Senate Study Bill 1291 - Introduced SENATE FILE _____ BY (PROPOSED COMMITTEE ON WAYS AND MEANS BILL BY CHAIRPERSON BOLKCOM) A BILL FOR An Act relating to state revenue and finance laws by exempting 1 certain all-terrain vehicles and off-road utility vehicles 2 from the sales and use tax, modifying the flood mitigation 3 program, and providing an individual income tax exemption 4 for certain payments made to nonresident utility workers, 5 and including effective date and retroactive applicability 6 provisions. 7 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 8 TLSB 2681XC (2) 86 mm/sc

S.F. _____ DIVISION I 1 SALES AND USE TAXES 2 Section 1. Section 423.3, subsection 8, paragraph d, Code 3 2015, is amended to read as follows: 4 d. (1) For purposes of this subsection , the following 5 items are exempt under paragraph “a” when used primarily in 6 agricultural production: 7 (a) A diesel fuel trailer, regardless of the vehicle to 8 which it is to be attached. 9 (b) A seed tender, regardless of the vehicle to which it is 10 to be attached. 11 (c) An all-terrain vehicle. 12 (d) An off-road utility vehicle. 13 (2) For purposes of this paragraph: 14 (a) “All-terrain vehicle” means the same as defined in 15 section 321I.1. 16 (a) (b) “Fuel trailer” means a trailer that holds dyed 17 diesel fuel or diesel exhaust fluid and that is used to 18 transport such fuel or fluid to a self-propelled implement of 19 husbandry. 20 (c) “Off-road utility vehicle” means the same as defined in 21 section 321I.1. 22 (b) (d) “Seed tender” means a trailer that holds seed and 23 that is used to transport seed to an implement of husbandry and 24 load seed into an implement of husbandry. 25 DIVISION II 26 FLOOD MITIGATION PROGRAM 27 Sec. 2. Section 418.5, subsections 1 and 6, Code 2015, are 28 amended to read as follows: 29 1. The flood mitigation board is established consisting 30 of nine voting members and four five ex officio, nonvoting 31 members, and is located for administrative purposes within 32 the department. The director of the department shall provide 33 office space, staff assistance, and necessary supplies and 34 equipment for the board. The director shall budget funds to 35 -1- LSB 2681XC (2) 86 mm/sc 1/ 4

S.F. _____ pay the necessary expenses of the board. In performing its 1 functions, the board is performing a public function on behalf 2 of the state and is a public instrumentality of the state. 3 6. The board’s ex officio membership shall include be 4 comprised of the following: 5 a. four Four members of the general assembly with one 6 each appointed by the majority leader of the senate, the 7 minority leader of the senate, the speaker of the house of 8 representatives, and the minority leader of the house of 9 representatives. A legislative member serves for a term as 10 provided in section 69.16B in an ex officio, nonvoting capacity 11 and is eligible for per diem and expenses as provided in 12 section 2.10 . 13 b. The director of revenue or the director’s designee. 14 DIVISION III 15 INDIVIDUAL INCOME TAX EXEMPTION FOR CERTAIN PAYMENTS MADE 16 TO NONRESIDENT ELECTRIC UTILITY WORKERS 17 Sec. 3. Section 422.7, Code 2015, is amended by adding the 18 following new subsection: 19 NEW SUBSECTION . 57. a. Subtract, to the extent included, 20 payments received by an individual from an electric utility for 21 the following: 22 (1) Emergency response work performed in this state for the 23 electric utility pursuant to a mutual aid agreement between 24 this state and any other state if such emergency response work 25 is performed while the individual is a nonresident. 26 (2) Training received in this state from the electric 27 utility if such training is received while the individual is 28 a nonresident. 29 b. For purposes of this subsection, “electric utility” means 30 the same as defined in section 476.22. 31 Sec. 4. Section 422.16, subsection 1, Code 2015, is amended 32 by adding the following new paragraph: 33 NEW PARAGRAPH . f. Nonresidents engaged in emergency 34 response work or training meeting the requirements of section 35 -2- LSB 2681XC (2) 86 mm/sc 2/ 4

S.F. _____ 422.7, subsection 57, are not subject to withholding by the 1 applicable electric utility for which such emergency response 2 work or training is being performed if the electric utility has 3 applied to the department for exemption from the withholding 4 requirement and the department has determined that the payments 5 received by the nonresidents would be exempt from taxation 6 pursuant to section 422.7, subsection 57. 7 Sec. 5. EFFECTIVE UPON ENACTMENT. This division of this 8 Act, being deemed of immediate importance, takes effect upon 9 enactment. 10 Sec. 6. RETROACTIVE APPLICABILITY. This division of this 11 Act applies retroactively to January 1, 2015, for tax years 12 beginning on or after that date. 13 EXPLANATION 14 The inclusion of this explanation does not constitute agreement with 15 the explanation’s substance by the members of the general assembly. 16 This bill relates to state revenue and finance laws, 17 including the sales and use tax, flood mitigation program, and 18 individual income tax. 19 DIVISION I —— SALES AND USE TAXES. Division I exempts 20 the sales price of all-terrain vehicles and off-road utility 21 vehicles used primarily in agricultural production from the 22 sales and use tax. Under current law, such vehicles are not 23 exempt from sales and use tax unless they are directly and 24 primarily used in production of agricultural products. 25 “All-terrain vehicle” means a motorized vehicle with not 26 less than three and not more than six nonhighway tires that 27 is limited in engine displacement to less than 1,000 cubic 28 centimeters and in total dry weight to less than 1,200 pounds 29 and that has a seat or saddle designed to be straddled by the 30 operator and handlebars for steering control. 31 “Off-road utility vehicle” means a motorized vehicle with 32 not less than four and not more than eight nonhighway tires or 33 rubberized tracks that has a seat that is of bucket or bench 34 design, not intended to be straddled by the operator, and a 35 -3- LSB 2681XC (2) 86 mm/sc 3/ 4

S.F. _____ steering wheel or control levers for control. 1 By operation of Code section 423.6, an item exempt from the 2 imposition of the sales tax is also exempt from the use tax 3 imposed in Code section 423.5. 4 DIVISION II —— FLOOD MITIGATION PROGRAM. Division II adds 5 the director of revenue, or a designee of the director, as an 6 ex officio, nonvoting member of the flood mitigation board 7 created in Code chapter 418. The flood mitigation board is 8 currently composed of nine voting members and four ex officio, 9 nonvoting members who are members of the general assembly, and 10 is responsible for overseeing the flood mitigation program 11 administered by the department of homeland security and 12 emergency management. 13 DIVISION III —— INDIVIDUAL INCOME TAX. Division III 14 provides an individual income tax exemption for payments 15 received by a nonresident from an electric utility for 16 emergency response work performed in Iowa for the electric 17 utility pursuant to a mutual aid agreement or for training 18 received in Iowa from the electric utility. The division 19 also provides that nonresidents engaged in such emergency 20 response work or training are not subject to individual 21 income tax withholding requirements for the exempt payments if 22 the electric utility for which such emergency response work 23 or training is being performed applies for and receives a 24 withholding exemption from the department of revenue. Division 25 III takes effect upon enactment and applies retroactively to 26 tax years beginning on or after January 1, 2015. 27 -4- LSB 2681XC (2) 86 mm/sc 4/ 4