Senate Study Bill 3045



                                    SENATE/HOUSE FILE       
                                    BY  (PROPOSED DEPARTMENT
                                        OF REVENUE BILL)

                                         A BILL FOR

     1 An Act relating to the administration of the streamlined sales
     2    tax agreement by the department of revenue.
     3 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
       TLSB 5302DP (3) 84
       mm/sc

PAG LIN



  1  1    Section 1.  Section 423.1, subsection 51, paragraph a,
  1  2 subparagraph (2), Code Supplement 2011, is amended to read as
  1  3 follows:
  1  4    (2)  The cost of materials used, labor or service cost,
  1  5 interest, losses, all costs of transportation to the seller,
  1  6 all taxes imposed on the seller except as provided in paragraph
  1  7 "b", subparagraphs (5) and (6), and any other expenses of the
  1  8 seller.
  1  9    Sec. 2.  Section 423.1, subsection 51, paragraph b, Code
  1 10 Supplement 2011, is amended by adding the following new
  1 11 subparagraphs:
  1 12    NEW SUBPARAGRAPH.  (5)  Any state or local tax on a retail
  1 13 sale that is imposed on the seller if the statute, rule, or
  1 14 local ordinance imposing the tax provides that the seller may,
  1 15 but is not required to, collect such tax from the consumer, and
  1 16 if the tax is separately stated on the invoice, bill of sale,
  1 17 or similar document given to the purchaser.
  1 18    NEW SUBPARAGRAPH.  (6)  Any tribal tax on a retail sale that
  1 19 is imposed on the seller if the tribal law imposing the tax
  1 20 provides that the seller may but is not required to collect
  1 21 such tax from the consumer, and if the tax is separately stated
  1 22 on the invoice, bill of sale, or similar document given to the
  1 23 purchaser.
  1 24    Sec. 3.  Section 423.1, subsection 51, Code Supplement 2011,
  1 25 is amended by adding the following new paragraph:
  1 26    NEW PARAGRAPH.  0d.  "Sales price" shall include
  1 27 consideration received by the seller from third parties if all
  1 28 of the following apply:
  1 29    (1)  The seller actually receives consideration from a party
  1 30 other than the purchaser and the consideration is directly
  1 31 related to a price reduction or discount on the sale.
  1 32    (2)  The seller has an obligation to pass the price reduction
  1 33 or discount through to the purchaser.
  1 34    (3)  The amount of the consideration attributable to the sale
  1 35 is fixed and determinable by the seller at the time of the sale
  2  1 of the item to the purchaser.
  2  2    (4)  One of the following criteria is met:
  2  3    (a)  The purchaser presents a coupon, certificate, or other
  2  4 documentation to the seller to claim a price reduction or
  2  5 discount where the coupon, certificate, or documentation is
  2  6 authorized, distributed, or granted by a third party with the
  2  7 understanding that the third party will reimburse any seller to
  2  8 whom the coupon, certificate, or documentation is presented.
  2  9    (b)  The purchaser is identified to the seller as a member
  2 10 of a group or organization entitled to a price reduction or
  2 11 discount. For purposes of this subparagraph division, a card
  2 12 identifying the holder as a preferred customer, which card is
  2 13 available to any patron, does not constitute membership in such
  2 14 a group or organization.
  2 15    (c)  The price reduction or discount is identified as
  2 16 a third=party price reduction or discount on the invoice
  2 17 received by the purchaser or on a coupon, certificate, or other
  2 18 documentation presented by the purchaser.
  2 19    Sec. 4.  Section 423.31, Code 2011, is amended by adding the
  2 20 following new subsection:
  2 21    NEW SUBSECTION.  8.  Persons required to file a return under
  2 22 this section may instead file a simplified electronic return
  2 23 pursuant to section 423.49.
  2 24    Sec. 5.  Section 423.49, subsection 4, paragraph d, Code
  2 25 2011, is amended to read as follows:
  2 26    d.  A model 4 seller, or a seller not registered under the
  2 27 agreement who is otherwise registered in the state, may elect
  2 28 to file a simplified return. Model 4 sellers, or sellers not
  2 29 registered under the agreement who are otherwise registered in
  2 30 the state, electing to do so shall file the first part of the
  2 31 return each month.
  2 32    Sec. 6.  Section 423.49, subsection 4, paragraph e,
  2 33 unnumbered paragraph 1, Code 2011, is amended to read as
  2 34 follows:
  2 35    A model 4 seller required to register in the state, or a
  3  1 seller not registered under the agreement who is otherwise
  3  2 registered in the state, may submit the information collected
  3  3 in the second part of the return in one of the following ways:
