day of a calendar quarter has occurred on or after
24the one hundred twentieth day.
25d. If a local sales and services tax has been imposed
26prior to April 1, 2000, and at the time of the election a date
27for repeal was specified on the ballot, the local sales and
28services tax may be repealed on that date, notwithstanding
29paragraph “b”.
302. a. The director of revenue shall administer a local
31sales and services tax and a local use tax as nearly as
32possible in conjunction with the administration of state sales
33and use tax laws. The director shall provide appropriate forms
34or provide on the regular state tax forms for reporting local
35sales and services tax liability and local use tax liability.
-9- 1b. The ordinance of a county board of supervisors imposing
2a local sales and services tax or a local use tax shall adopt
3by reference the applicable provisions of the appropriate
4sections of chapter 423. All powers and requirements of the
5director to administer the state sales tax law and use tax
6law are applicable to the administration of a local sales and
7services tax law, and the local excise tax, and the local use
8tax, including but not limited to the provisions of section
9422.25, subsection 4, sections 422.30, 422.67, and 422.68,
10section 422.69, subsection 1, sections 422.70 through 422.75,
11section and sections 423.14, subsection 1 and subsection 2,
12paragraphs “b” through “e”, and sections 423.15, 423.23, 423.24,
13423.25, 423.31 through 423.35, 423.37 through 423.42, 423.46,
14and 423.47. Local officials shall confer with the director of
15revenue for assistance in drafting the ordinance imposing a
16local sales and services tax or a local use tax. A certified
17copy of the ordinance shall be filed with the director as soon
18as possible after passage.
19c. Frequency of deposits and quarterly reports of with the
20department of revenue are governed by the tax provisions in
21section 423.31 for a local sales and services tax with the
22department of revenue and are governed by the tax provisions
23in section 423.31 423.32 for a local use tax. Local tax
24collections shall not be included in computation of the total
25tax to determine frequency of filing under section 423.31 or
26432.32.
27d. The director shall apply a boundary change of a county or
28city imposing or collecting the local sales and services tax
29or the local use tax to the imposition or collection of that
30tax only on the first day of a calendar quarter which occurs
31sixty days or more after the director has given notice of the
32boundary change to sellers.
333. a. The director, in consultation with local officials,
34shall collect and account for a local sales and services tax
35and a local use tax. The director shall certify each quarter
-10-1the amount of local sales and services tax receipts and any
2interest and penalties to be credited to the “local sales and
3services tax fund” established in the office of the treasurer
4of state. The director shall certify each quarter the amount
5of local use tax receipts and any interest and penalties to
6be credited to the “local use tax fund” established in the
7office of the treasurer of state. All taxes collected under
8this chapter by a retailer or any individual are deemed to be
9held in trust for the state of Iowa and the local jurisdictions
10imposing the taxes.
11b. All local tax moneys and interest and penalties received
12or refunded one hundred eighty days or more after the date on
13which the county repeals its local sales and services tax or
14local use tax shall be deposited in or withdrawn from the state
15general fund.
16 Sec. 6. Section 423B.7, subsection 1, paragraph a, Code
172017, is amended to read as follows:
18a. Except as provided in paragraph “b”, the director shall
19credit the local sales and services tax receipts and interest
20and penalties from a county-imposed tax to the county’s
21account in the local sales and services tax fund and from a
22city-imposed tax under section 423B.1, subsection 2, to the
23city’s account in the local sales and services tax fund. The
24director shall credit the local use tax receipts and interest
25and penalties from a county-imposed tax to the county’s account
26in the local use tax fund. If the director is unable to
27determine from which county any of the receipts were collected,
28those receipts shall be allocated among the possible counties
29based on allocation rules adopted by the director.
30 Sec. 7. Section 423B.7, subsection 7, Code 2017, is amended
31to read as follows:
327. Local sales and services tax moneys and local use tax
33moneys received by a city or county may be expended for any
34lawful purpose of the city or county.
35 Sec. 8. Section 423B.8, Code 2017, is amended to read as
-11-1follows:
2423B.8 Construction contractor refunds.
31. Construction contractors may make application to the
4department for a refund of the additional local sales and
5services tax or local use tax paid under this chapter by
6reason of taxes paid on goods, wares, or merchandise under the
7following conditions:
8a. The goods, wares, or merchandise are incorporated into an
9improvement to real estate in fulfillment of a written contract
10fully executed prior to the date of the imposition or increase
11in rate of a local sales and services tax or a local use tax
12 under this chapter. The refund shall not apply to equipment
13transferred in fulfillment of a mixed construction contract.
14b. The contractor has paid to the department or to a
15retailer the full amount of the state and local tax.
16c. The claim is filed on forms provided by the department
17and is filed within one year of the date the tax is paid.
182. The department shall pay the refund from the appropriate
19city’s or county’s account in the local sales and services tax
20fund or the local use tax fund.
213. A contractor who makes an erroneous application for
22refund shall be liable for payment of the excess refund paid
23plus interest at the rate in effect under section 421.7. In
24addition, a contractor who willfully makes a false application
25for refund is guilty of a simple misdemeanor and is liable
26for a penalty equal to fifty percent of the excess refund
27claimed. Excess refunds, penalties, and interest due under
28this subsection may be enforced and collected in the same
29manner as the local sales and services tax and the local use
30tax imposed under this chapter.
31 Sec. 9. Section 423B.9, subsections 1, 2, and 3, Code 2017,
32are amended to read as follows:
331. For purposes of this section unless the context otherwise
34requires:
35a. “Bond issuer” or “issuer” means a city, a county, or a
-12-1secondary recipient.
2b. “Designated portion” means the portion of the local
3option sales and services tax revenues or the local option use
4tax revenues which is authorized to be expended for one or a
5combination of purposes under an adopted public measure.
6c. “Secondary recipient” means a political subdivision of
7the state which is to receive revenues from a local option
8sales and services tax or a local use tax over a period of years
9pursuant to the terms of a chapter 28E agreement with one or
10more cities or counties.
