General Assembly: 76 (1996 Regular GA) - Chapter 1049 - Taxation of industrial machinery, equipment, and computers


Published: 1996-04-04

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CH. 1049 lAWS OF THE SEVENTY-SIXTH GA., 1996 SESSION

CHAPTER 1049 TAXATION OF INDUSTRIAL MACHINERY, EQUIPMENT, AND COMPUTERS

H.F.2165

114

AN ACf relating to industrial machinery, computers and equipment for purposes of sales taxation and property taxation and providing an effective date and applicability date.

Be It Enacted by the General Assembly of the State of Iowa:

Section 1. Section 422.45, subsection 27, Code Supplement 1995, is amended to read as follows:

27. The gross receipts from the sale or rental, en eF afteF July 1, 1987 eF en eF afteF July 1, 1985, in the ease ef all industFy whieh has entered inte an agFeement HBdeF ehapteF 260E prieF te the sale eF lease, of industrial machinery, equipment and computers, includ- ing replacement parts which are depreciable for state and federal income tax purposes, if the following conditions are met:

a. The industrial machinery, equipment and computers shall be directly and primarily used in the manner described in section 428.20 in processing tangible personal property or in research and development of new products or processes of manufacturing, refining, purifying, combining of different materials or packing of meats to be used for the purpose of adding value to products, or in processing or storage of data or information by an insur- ance company, financial institution or commercial enterprise, or in the recycling or repro- cessing of waste products. As used in this paragraph:

(1) "Insurance company" means an insurer organized or operating under chapters 508, 514, 515, 518, 518A, 519, 520 or authorized to do business in Iowa as an insurer aBEl ha ... :.ng fifty eF meFe peFsens empleyed in this state e~[elHding lieensed insHFanee agents or a licensed insurance agent under chapter 522.

(2) "Financial institutions" means as defined in section 527.2, subsection 9. (3) "Commercial enterprise" includes businesses and manufacturers conducted for profit

and includes centers for data processing services to insurance companies, financial insti- tutions, businesses and manufacturers but excludes professions and occupations and non- profit organizations.

b. The industrial machinery, equipment and computers must be real property within the scope of section 427Al, subsection 1, paFagFaphs paragraph "en or "j", and must. For sales occurring after January 1. 1994. the property is not required to be subject to taxation as real property. This paFagrnph dees net apply te maehineFy and equipment used in the FeeyeliBg eF FepFeeessing ef waste pF9duets quali1¥.ng feF an exemptien undeF paFagrnph

Hev.'eveF, the pFeYisiens ef ehapteFS 404 and 427B 'uhieh Fesult in the exemptien ITem taxatien ef pFepeFty feF pFepeFty tax pUFpeses de net pFeelHde the pFepeFty ITem reeeMng this exemptien if the pF9peFty etheFwise E):Halifies.

The gross receipts from the sale or rental of hand tools are not exempt. The gross re- ceipts from the sale or rental of pollution control equipment qualifying under paragraph "a" shall be exempt.

The gross receipts from the sale or rental of industrial machinery, equipment, and com- puters, including pollution control equipment, within the scope of section 427A,1, subsec- tion 1, paragraphs "h" and "in, shall not be exempt.

Sec. 2. Section 427B.17, subsection 6, Code Supplement 1995, is amended by striking the subsection.

Sec. 3. Section 427B.17, subsection 7, Code Supplement 1995, is amended to read as follows:

7. For the purpose of dividing taxes under section 260E.4 or 260F.4, the employer's or business's valuation of property defined in section 427Al, subsection 1, paragraphs "e"

115 lAWS OF THE SEVENIY-SIXTH GA, 1996 SESSION CH. 1049

and "j", and used to fund a new jobs training project which project's first written agree- ment providing for a division of taxes as provided in section 403.19 is approved on or before June 30, 1995, shall be limited to thirty percent of the net acquisition cost of the property. The community college shall notify the assessor by February 15 of each assess- ment year if taxes levied against such property of an employer or business will be used to finance a project in the following fiscal year. In any fiscal year in which the community college does rely on taxes levied against an employer's or business's property defined in section 427A.1. subsection 1. paragraph "e" or "j". to finance a project. such property shall not be valued pursuant to subsection 2 or 3. whichever is applicable. for that fiscal year. An employer's or business's taxable property used to fund a new jobs training project shall not be valued pursuant to subsection 2 or 3, whichever is applicable, until the assessment year following the calendar year in which the certificates or other funding obligations have been retired or escrowed. The tiiXj3ayeF's valHatisa feF sHeh IJFSIJerty shall thea be the valHatisa sIJeeifiee ill sHbseetisa 1 {SF the aIJIJueable assessmeat yeaF. If the certifi- cates issued, or other funding obligations incurred, between January 1, 1982, and June 30, 1995, are refinanced or refunded after June 30, 1995, the valuation of such property shall then be the valuation specified in subsection 2 or 3, whichever is applicable, for the appli- cable assessment year beginning with the assessment year following the calendar year in which those certificates or other funding obligations are refinanced or refunded after June 30, 1995.

