Bills › 89th General Assembly
Where it is now
- Done: IntroducedJanuary 26, 2022
- Done: SubcommitteeJanuary 26, 2022
- Done: House committeeFebruary 22, 2022
- Skipped: Passes the HouseContinued as HF 2520
- Next: Senate committee
- Next: Passes the Senate
- Next: To the Governor
- Next: Signed into law
Became HF 2520 → Its progress continues under the new number. Go to HF 2520 What’s a funnel?
What’s in it
AI summary Public utilities will no longer have to pay state sales or use taxes when they buy certain digital products, computer software, or related services. This rule only applies if the utility uses these items exclusively for their work.1
Read the official explanation
This bill exempts from the state sales and use tax the purchase price of specified digital products, prewritten computer software, and related services sold to public utilities. The bill expands the definition of “commercial enterprise” to include a “public utility” as defined in Code section 476.1(3). As a result, the sales price of specified digital products, prewritten computer software, and other enumerated digital and computer services furnished to a public utility are exempt from the sales tax, if exclusively used by the public utility. By operation of Code section 423.6, an item exempt from the imposition of the sales tax is also exempt from the use tax imposed in Code section 423.5. The bill takes effect January 1, 2023.
House subcommittee
Named January 26, 2022. On February 9, 2022 it recommended passage. Vote Total: 3-0.
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 exempts certain digital products, computer software, and related services from sales and use tax when they are sold to public utilities. It is estimated to reduce General Fund revenues by $130,000 in fiscal year 2023 and $250,000 in fiscal year 2027, while also reducing local option sales tax revenues by $20,000 in fiscal year 2023 and $40,000 in fiscal year 2027.3
Read the fiscal note
Description
House File 2520 exempts from sales tax and use tax the purchase price of specified digital products, prewritten computer software, and related services sold to public utilities. The Bill is effective January 1, 2023.
Background
A public utility is defined in Iowa Code section 476.1 as any person, partnership, business association, or domestic or foreign corporation owning or operating any facilities for the following:
- Furnishing gas by piped distribution system or electricity to the public for compensation.
- Furnishing communications services to the public for compensation.
- Furnishing water by piped distribution system to the public for compensation.
- Furnishing sanitary sewage or storm water drainage disposal by piped collection system to the public for compensation.
Assumptions
- It is estimated for FY 2021 that public utilities spent $3.6 million on specified digital products, prewritten computer software, and other enumerated digital and computer services.
- Growth trends in future fiscal years are based on consumer price index (CPI) average estimated increases of 2.2% annually through FY 2027.
Fiscal Impact
House File 2520 will reduce revenues to the General Fund and local option sales tax (LOST) by the estimated amounts listed below.General Fund LOST FY 2023 130,000$ 20,000$ FY 2024 230,000 40,000 FY 2025 240,000 40,000 FY 2026 240,000 40,000 FY 2027 250,000 40,000 Estimated Revenue Reduction of HF 2520
Sources
- Department of Revenue
- LSA analysis and calculations
- Sales Tax Exemption, Digital Goods · February 28, 2022 · $20,000
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89th General Assembly