112. An issuer of public bonds which is a recipient of
12revenues from a local option sales and services tax or a local
13use tax imposed pursuant to this chapter may issue bonds in
14anticipation of the collection of one or more designated
15portions of the local option sales and services tax or the
16local option use tax and may pledge irrevocably an amount of
17the revenue derived from the designated portions for each of
18the years the bonds remain outstanding to the payment of the
19bonds. Bonds may be issued only for one or more of the purposes
20set forth on the ballot proposition concerning the imposition
21of the local option sales and services tax or the local option
22use tax, except bonds shall not be issued which are payable
23from that portion of tax revenues designated for property
24tax relief. The bonds may be issued in accordance with the
25procedures set forth in either subsection 3 or 4.
263. The governing body of an issuer may authorize the
27issuance of bonds which are payable from the designated portion
28of the revenues of the local option sales and services tax
29or the local option use tax, and not from property tax, by
30following the authorization procedures set forth for cities
31in section 384.83. Bonds may be issued for the purpose of
32refunding outstanding and previously issued bonds under this
33subsection without otherwise complying with the provisions of
34this subsection.
35 Sec. 10. Section 423B.9, subsection 4, paragraph b, Code
-13-12017, is amended to read as follows:
2b. The provisions of chapter 76 apply to the bonds payable
3as provided in this subsection, except that the mandatory levy
4to be assessed pursuant to section 76.2 shall be at a rate
5to generate an amount which together with the receipts from
6the pledged designated portion of the local option sales and
7services tax or the local option use tax is sufficient to pay
8the interest and principal on the bonds. All amounts collected
9as a result of the levy assessed pursuant to section 76.2 and
10paid out in the first instance for bond principal and interest
11shall be repaid to the bond issuer which levied the tax from
12the first available designated portion of local option sales
13and services tax or local option use tax collections received
14in excess of the requirement for the payment of the principal
15and interest of the bonds and when repaid shall be applied in
16reduction of property taxes. The amount of bonds which may be
17issued under section 76.3 shall be the amount which could be
18retired from the actual collections of the designated portions
19of the local option sales and services tax or the local option
20use tax for the last four calendar quarters, as certified by
21the director of revenue. The amount of tax revenues pledged
22jointly by other cities or counties may be considered for the
23purpose of determining the amount of bonds which may be issued.
24If the local option sales and services tax or the local
25option use tax has been in effect for less than four calendar
26quarters, the tax collected within the shorter period may be
27adjusted to project the collections of the designated portion
28for the full year for the purpose of determining the amount of
29the bonds which may be issued. The provisions of this section
30constitute separate authorization for the issuance of bonds and
31shall prevail in the event of conflict with any other provision
32of the Code limiting the amount of bonds which may be issued or
33the source of payment of the bonds. Bonds issued under this
34section shall not limit or restrict the authority of the bond
35issuer to issue bonds under other provisions of the Code.
-14-1 Sec. 11. Section 423B.9, subsection 5, Code 2017, is amended
2to read as follows:
35. A city or county, jointly with one or more other
4political subdivisions as provided in chapter 28E, may pledge
5irrevocably any amount derived from the designated portions of
6the revenues of the local option sales and services tax or the
7local option use tax to the support or payment of bonds of an
8issuer, issued for one or more purposes set forth on the ballot
9proposition concerning the imposition of the local option sales
10and services tax or the local option use tax or a political
11subdivision may apply the proceeds of its bonds to the support
12of any such purpose.
13DIVISION II
14CORRESPONDING AMENDMENTS
15 Sec. 12. Section 15J.7, subsection 2, Code 2017, is amended
16to read as follows:
172. In addition to the moneys received pursuant to section
1815J.6, a municipality may deposit in the reinvestment project
19fund any other moneys lawfully at the municipality’s disposal,
20including but not limited to local sales and services tax or
21local use tax receipts collected under chapter 423B if such
22use is a purpose authorized for the municipality under chapter
23423B.
24 Sec. 13. Section 49.73, subsection 1, paragraph b, Code
252017, is amended to read as follows:
26b. Any election conducted for a city, including a local
27option sales and services tax or a local use tax election
28conducted pursuant to section 423B.1. At elections conducted
29pursuant to chapter 423B, all polling places shall have the
30same voting hours.
31 Sec. 14. Section 76.4, Code 2017, is amended to read as
32follows:
3376.4 Permissive application of funds.
34Whenever the governing authority of such political
35subdivision shall have on hand funds derived from any other
-15-1source than taxation which may be appropriated to the payment
2either of interest or principal, or both principal and interest
3of such bonds, such funds may be so appropriated and used and
4the levy for the payment of the bonds correspondingly reduced.
5This section shall not restrict the authority of a political
6subdivision to apply local sales and services tax or local
7use tax receipts collected pursuant to chapter 423B for such
8purpose. Notwithstanding section 423F.3, a school district may
9apply tax receipts received pursuant to chapter 423F for the
10purposes of this section.
11 Sec. 15. Section 279.63, subsection 2, paragraph a, Code
122017, is amended to read as follows:
13a. All property tax levies, income surtaxes, and
14local option sales and use taxes in place in the school
15district, listed by type of levy, rate, amount, duration,
16and notification of the maximum rate and amount limitations
17permitted by statute.
18 Sec. 16. Section 418.13, subsection 2, Code 2017, is amended
19to read as follows:
202. In addition to the moneys received pursuant to section
21418.10 or 418.12, a governmental entity may deposit in the
22flood project fund any other moneys lawfully received by the
23governmental entity, including but not limited to local sales
24and services tax or local use tax receipts collected under
25chapter 423B.
26 Sec. 17. Section 423.4, subsection 7, paragraph f, Code
272017, is amended to read as follows:
28f. The refund in this subsection applies only to state sales
29and use tax paid and does not apply to local option sales and
30services taxes or local option use taxes imposed pursuant to
31chapter 423B. Notwithstanding the state sales tax imposed
32in section 423.2, a refund issued pursuant to this section
33shall not exceed an amount equal to five percent of the sales
34price of the fuel used to create heat, power, and steam for
35processing or generating electrical current or from the sale
-16-1price of electricity consumed by computers, machinery, or other
2equipment for operation of the data center business facility.
