Bills › 88th General Assembly
Exempting from the sales tax certain items and services sold or furnished to nonprofit blood centers. Effective 7-1-19
Sponsored by the Senate Ways and Means Committee
Topics:Taxes
Where it is now
- Done: IntroducedMarch 13, 2019
- Skipped: SubcommitteeSkipped
- Done: Senate committeeMarch 13, 2019
- Done: Passes the SenateApril 2, 201947–0
- Done: House committeeApril 16, 2019
- Done: Passes the HouseApril 25, 2019
- Done: To the GovernorMay 2, 2019
- Done: Signed into lawMay 16, 2019
Signed into law What’s a funnel?
What’s in it
This bill relates to exempting from the sales tax certain items and services sold or furnished to a nonprofit blood center.3(26A) by exempting from the sales tax the sales price of tangible personal property sold or test laboratory services furnished, if such tangible personal property or test laboratory services are sold or furnished to a nonprofit blood center that is registered by the federal food and drug administration, and the tangible personal property or test laboratory services are directly and primarily used in the processing of human blood.
Read the full explanation
3(104) to include a nonprofit blood center. As a result, the sales price of specified digital products, prewritten computer software, and other enumerated digital and computer services furnished to a nonprofit blood center are exempt from the sales tax, if exclusively used by the blood center.5. The bill permits refunds of taxes, interest, or penalties arising from claims resulting from the enactment of the bill for sales occurring between May 30, 2018, and the effective date of the bill, and requires such claims to be filed prior to October 1, 2019. The bill takes effect upon enactment and applies retroactively to May 30, 2018.
Changed since by amendment H-1293; see Amendments.
House subcommittee
Named April 4, 2019. On April 15, 2019 it recommended amendment and passage.
Three legislators hear a bill first and recommend what the committee should do; it’s the best time to weigh in. How to take part
Fiscal note
AI summary This bill makes certain items and laboratory services used in processing human blood exempt from sales tax. It is estimated to reduce revenue for the state's General Fund, the Secure an Advanced Vision for Education (SAVE) Fund, and local option sales tax (LOST) by $734,000, $147,000, and $147,000 respectively in fiscal year 2020. These reductions are projected to decrease in subsequent years through fiscal year 2023.2
Read the fiscal note
Description
Senate File 597 revises the sales and use tax exemption in Iowa Code section 423.3(26A) for reagents and related accessory equipment sold or furnished to a regional blood testing facility under certain conditions and makes an exemption for tangible personal property sold or test laboratory services furnished that are directly and primarily involved in the processing of human blood.
Background
The two main entities affected by the Bill are LifeServe Blood Center (LBC) and Mississippi Valley Regional Blood Center (MVRBC). For this analysis, expenditure data from IRS Tax Form 990 reported by the two agencies from 2014 to 2017 was utilized. The IRS 990 forms are representative of the total operations of federally tax-exempt organizations, in this case the nonprofit blood centers in the United States, so estimated allocation of activities in and outside of Iowa was obtained from the organizations.
Assumptions
- Sales of laboratory testing reagents to MVRBC are already exempt under Iowa Code section 423.3(26A).
- MVRBC medical supplies expenditures are 66.0% sourced in Iowa, with the remainder occurring in other states. Equipment rental and maintenance expenditures are 50.0% sourced in Iowa.
- LBC total expenditures are 85.0% sourced in Iowa, with the remainder occurring in other states.
- Total expenditures for medical supplies and testing supplies from 2014 to 2017 trended downward for both LBC and MVRBC. This trend is consistent with the federal Bureau of Labor Statistics’ Producer Price Index for Blood and Organ Banks, which indicates the costs of inputs are falling. This rate of decline is projected to continue.
- MVRBC is located in Davenport, which has a 1.0% local option sales tax (LOST) for a total sales tax rate of 7.0%. LBC is located in Des Moines, which will have a LOST effective July 1, 2019.
- The IRS 990 reports are organized by the tax year, or calendar year. These totals were divided evenly to allocate amounts by the State fiscal years.
- The IRS 990 report for LBC’s listing of laboratory reagents includes both testing that LBC directly performs, and testing as a service that LBC procures from other vendors.
Fiscal Impact
The calendar year (CY) sales tax liability for 2019 for each nonprofit blood center is estimated in Table 1.
Senate File 597 will reduce revenue to the General Fund, Secure an Advanced Vision for Education (SAVE) Fund, and LOST by the estimates presented in Table 2.
Sources
- IRS 990 forms for Mississippi Valley Regional Blood Center, 2014-2017
- IRS 990 forms for LifeServe Blood Center, 2014-2017
- Interviews with Mississippi Valley Regional Blood Center and LifeServe Blood Center
- LSA analysis and calculations
- Final Fiscal Note - Blood Processing Centers, Sales Tax Exemption · June 4, 2019
- Blood Processing Centers, Sales Tax Exemption · April 25, 2019
- Blood Processing Centers, Sales Tax Exemption · March 18, 2019
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88th General Assembly