  3  4    Sec. 7.  Section 423.52, subsection 1, Code 2011, is amended
  3  5 to read as follows:
  3  6    1.  Sellers and certified service providers using
  3  7 databases derived from zip codes or state or vendor provided
  3  8 address=based databases are relieved from liability to this
  3  9 state or its local taxing jurisdictions for having charged and
  3 10 collected the incorrect amount of sales or use tax resulting
  3 11 from the seller or certified service provider relying on
  3 12 erroneous data provided by this state on tax rates, boundaries,
  3 13 or taxing jurisdiction assignments. If this state provides an
  3 14 address=based system for assigning taxing jurisdictions, the
  3 15 director is not required to provide liability relief for errors
  3 16 resulting from reliance on the information a database derived
  3 17 from zip codes and provided by this state if the director has
  3 18 given adequate notice, as determined by the governing board, to
  3 19 affected parties of the decision to end this relief.
  3 20                           EXPLANATION
  3 21    This bill relates to the administration of the sales and use
  3 22 taxes under the streamlined sales tax agreement.
  3 23    Iowa is a member of the streamlined sales and use tax
  3 24 agreement, which is an effort to administer state sales and
  3 25 use taxes in all participating states according to the same
  3 26 simplified system.  Under the agreement, Iowa must periodically
  3 27 make changes in the administration of the sales and use taxes
  3 28 in order to remain in compliance.
  3 29    The bill amends the definition of "sales price" to exclude
  3 30 any state or local tax on a retail sale that is imposed on the
  3 31 seller if by law the seller may but is not required to collect
  3 32 the tax from the consumer, and if the tax is separately stated
  3 33 on the invoice, bill of sale, or similar document given to the
  3 34 purchaser.
  3 35    The bill further amends the definition of "sales price" to
  4  1 exclude any tribal tax on a retail sale that is imposed on the
  4  2 seller if by law the seller may but is not required to collect
  4  3 such tax from the consumer, and if the tax is separately stated
  4  4 on the invoice, bill of sale, or similar document given to the
  4  5 purchaser.
  4  6    The bill also amends the definition of "sales price" to
  4  7 include consideration received from third parties if four
  4  8 criteria are met.  First, the seller must actually receive
  4  9 consideration from a party other than the purchaser and the
  4 10 consideration must be directly related to a price reduction
  4 11 or discount on the sale.  Second, the seller must have an
  4 12 obligation to pass the price reduction or discount through
  4 13 to the purchaser.  Third, the amount of the consideration
  4 14 attributable to the sale must be fixed and determinable by the
  4 15 seller at the time of the sale.  Fourth, one of the following
  4 16 must apply: the purchaser presents to the seller a coupon,
  4 17 certificate, or other documentation acquired from a third party
  4 18 to claim a discount; the purchaser is identified to the seller
  4 19 as a member of a group or organization entitled to claim a
  4 20 price reduction or discount; or the price reduction or discount
  4 21 is identified as a third=party price reduction or discount
  4 22 on the invoice received by the purchaser or on a coupon,
  4 23 certificate, or other documentation presented by the purchaser.
  4 24    The bill allows sellers that have not registered under the
  4 25 streamlined sales and use tax agreement but that are otherwise
  4 26 registered in the state and required to file sales tax returns
  4 27 to elect to file using the simplified electronic return.
  4 28    The bill amends Code section 423.52 relating to liability
  4 29 relief for sellers and certified service providers.  Under
  4 30 current law, relief from liability is granted to sellers and
  4 31 certified service providers who charge incorrect sales and
  4 32 use tax after relying on erroneous tax rate, boundary, or
  4 33 jurisdiction data provided by the state in databases derived
  4 34 from zip codes or addresses.  However, the state may deny
  4 35 liability relief to a seller or certified service provider for
  5  1 reliance on either database as long as the state maintains an
  5  2 address=based system for assigning taxing jurisdictions, and
  5  3 provides adequate notice to the affected parties.  The bill
  5  4 provides that if the state maintains an address=based system
  5  5 for assigning taxing jurisdictions, it may only deny liability
  5  6 relief to sellers and certified service providers for errors
  5  7 resulting from the seller's or certified service provider's
  5  8 reliance on a database derived from zip codes.
       LSB 5302DP (3) 84
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