3 Sec. 18. Section 423.4, subsection 8, paragraph g, Code
42017, is amended to read as follows:
5g. The refund in this subsection applies only to state sales
6and use tax paid and does not apply to local option sales and
7services taxes or local option use taxes imposed pursuant to
8chapter 423B. Notwithstanding the state sales tax imposed in
9section 423.2, a refund issued pursuant to this section shall
10not exceed an amount equal to five percent of the sales price
11of the items listed in paragraph “a”, subparagraphs (1), (2),
12and (3).
13 Sec. 19. Section 423.34A, unnumbered paragraph 1, Code
142017, is amended to read as follows:
15A purchaser is relieved of liability for payment of state
16sales or use tax, for payment of any local option sales or use
17 tax, for payment of interest, or for payment of any penalty for
18nonpayment of tax which nonpayment is not fraudulent, willful,
19or intentional, under the following circumstances:
20EXPLANATION
21The inclusion of this explanation does not constitute agreement with
22the explanation’s substance by the members of the general assembly.
23BACKGROUND. Iowa law currently imposes a state sales tax and
24a state use tax. The state sales tax applies to retail sales of
25property and certain services within Iowa. The state use tax
26is complementary to the state sales tax and generally applies
27to the purchase of property or a service that would be subject
28to the state sales tax if the transaction was consummated in
29Iowa, but that is instead consummated outside of Iowa but
30purchased for use in Iowa and used in Iowa.
31Iowa law also currently allows Iowa counties to impose a
32local sales and services tax that, with a few exceptions,
33applies to the same sales of property and services as are
34subject to the state sales tax. The local option sales and
35services tax generally applies to sales occurring, and services
-17-1performed, within the area imposing the tax. Iowa law does not
2permit counties to impose a local use tax.
3BILL CHANGES. This bill creates a local option use tax that
4may be imposed by a county that is also imposing a local option
5sales and services tax. If imposed, the local use tax rate
6must be the same as the county’s local sales and services tax
7rate, which under current law cannot exceed 1 percent.
8The local option use tax is authorized, imposed, and
9repealed by a county in the same manner as a local option
10sales and services tax and is administered by the department
11of revenue (department) in the same manner as the state sales
12and use tax laws. A county may impose the local option use
13tax upon a petition of the voters or motions of city councils
14or the board of supervisors and after an election at which a
15majority of those voting favors imposition. When imposed, a
16local option use tax only applies in those incorporated areas
17and the unincorporated area of a county in which a majority of
18those voting in the area favored imposition, and if the area
19is also imposing the local sales and services tax. The local
20option use tax may be repealed by a majority vote or by motion
21of the governing body of the area imposing the tax. However,
22if the county’s local option sales and services tax is repealed
23or the rate decreased, the bill provides that the local option
24use tax imposed in that county, if any, shall be deemed to
25be repealed or reduced by the same election or motion of the
26governing body.
27The local option use tax is imposed on the same basis as the
28state use tax and is applicable to uses of taxable property
29or services within those incorporated and unincorporated
30areas of the county where it is imposed. The bill provides
31that evidence that tangible personal property was sold by any
32person for delivery to a location in Iowa shall be prima facie
33evidence that such tangible personal property was sold for use
34at that location in Iowa. The bill also provides that the
35local option use tax will not apply to the use of natural gas,
-18-1natural gas service, electricity, or electric service, certain
2uses of motor or special fuel, the use of equipment by the
3state department of transportation, and the use of any property
4or service not taxed by the state.
5The local option use tax is required to be collected by
6persons required to collect state use taxes, and if not
7collected by such persons is required to be paid by the person
8using the property or service.
9Local option use taxes are remitted to the department of
10revenue to be deposited in the appropriate county’s account
11within the local use tax fund created in the bill, and are then
12distributed back to local governments according to a statutory
13formula involving population and property tax revenues in the
14same manner as local sales and services tax revenues are under
15current law. Local option use taxes received by a city or
16county may be expended for any lawful purposes of the city or
17county.
18The bill provides that local option use taxes may be refunded
19to certain construction contractors, and pledged towards the
20repayment of bonds of a city or county, in the same manner as
21local option sales and services taxes may be under current law.
22The bill does not allow local use tax revenues to be used to
23fund urban renewal projects, which is a permitted use of local
24sales and services tax revenues under current law.
25Finally, the bill makes several corresponding changes
26to provisions of the Iowa Code that reference local option
27taxes or the local option sales and services tax to include
28references to the local option use tax created in the bill.
-19-mm/rj
2option use tax.
3BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
1DIVISION I
2LOCAL OPTION USE TAX
3 Section 1. Section 423B.1, subsections 3, 4, and 5, Code
42017, are amended to read as follows:
53. A local option tax shall be imposed only after an
6election at which a majority of those voting on the question
7favors imposition and shall then be imposed until repealed
8as provided in subsection 6, paragraph “a”. If the tax is a
9local vehicle tax imposed by a county, it shall apply to all
10incorporated and unincorporated areas of the county. If the
11tax is a local sales and services tax imposed by a county,
12it shall only apply to those incorporated areas and the
13unincorporated area of that county in which a majority of those
14voting in the area on the tax favors its imposition. If the
15tax is a local use tax, it shall only be imposed by a county
16if the county is also imposing a local sales and services
17tax, and shall only apply to those incorporated areas and the
18unincorporated area of that county in which a majority of those
19voting in the area on the tax favors imposition, and in which
20the local sales and services tax is also imposed. For purposes
21of the local sales and services tax and the local use tax, all
22cities contiguous to each other shall be treated as part of
23one incorporated area and the tax would be imposed in each of
24those contiguous cities only if the majority of those voting
25in the total area covered by the contiguous cities favors its
26imposition. In the case of a local sales and services tax or a
27local use tax submitted to the registered voters of two or more
28contiguous counties as provided in subsection 4, paragraph “c”,
29all cities contiguous to each other shall be treated as part of
30one incorporated area, even if the corporate boundaries of one
31or more of the cities include areas of more than one county,
32and the tax shall be imposed in each of those contiguous cities
33only if a majority of those voting on the tax in the total area
34covered by the contiguous cities favored its imposition. For
35purposes of the local sales and services tax and the local use
-1-1tax, a city is not contiguous to another city if the only road
2access between the two cities is through another state.
