Bills › 89th General Assembly
Where it is now
- Done: IntroducedMarch 30, 2021
- Done: SubcommitteeMarch 30, 2021
- Done: Senate committeeApril 20, 2021
- Skipped: Passes the SenateContinued as SF 601
- Next: House committee
- Next: Passes the House
- Next: To the Governor
- Next: Signed into law
Became SF 601 → Its progress continues under the new number. Go to SF 601 What’s a funnel?
What’s in it
AI summary Nonprofit food banks will no longer have to pay sales or use tax when they buy or rent items and services for charitable work. This change applies to any property or service used by these organizations to help people in need.1
Read the official explanation
This bill exempts from the sales tax the purchase price of the sale or rental of tangible personal property sold to and of services furnished to a nonprofit food bank if the property or services are used by the nonprofit food bank for a charitable purpose. “Nonprofit food bank” is defined in the bill. 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.
Senate subcommittee
Named March 30, 2021. On April 7, 2021 it recommended 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 exempts nonprofit food banks from paying sales and use tax on certain purchases and services used for charitable purposes. It is estimated to reduce revenues for the state's General Fund, the Secure an Advanced Vision for Education (SAVE) Fund, and local option sales tax (LOST) by $170,000, $34,000, and $33,000 respectively in fiscal year 2022. These reductions are projected to increase slightly each year through fiscal year 2026.3
Read the fiscal note
Description
Senate File 601 exempts from the sales tax and use tax the purchase price from the sale or rental of tangible personal property or services furnished to a nonprofit food bank if the property or services are to be used by the nonprofit food bank for a charitable purpose. The exemption does not include specified digital products.
Background
A nonprofit food bank is defined as an organization under Iowa Code chapter 504 and qualifying under Section 501(c)(3) of the Internal Revenue Code as an organization exempt from federal income tax that maintains an established operation involving the provision of food or edible commodities or the products thereof on a regular basis to persons in need or to food pantries, soup kitchens, hunger relief centers, or other food or feeding centers that, as an integral part of their normal activities, provide meals or food on a regular basis to persons in need. Six major food banks serve Iowa as part of the Iowa Food Bank Association:
- River Bend Food Bank (includes St. Stephen’s Food Bank)
- Northeast Food Bank
- Food Bank of Siouxland
- HACAP Food Reservoir (includes Linn Community Food Bank)
- Food Bank for the Heartland
- Food Bank of Iowa (merged with Food Bank of Southern Iowa)
In addition, there are 57 smaller food banks across the State.
Assumptions
- Of the six major food banks that serve Iowa, two would not be included in this new exemption. One is based in Omaha (Food Bank for the Heartland) and is assumed to not make significant purchases subject to Iowa sales/use tax. Another (Hawkeye Area Community Action Program) already qualifies for a sales/use tax exemption as a community action agency under Iowa Code section 423.3(79).
- From information provided by the Iowa Food Bank Association, it is estimated that FY 2019 purchases that would qualify for the sales/use tax exemption were $3.1 million.
- An estimated 57 additional smaller food banks and food pantries will qualify under the Bill. These entities are estimated to represent 5.0% of total purchases of all qualifying entries.
- Growth trends in future fiscal years are based on Consumer Price Index Urban (CPI-U) average estimated increases of 2.34% from FY 2019 to FY 2026.
Fiscal Impact
Senate File 601 will reduce revenues to the General Fund, Secure an Advanced Vision for Education (SAVE) Fund, and local option sales tax (LOST) by the estimated amounts listed below.
Sources
- Department of Revenue
- Iowa Food Bank Association
- LSA analysis and calculations
- Sales Tax Exemption, Food Banks · April 21, 2021
Family tree
Tried before
Study bill
89th General Assembly
Earlier and later bills are matched by wording or an identical title.
Tried before
This idea has been filed in an earlier General Assembly. None got through a chamber.
- HF 2103 Exempting from the state sales tax the purchase price of tangible personal property or spe…88th General Assembly · In committee · very similarCleared committee
Similar bills this General Assembly
- HF 579 Exempting from the state sales tax and use tax the purchase price of tangible personal pro…89th General Assembly · In committeeVery similar
- SF 306 Exempting from the state sales tax and use tax the purchase price of tangible personal pro…89th General Assembly · In committeeVery similar
- HF 609 Relating to nonprofit food banks, and making an appropriation89th General Assembly · In committeeSimilar
Matched by wording or an identical title.