Sec. 4. Section 427B.19, Code Supplement 1995, is amended by adding the following new subsections:

NEW SUBSECTION. 5. For purposes of this section, "assessed value of the property assessed under section 427B.17" does not include the value of property defined in section 427A.l, subsection 1, paragraphs "e" and "j", which is obligated to secure payment of certificates or other indebtedness incurred pursuant to chapter 260E or 260F.

NEW SUBSECTION. 6. For purposes of computing replacement amounts under this section, that portion of an urban renewal area defined as the sum of the assessed valua- tions defined in section 403.19, subsections 1 and 2, shall be considered a taxing district.

Sec. 5. Section 427B.19A, subsection 3, Code Supplement 1995, is amended to read as follows:

3. The replacement claims shall be paid to each county treasurer in equal installments in September and March of each year. The county treasurer shall apportion the replace- ment claim payments among the eligible taxing districts in the county. If the taxing district is an urban renewal area. the amount of the replacement claim shall be apportioned as provided in subsection 4 unless the municipality elects to proceed under subsection 5.

Sec. 6. Section 427B.19A, Code Supplement 1995, is amended by adding the following new subsections:

NEW SUBSECTION. 4. a. If the total assessed value of property located in an urban renewal area taxing district is equal to or more than that portion of such valuation defined in section 403.19, subsection 1, the total tax replacement amount computed pursuant to section 427B.19 shall be credited to that portion of the assessed value defined in section 403.19, subsection 2.

b. If the total assessed value of the property is less than that portion of such valuation defined in section 403.19, subsection 1, the replacement amount shall be credited to those portions of the assessed value defined in section 403.19, subsections 1 and 2, as follows:

(1) To that portion defined in section 403.19, subsection 1, an amount equal to the amount that would be produced by multiplying the applicable consolidated levy times the difference between the assessed value of the taxable property defined in section 403.19, subsection 1, and the total assessed value in the budget year for which the replacement claim is computed.

(2) To that portion defined in section 403.19, subsection 2, the remaining amount, if any.

CH. 1049 lAWS OF THE SEVEN1Y-SIXTH GA., 1996 SESSION 116

c. Notwithstanding the allocation provisions of paragraphs "a" and "b", the amount of the tax replacement amount that shall be allocated to that portion of the assessed value defined in section 403.19, subsection 2, shall not exceed the amount equal to the amount certified to the county auditor under section 403.19 for the budget year in which the claim is paid, after deduction of the amount of other revenues committed for payment on that amount for the budget year. The amount not allocated to that portion of the assessed value defined in section 403.19, subsection 2, as a result of the operation of this paragraph, shall be allocated to that portion of assessed value defined in section 403.19, subsection 1.

NEW SUBSECTION. 5. A municipality may elect to reduce the amount of assessed value of property defined in section 403.19, subsection 1, by an amount equal to that por- tion of the amount of such assessed value which was phased out for the fiscal year by operation of section 427B.17, subsection 3. The applicable assessment roll and ordinance providing for the division of taxes under section 403.19 in the urban renewal taxing dis- trict shall be deemed to be modified for that fiscal year only to the extent of such adjust- ment without further action on the part of the city or county implementing the urban renewal taxing district.

Sec. 7. NEW SECTION. 427B.19C ADJUSTMENT OF CERTAIN ASSESSMENTS REQUIRED.

In the assessment year beginning January 1, 2005, the amount of assessed value of prop- erty defined in section 403.19, subsection 1, for an urban renewal taxing district which received replacement moneys under section 427B.19A, subsection 4, shall be reduced by an amount equal to that portion of the amount of assessed value of such property which was assessed pursuant to section 427B.17, subsection 3.

Sec. 8. NEW SECfION. 427B.19D APPEAL FOR STATE ASSISTANCE. For fiscal years beginning on or after July 1, 1996, a municipality in which is located an

urban renewal district for which debt was incurred prior to June 30, 1996, may appeal to the state appeal board for state assistance to meet such debt obligations for the fiscal year if such debt is not secured by an assessment agreement pursuant to section 403.6, subsec- tion 19, and if the urban renewal area contains property assessed pursuant to section 427B.17. The appeal shall be made by May 15 preceding the fiscal year on forms approved by the department of management.

Sec. 9. RETROACTIVE APPUCABIUTY DATE. Section 2 of this Act, striking section 427B.17, subsection 6, applies retroactively to assessment years beginning on or after January 1, 1995.

Sec. 10. EFFECTIVE DATE. This Act, being deemed of immediate importance, takes effect upon enactment.

Approved April 4, 1996