34. a. A county board of supervisors shall direct within
4thirty days the county commissioner of elections to submit the
5question of imposition of a local vehicle tax, or a local sales
6and services tax, or a local use tax to the registered voters
7of the incorporated and unincorporated areas of the county
8upon receipt of a petition, requesting imposition of a local
9vehicle tax, or a local sales and services tax, or a local use
10tax, signed by eligible electors of the whole county equal in
11number to five percent of the persons in the whole county who
12voted at the last preceding general election. In the case of
13a local vehicle tax, the petition requesting imposition shall
14specify the rate of tax and the classes, if any, that are to
15be exempt. If more than one valid petition is received, the
16earliest received petition shall be used.
17b. The question of the imposition of a local sales and
18services tax or a local use tax shall be submitted to the
19registered voters of the incorporated and unincorporated
20areas of the county upon receipt by the county commissioner
21of elections of the motion or motions, requesting such
22submission, adopted by the governing body or bodies of the
23city or cities located within the county or of the county, for
24the unincorporated areas of the county, representing at least
25one half of the population of the county. Upon adoption of
26such motion, the governing body of the city or county, for the
27unincorporated areas, shall submit the motion to the county
28commissioner of elections and in the case of the governing
29body of the city shall notify the board of supervisors of the
30adoption of the motion. The county commissioner of elections
31shall keep a file on all the motions received and, upon
32reaching the population requirements, shall publish notice of
33the ballot proposition concerning the imposition of the local
34sales and services tax or the local use tax. A motion ceases
35to be valid at the time of the holding of the regular election
-2-1for the election of members of the governing body which
2adopted the motion. The county commissioner of elections shall
3eliminate from the file any motion that ceases to be valid.
4The manner provided under this paragraph for the submission of
5the question of imposition of a local sales and services tax
6or a local use tax is an alternative to the manner provided in
7paragraph “a”.
8c. Upon receipt of petitions or motions calling for the
9submission of the question of the imposition of a local sales
10and services tax or a local use tax as described in paragraph
11“a” or “b”, the boards of supervisors of two or more contiguous
12counties in which the question is to be submitted may enter
13into a joint agreement providing that for purposes of this
14chapter, a city whose corporate boundaries include areas of
15more than one county shall be treated as part of the county
16in which a majority of the residents of the city reside. In
17such event, the county commissioners of elections from each
18such county shall cooperate in the selection of a single date
19upon which the election shall be held, and for all purposes of
20this chapter relating to the imposition, repeal, change of use,
21or collection of the tax, such a city shall be deemed to be
22part of the county in which a majority of the residents of the
23city reside. A copy of the joint agreement shall be provided
24promptly to the director of revenue.
255. The county commissioner of elections shall submit the
26question of imposition of a local option tax at an election
27held on a date specified in section 39.2, subsection 4,
28paragraph “a”. The election shall not be held sooner than sixty
29days after publication of notice of the ballot proposition.
30The ballot proposition shall specify the type and rate of tax
31and in the case of a vehicle tax the classes that will be
32exempt and in the case of a local sales and services tax or
33a local use tax the date it will be imposed which date shall
34not be earlier than ninety days following the election. The
35ballot proposition shall also specify the approximate amount
-3-1of local option tax revenues that will be used for property
2tax relief and shall contain a statement as to the specific
3purpose or purposes for which the revenues shall otherwise be
4expended. If the county board of supervisors decides under
5subsection 6 to specify a date on which the local option sales
6and services tax or a local use tax shall automatically be
7repealed, the date of the repeal shall also be specified on the
8ballot. The rate of the vehicle tax shall be in increments of
9one dollar per vehicle as set by the petition seeking to impose
10the tax. The rate of a local sales and services tax shall not
11be more than one percent as set by the governing body. The rate
12of a local use tax shall be the same as the local sales and
13services tax rate set by the same governing body. The state
14commissioner of elections shall establish by rule the form for
15the ballot proposition which form shall be uniform throughout
16the state.
17 Sec. 2. Section 423B.1, subsection 6, paragraph a, Code
182017, is amended to read as follows:
19a. (1) If a majority of those voting on the question of
20imposition of a local option tax favors imposition of a local
21option tax, the governing body of that county shall impose the
22tax at the rate specified for an unlimited period. However,
23in the case of a local sales and services tax or a local use
24tax, the county shall not impose the tax in any incorporated
25area or the unincorporated area if the majority of those voting
26on the tax in that area did not favor its imposition and, in
27the case of a local use tax, shall not impose the tax in any
28incorporated area or the unincorporated area in which the
29local sales and services tax is not imposed. For purposes of
30the local sales and services tax and the local use tax, all
31cities contiguous to each other shall be treated as part of one
32incorporated area and the tax shall be imposed in each of those
33contiguous cities only if the majority of those voting on the
34tax in the total area covered by the contiguous cities favored
35its imposition. In the case of a local sales and services
-4-1tax or a local use tax submitted to the registered voters of
2two or more contiguous counties as provided in subsection 4,
3paragraph “c”, all cities contiguous to each other shall be
4treated as part of one incorporated area, even if the corporate
5boundaries of one or more of the cities include areas of more
6than one county, and the tax shall be imposed in each of those
7contiguous cities only if a majority of those voting on the tax
8in the total area covered by the contiguous cities favored its
9imposition.
10(2) The local option tax may be repealed or the rate
11increased or decreased or the use thereof changed after an
12election at which a majority of those voting on the question of
13repeal or rate or use change favored the repeal or rate or use
14change. However, if a local sales and services tax is repealed
15or the rate decreased, the local use tax imposed within that
16county, if any, shall be deemed to be repealed or reduced
17by the same action repealing or reducing the local sales and
18services tax. The date on which the repeal, rate, or use
19change is to take effect shall not be earlier than ninety days
20following the election. The election at which the question
21of repeal or rate or use change is offered shall be called
22and held in the same manner and under the same conditions
23as provided in subsections 4 and 5 for the election on the
24imposition of the local option tax. However, in the case of
25a local sales and services tax and a local use tax where the
26tax has not been imposed countywide, the question of repeal or
27imposition or rate or use change shall be voted on only by the
28registered voters of the areas of the county where the tax has
29been imposed or has not been imposed, as appropriate. However,
30the governing body of the incorporated area or unincorporated
31area where the local sales and services tax and the local
32use tax is imposed may, upon its own motion, request the
33county commissioner of elections to hold an election in the
34incorporated or unincorporated area, as appropriate, on the
35question of the change in use of local sales and services tax
-5- 1or the local use tax revenues. The election may be held at
2any time but not sooner than sixty days following publication
3of the ballot proposition. If a majority of those voting
4in the incorporated or unincorporated area on the change in
5use favors the change, the governing body of that area shall
6change the use to which the revenues shall be used. The ballot
7proposition shall list the present use of the revenues, the
8proposed use, and the date after which revenues received will
9be used for the new use.
10(3) When submitting the question of the imposition of a
11local sales and services tax or a local use tax, the county
12board of supervisors may direct that the question contain a
13provision for the repeal, without election, of the local sales
14and services tax or the local use tax on a specific date, which
15date shall be as provided in section 423B.6, subsection 1.
16 Sec. 3. Section 423B.1, subsections 8, 9, and 10, Code 2017,
17are amended to read as follows:
188. Local option taxes authorized to be imposed as provided
19in this chapter are a local sales and services tax, and a local
20vehicle tax, and a local use tax. The rate of the tax shall
21be in increments of one dollar per vehicle for a vehicle tax
22as set on the petition seeking to impose the vehicle tax. The
23rate of a local sales and services tax shall not be more than
24one percent as set by the governing body. The rate of a local
25use tax shall be the same as the local sales and services tax
26rate set by the same governing body.
279. In a county that has imposed a local option sales
28and services tax or a local option use tax, the board of
29supervisors shall, notwithstanding any contrary provision of
30this chapter, repeal the local option sales and services tax or
31the local option use tax in the unincorporated areas or in an
32incorporated city area in which the tax has been imposed upon
33adoption of its own motion for repeal in the unincorporated
34areas or upon receipt of a motion adopted by the governing
35body of that incorporated city area requesting repeal. If a
-6-1local sales and services tax is repealed pursuant to such a
2motion, the local use tax imposed within the same incorporated
3city area or the unincorporated area, if any, shall be deemed
4to be repealed by the same motion repealing the local sales
5and services tax. The board of supervisors shall repeal the
6local option sales and services tax or the local option use
7tax effective on the later of the date of the adoption of the
8repeal motion or the earliest date specified in section 423B.6,
9subsection 1. For purposes of this subsection, incorporated
10city area includes an incorporated city which is contiguous to
11another incorporated city.
1210. Notwithstanding subsection 9 or any other contrary
13provision of this chapter, a local option sales and services
14tax and a local use tax shall not be repealed or reduced in rate
15if obligations are outstanding which are payable as provided in
16section 423B.9, unless funds sufficient to pay the principal,
17interest, and premium, if any, on the outstanding obligations
18at and prior to maturity have been properly set aside and
19pledged for that purpose.
20 Sec. 4. NEW SECTION. 423B.5A Local use tax.
211. A county that is imposing a local sales and services tax
22under section 423B.5 may impose a local use tax at the same
23rate on the purchase price or installed purchase price taxed by
24the state under chapter 423, subchapter III. A local use tax
25shall be imposed on the same basis as the state use tax except
26it shall not be imposed on any of the following:
27a. The purchase price on the use of natural gas, natural gas
28service, electricity, or electric service.
29b. The purchase price on the use of any property or on the
30use of any service not taxed by the state.
31c. The purchase price from the use of motor fuel or special
32fuel as defined in chapter 452A which is consumed for highway
33use or in watercraft or aircraft if the fuel tax is paid on the
34transaction and a refund has not or will not be allowed.
35d. The purchase price from the use of equipment by the state
-7-1department of transportation.
22. A local use tax is applicable to uses of property or
3services within those incorporated and unincorporated areas
4of the county where it is imposed and shall be collected by
5all persons required to collect state use taxes, and if not
6collected by such persons shall be paid by the person using
7the property or service. All cities contiguous to each other
8shall be treated as part of one incorporated area and the tax
9is imposed in each of those contiguous cities only if the
10majority of those voting in the total area covered by the
11contiguous cities favors its imposition. In the case of a
12local use tax submitted to the registered voters of two or more
13contiguous counties as provided in section 423B.1, subsection
144, paragraph “c”, all cities contiguous to each other shall be
15treated as part of one incorporated area, even if the corporate
16boundaries of one or more of the cities include areas of more
17than one county, and the tax shall be imposed in each of those
18contiguous cities only if a majority of those voting on the tax
19in the total area covered by the contiguous cities favor its
20imposition.
213. For purposes of the proper administration of the local
22use tax and to prevent its evasion, evidence that tangible
23personal property was sold by any person for delivery to a
24location in this state shall be prima facie evidence that such
25tangible personal property was sold for use at that location
26in this state.
274. The amount of the purchase price, for purposes of
28determining the amount of the local use tax, does not include
29the amount of any state use tax.
305. A tax permit other than the state use tax permit
31required under section 423.36 shall not be required by local
32authorities.
33 Sec. 5. Section 423B.6, Code 2017, is amended to read as
34follows:
35423B.6 Administration.
-8- 11. a. A local sales and services tax or a local use tax
2 shall be imposed either January 1 or July 1 following the
3notification of the director of revenue but not sooner than
4ninety days following the favorable election and not sooner
5than sixty days following notice to sellers, as defined in
6section 423.1. However, a jurisdiction which has voted to
7continue imposition of the tax may impose that tax without
8repeal of the prior tax.
9b. A local sales and services tax or a local use tax shall
10be repealed only on June 30 or December 31 but not sooner than
11ninety days following the favorable election if one is held.
12However, a local sales and services tax shall not be repealed
13before the tax has been in effect for one year. At least forty
14days before the imposition or repeal of the tax, a county shall
15provide notice of the action by certified mail to the director
16of revenue.
17c. The imposition of or a rate change for a local sales
18and services tax or a local use tax shall not be applied to
19purchases from a printed catalog wherein a purchaser computes
20the local tax based on rates published in the catalog unless a
21minimum of one hundred twenty days’ notice of the imposition or
22rate change has been given to the seller from the catalog and
23the first day of a calendar quarter has occurred on or after
24the one hundred twentieth day.
25d. If a local sales and services tax has been imposed
26prior to April 1, 2000, and at the time of the election a date
27for repeal was specified on the ballot, the local sales and
28services tax may be repealed on that date, notwithstanding
29paragraph “b”.
302. a. The director of revenue shall administer a local
31sales and services tax and a local use tax as nearly as
32possible in conjunction with the administration of state sales
33and use tax laws. The director shall provide appropriate forms
34or provide on the regular state tax forms for reporting local
35sales and services tax liability and local use tax liability.
-9- 1b. The ordinance of a county board of supervisors imposing
2a local sales and services tax or a local use tax shall adopt
3by reference the applicable provisions of the appropriate
4sections of chapter 423. All powers and requirements of the
5director to administer the state sales tax law and use tax
6law are applicable to the administration of a local sales and
7services tax law, and the local excise tax, and the local use
8tax, including but not limited to the provisions of section
9422.25, subsection 4, sections 422.30, 422.67, and 422.68,
10section 422.69, subsection 1, sections 422.70 through 422.75,
11section and sections 423.14, subsection 1 and subsection 2,
12paragraphs “b” through “e”, and sections 423.15, 423.23, 423.24,
13423.25, 423.31 through 423.35, 423.37 through 423.42, 423.46,
14and 423.47. Local officials shall confer with the director of
15revenue for assistance in drafting the ordinance imposing a
16local sales and services tax or a local use tax. A certified
17copy of the ordinance shall be filed with the director as soon
18as possible after passage.
19c. Frequency of deposits and quarterly reports of with the
20department of revenue are governed by the tax provisions in
21section 423.31 for a local sales and services tax with the
22department of revenue and are governed by the tax provisions
23in section 423.31 423.32 for a local use tax. Local tax
24collections shall not be included in computation of the total
25tax to determine frequency of filing under section 423.31 or
26432.32.
27d. The director shall apply a boundary change of a county or
28city imposing or collecting the local sales and services tax
29or the local use tax to the imposition or collection of that
30tax only on the first day of a calendar quarter which occurs
31sixty days or more after the director has given notice of the
32boundary change to sellers.
333. a. The director, in consultation with local officials,
34shall collect and account for a local sales and services tax
35and a local use tax. The director shall certify each quarter
-10-1the amount of local sales and services tax receipts and any
2interest and penalties to be credited to the “local sales and
3services tax fund” established in the office of the treasurer
4of state. The director shall certify each quarter the amount
5of local use tax receipts and any interest and penalties to
6be credited to the “local use tax fund” established in the
7office of the treasurer of state. All taxes collected under
8this chapter by a retailer or any individual are deemed to be
9held in trust for the state of Iowa and the local jurisdictions
10imposing the taxes.
11b. All local tax moneys and interest and penalties received
12or refunded one hundred eighty days or more after the date on
13which the county repeals its local sales and services tax or
14local use tax shall be deposited in or withdrawn from the state
15general fund.
16 Sec. 6. Section 423B.7, subsection 1, paragraph a, Code
172017, is amended to read as follows:
18a. Except as provided in paragraph “b”, the director shall
19credit the local sales and services tax receipts and interest
20and penalties from a county-imposed tax to the county’s
21account in the local sales and services tax fund and from a
22city-imposed tax under section 423B.1, subsection 2, to the
23city’s account in the local sales and services tax fund. The
24director shall credit the local use tax receipts and interest
25and penalties from a county-imposed tax to the county’s account
26in the local use tax fund. If the director is unable to
27determine from which county any of the receipts were collected,
28those receipts shall be allocated among the possible counties
29based on allocation rules adopted by the director.
30 Sec. 7. Section 423B.7, subsection 7, Code 2017, is amended
31to read as follows:
327. Local sales and services tax moneys and local use tax
33moneys received by a city or county may be expended for any
34lawful purpose of the city or county.
35 Sec. 8. Section 423B.8, Code 2017, is amended to read as
-11-1follows:
2423B.8 Construction contractor refunds.
31. Construction contractors may make application to the
4department for a refund of the additional local sales and
5services tax or local use tax paid under this chapter by
6reason of taxes paid on goods, wares, or merchandise under the
7following conditions:
8a. The goods, wares, or merchandise are incorporated into an
9improvement to real estate in fulfillment of a written contract
10fully executed prior to the date of the imposition or increase
11in rate of a local sales and services tax or a local use tax
12 under this chapter. The refund shall not apply to equipment
13transferred in fulfillment of a mixed construction contract.
14b. The contractor has paid to the department or to a
15retailer the full amount of the state and local tax.
16c. The claim is filed on forms provided by the department
17and is filed within one year of the date the tax is paid.
182. The department shall pay the refund from the appropriate
19city’s or county’s account in the local sales and services tax
20fund or the local use tax fund.
213. A contractor who makes an erroneous application for
22refund shall be liable for payment of the excess refund paid
23plus interest at the rate in effect under section 421.7. In
24addition, a contractor who willfully makes a false application
25for refund is guilty of a simple misdemeanor and is liable
26for a penalty equal to fifty percent of the excess refund
27claimed. Excess refunds, penalties, and interest due under
28this subsection may be enforced and collected in the same
29manner as the local sales and services tax and the local use
30tax imposed under this chapter.
31 Sec. 9. Section 423B.9, subsections 1, 2, and 3, Code 2017,
32are amended to read as follows:
331. For purposes of this section unless the context otherwise
34requires:
35a. “Bond issuer” or “issuer” means a city, a county, or a
-12-1secondary recipient.
2b. “Designated portion” means the portion of the local
3option sales and services tax revenues or the local option use
4tax revenues which is authorized to be expended for one or a
5combination of purposes under an adopted public measure.
6c. “Secondary recipient” means a political subdivision of
7the state which is to receive revenues from a local option
8sales and services tax or a local use tax over a period of years
9pursuant to the terms of a chapter 28E agreement with one or
10more cities or counties.
112. An issuer of public bonds which is a recipient of
12revenues from a local option sales and services tax or a local
13use tax imposed pursuant to this chapter may issue bonds in
14anticipation of the collection of one or more designated
15portions of the local option sales and services tax or the
16local option use tax and may pledge irrevocably an amount of
17the revenue derived from the designated portions for each of
18the years the bonds remain outstanding to the payment of the
19bonds. Bonds may be issued only for one or more of the purposes
20set forth on the ballot proposition concerning the imposition
21of the local option sales and services tax or the local option
22use tax, except bonds shall not be issued which are payable
23from that portion of tax revenues designated for property
24tax relief. The bonds may be issued in accordance with the
25procedures set forth in either subsection 3 or 4.
263. The governing body of an issuer may authorize the
27issuance of bonds which are payable from the designated portion
28of the revenues of the local option sales and services tax
29or the local option use tax, and not from property tax, by
30following the authorization procedures set forth for cities
31in section 384.83. Bonds may be issued for the purpose of
32refunding outstanding and previously issued bonds under this
33subsection without otherwise complying with the provisions of
34this subsection.
35 Sec. 10. Section 423B.9, subsection 4, paragraph b, Code
-13-12017, is amended to read as follows:
2b. The provisions of chapter 76 apply to the bonds payable
3as provided in this subsection, except that the mandatory levy
4to be assessed pursuant to section 76.2 shall be at a rate
5to generate an amount which together with the receipts from
6the pledged designated portion of the local option sales and
7services tax or the local option use tax is sufficient to pay
8the interest and principal on the bonds. All amounts collected
9as a result of the levy assessed pursuant to section 76.2 and
10paid out in the first instance for bond principal and interest
11shall be repaid to the bond issuer which levied the tax from
12the first available designated portion of local option sales
13and services tax or local option use tax collections received
14in excess of the requirement for the payment of the principal
15and interest of the bonds and when repaid shall be applied in
16reduction of property taxes. The amount of bonds which may be
17issued under section 76.3 shall be the amount which could be
18retired from the actual collections of the designated portions
19of the local option sales and services tax or the local option
20use tax for the last four calendar quarters, as certified by
21the director of revenue. The amount of tax revenues pledged
22jointly by other cities or counties may be considered for the
23purpose of determining the amount of bonds which may be issued.
24If the local option sales and services tax or the local
25option use tax has been in effect for less than four calendar
26quarters, the tax collected within the shorter period may be
27adjusted to project the collections of the designated portion
28for the full year for the purpose of determining the amount of
29the bonds which may be issued. The provisions of this section
30constitute separate authorization for the issuance of bonds and
31shall prevail in the event of conflict with any other provision
32of the Code limiting the amount of bonds which may be issued or
33the source of payment of the bonds. Bonds issued under this
34section shall not limit or restrict the authority of the bond
35issuer to issue bonds under other provisions of the Code.
-14-1 Sec. 11. Section 423B.9, subsection 5, Code 2017, is amended
2to read as follows:
35. A city or county, jointly with one or more other
4political subdivisions as provided in chapter 28E, may pledge
5irrevocably any amount derived from the designated portions of
6the revenues of the local option sales and services tax or the
7local option use tax to the support or payment of bonds of an
8issuer, issued for one or more purposes set forth on the ballot
9proposition concerning the imposition of the local option sales
10and services tax or the local option use tax or a political
11subdivision may apply the proceeds of its bonds to the support
12of any such purpose.
13DIVISION II
14CORRESPONDING AMENDMENTS
15 Sec. 12. Section 15J.7, subsection 2, Code 2017, is amended
16to read as follows:
172. In addition to the moneys received pursuant to section
1815J.6, a municipality may deposit in the reinvestment project
19fund any other moneys lawfully at the municipality’s disposal,
20including but not limited to local sales and services tax or
21local use tax receipts collected under chapter 423B if such
22use is a purpose authorized for the municipality under chapter
23423B.
24 Sec. 13. Section 49.73, subsection 1, paragraph b, Code
252017, is amended to read as follows:
26b. Any election conducted for a city, including a local
27option sales and services tax or a local use tax election
28conducted pursuant to section 423B.1. At elections conducted
29pursuant to chapter 423B, all polling places shall have the
30same voting hours.
31 Sec. 14. Section 76.4, Code 2017, is amended to read as
32follows:
3376.4 Permissive application of funds.
34Whenever the governing authority of such political
35subdivision shall have on hand funds derived from any other
-15-1source than taxation which may be appropriated to the payment
2either of interest or principal, or both principal and interest
3of such bonds, such funds may be so appropriated and used and
4the levy for the payment of the bonds correspondingly reduced.
5This section shall not restrict the authority of a political
6subdivision to apply local sales and services tax or local
7use tax receipts collected pursuant to chapter 423B for such
8purpose. Notwithstanding section 423F.3, a school district may
9apply tax receipts received pursuant to chapter 423F for the
10purposes of this section.
11 Sec. 15. Section 279.63, subsection 2, paragraph a, Code
122017, is amended to read as follows:
13a. All property tax levies, income surtaxes, and
14local option sales and use taxes in place in the school
15district, listed by type of levy, rate, amount, duration,
16and notification of the maximum rate and amount limitations
17permitted by statute.
18 Sec. 16. Section 418.13, subsection 2, Code 2017, is amended
19to read as follows:
202. In addition to the moneys received pursuant to section
21418.10 or 418.12, a governmental entity may deposit in the
22flood project fund any other moneys lawfully received by the
23governmental entity, including but not limited to local sales
24and services tax or local use tax receipts collected under
25chapter 423B.
26 Sec. 17. Section 423.4, subsection 7, paragraph f, Code
272017, is amended to read as follows:
28f. The refund in this subsection applies only to state sales
29and use tax paid and does not apply to local option sales and
30services taxes or local option use taxes imposed pursuant to
31chapter 423B. Notwithstanding the state sales tax imposed
32in section 423.2, a refund issued pursuant to this section
33shall not exceed an amount equal to five percent of the sales
34price of the fuel used to create heat, power, and steam for
35processing or generating electrical current or from the sale
-16-1price of electricity consumed by computers, machinery, or other
2equipment for operation of the data center business facility.
3 Sec. 18. Section 423.4, subsection 8, paragraph g, Code
42017, is amended to read as follows:
5g. The refund in this subsection applies only to state sales
6and use tax paid and does not apply to local option sales and
7services taxes or local option use taxes imposed pursuant to
8chapter 423B. Notwithstanding the state sales tax imposed in
9section 423.2, a refund issued pursuant to this section shall
10not exceed an amount equal to five percent of the sales price
11of the items listed in paragraph “a”, subparagraphs (1), (2),
12and (3).
13 Sec. 19. Section 423.34A, unnumbered paragraph 1, Code
142017, is amended to read as follows:
15A purchaser is relieved of liability for payment of state
16sales or use tax, for payment of any local option sales or use
17 tax, for payment of interest, or for payment of any penalty for
18nonpayment of tax which nonpayment is not fraudulent, willful,
19or intentional, under the following circumstances:
20EXPLANATION
21The inclusion of this explanation does not constitute agreement with
22the explanation’s substance by the members of the general assembly.
23BACKGROUND. Iowa law currently imposes a state sales tax and
24a state use tax. The state sales tax applies to retail sales of
25property and certain services within Iowa. The state use tax
26is complementary to the state sales tax and generally applies
27to the purchase of property or a service that would be subject
28to the state sales tax if the transaction was consummated in
29Iowa, but that is instead consummated outside of Iowa but
30purchased for use in Iowa and used in Iowa.
31Iowa law also currently allows Iowa counties to impose a
32local sales and services tax that, with a few exceptions,
33applies to the same sales of property and services as are
34subject to the state sales tax. The local option sales and
35services tax generally applies to sales occurring, and services
-17-1performed, within the area imposing the tax. Iowa law does not
2permit counties to impose a local use tax.
3BILL CHANGES. This bill creates a local option use tax that
4may be imposed by a county that is also imposing a local option
5sales and services tax. If imposed, the local use tax rate
6must be the same as the county’s local sales and services tax
7rate, which under current law cannot exceed 1 percent.
8The local option use tax is authorized, imposed, and
9repealed by a county in the same manner as a local option
10sales and services tax and is administered by the department
11of revenue (department) in the same manner as the state sales
12and use tax laws. A county may impose the local option use
13tax upon a petition of the voters or motions of city councils
14or the board of supervisors and after an election at which a
15majority of those voting favors imposition. When imposed, a
16local option use tax only applies in those incorporated areas
17and the unincorporated area of a county in which a majority of
18those voting in the area favored imposition, and if the area
19is also imposing the local sales and services tax. The local
20option use tax may be repealed by a majority vote or by motion
21of the governing body of the area imposing the tax. However,
22if the county’s local option sales and services tax is repealed
23or the rate decreased, the bill provides that the local option
24use tax imposed in that county, if any, shall be deemed to
25be repealed or reduced by the same election or motion of the
26governing body.
27The local option use tax is imposed on the same basis as the
28state use tax and is applicable to uses of taxable property
29or services within those incorporated and unincorporated
30areas of the county where it is imposed. The bill provides
31that evidence that tangible personal property was sold by any
32person for delivery to a location in Iowa shall be prima facie
33evidence that such tangible personal property was sold for use
34at that location in Iowa. The bill also provides that the
35local option use tax will not apply to the use of natural gas,
-18-1natural gas service, electricity, or electric service, certain
2uses of motor or special fuel, the use of equipment by the
3state department of transportation, and the use of any property
4or service not taxed by the state.
5The local option use tax is required to be collected by
6persons required to collect state use taxes, and if not
7collected by such persons is required to be paid by the person
8using the property or service.
9Local option use taxes are remitted to the department of
10revenue to be deposited in the appropriate county’s account
11within the local use tax fund created in the bill, and are then
12distributed back to local governments according to a statutory
13formula involving population and property tax revenues in the
14same manner as local sales and services tax revenues are under
15current law. Local option use taxes received by a city or
16county may be expended for any lawful purposes of the city or
17county.
18The bill provides that local option use taxes may be refunded
19to certain construction contractors, and pledged towards the
20repayment of bonds of a city or county, in the same manner as
21local option sales and services taxes may be under current law.
22The bill does not allow local use tax revenues to be used to
23fund urban renewal projects, which is a permitted use of local
24sales and services tax revenues under current law.
25Finally, the bill makes several corresponding changes
26to provisions of the Iowa Code that reference local option
27taxes or the local option sales and services tax to include
28references to the local option use tax created in the bill.
-19-mm/rj