Bills › 90th General Assembly
Where it is now
- Done: IntroducedJanuary 20, 2023
- Done: SubcommitteeJanuary 20, 2023
- Done: House committeeFebruary 1, 2023
- Done: Passes the HouseFebruary 15, 202392–6
- Done: Senate committeeMay 3, 2023
- Stopped: Passes the SenateDied when the General Assembly ended
- Next: To the Governor
- Next: Signed into law
Died when the session ended The 2024 session adjourned on April 19, 2024, the General Assembly’s last regular session. Bills that didn’t pass both chambers died. What’s a funnel?
What’s in it
AI summary Aboveground storage tanks that owners typically take with them when they move will no longer be taxed as real property. This change affects how these tanks are valued for property taxes. Additionally, the bill changes how certain property tax credits and exemptions are handled if the state does not provide enough money to pay for them.1
Read the official explanation
1 specifies that for the purposes of property taxation only, certain property shall be assessed and taxed, unless otherwise qualified for exemption, as real property, including buildings, structures, or improvements, any of which are constructed on or in the land, attached to the land, or placed upon a foundation whether or not attached to the foundation. However, property is not “attached” if it is a kind of property which would ordinarily be removed when the owner of the property moves to another location. This bill provides that aboveground storage tanks of any size that would ordinarily be removed when the owner of the property moves to another location shall not be assessed and taxed as real property.7.7 provides that for a property tax credit or exemption enacted on or after January 1, 1997, if a state appropriation made to fund the credit or exemption is not sufficient to fully fund the credit or exemption, the political subdivision shall be required to extend to the taxpayer only that portion of the credit or exemption estimated by the department of revenue to be funded by the state appropriation. The bill takes effect upon enactment and applies retroactively to assessment years beginning on or after January 1, 2023.
Senate subcommittee
Named February 21, 2023. On April 12, 2023 it recommended passage. [].
- Sen. Carrie Koelker REmail
- Sen. Dan Dawson REmail
- Sen. T. Taylor
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 aboveground storage tanks of any size from property taxes if they are not attached to real property. If the change applies to all currently taxed tanks, it is projected to increase the annual State General Fund appropriation for school aid by $1.6 million and decrease annual local government property tax revenue by $8.6 million starting in fiscal year 2025. Owners of these tanks would see a projected decrease in annual property taxes of $10.2 million.3
Read the fiscal note
Description
House File 206 exempts an aboveground storage tank of any size from property taxation if the storage tank is not attached to real property described in Iowa Code section 427A.1(3). The change is retroactive and applies to assessment years (AY) 2023 and after (FY 2025). The Bill makes Iowa Code section 25B.7 (State funding of property tax credits and exemptions) inapplicable to the new exemption.
Background
Iowa Code section 427A.1 specifies that structures and improvements that are attached to land or buildings shall be considered real property and subject to property tax. The definition of “attached” is provided in Iowa Code section 427A.1(2). Iowa Code section 427A.1(3) provides an exception to the definition of “attached” by stating:
…property is not “attached” if it is…ordinarily removed when the owner of the property moves to another location.
The Bill adds another exception to the meaning of the word “attached” as it relates specifically to aboveground storage tanks by incorporating the language in Iowa Code section 427A.1(3) and by adding that the size of the tank in question is not a factor in determining whether the tank is real property that is subject to property tax.
The Department of Revenue’s Iowa Real Property Appraisal Manual specifies how aboveground storage tanks are to be assessed and valued by assessors. The portion that pertains to the assessment and value of aboveground tanks begins with tank capacities as low as 1,000 gallons (133.7 cubic feet).
Assumptions
- Iowa law currently includes an aboveground storage tank as real property and subject to property tax as long as the tank is not determined to be property that is “ordinarily removed when the owner of the property moves to another location.”
- Aboveground storage tanks are classified as commercial or industrial (C/I) property for property tax purposes.
- A review of 16 assessor areas in Iowa conducted by the Iowa State Association of Assessors and representing 40.4% of the statewide C/I taxed value in the State determined that assessed aboveground storage tanks represent 0.58% of all the C/I value within those assessor areas. This percentage is assumed to apply to all 106 assessor areas within the State.
- The statewide total C/I taxed value for FY 2023 is $50.7 billion. Aboveground storage tanks are assumed to represent 0.58% of that statewide amount, or $291.9 million.
- The statewide average C/I property tax rate for FY 2023 is $35.03 per $1,000 of taxed value. Of that $35.03 tax rate, $5.40 represents the school finance basic levy.
- By action of the State school aid formula, property tax exemptions increase the State General Fund appropriation to schools by $5.40 per $1,000 of exempted value.
- The preceding three assumptions combined result in the following fiscal impact, should the full value of all currently taxed aboveground storage tanks become exempt from property tax (beginning with FY 2025):
- A projected decrease in annual property taxes owed by owners of aboveground storage tanks of $10.2 million.
- A projected increase in the annual State General Fund appropriation for school aid of $1.6 million.
- A projected decrease in annual local government property tax revenue of $8.6 million.
Fiscal Impact
The Bill will increase the annual State General Fund appropriation for school aid and decrease annual local government property tax revenue, although the level of impact cannot be projected without knowledge as to how the law change will be implemented by the Department of Revenue and local assessors. The Bill leaves in place the requirement that to qualify for the exemption, the aboveground tank must be property that is ordinarily removed when the owner of the property moves to another location. However, the Bill expands the existing exemption by allowing it to apply to a tank of any size.
To have a fiscal impact, the implementation of the Bill by the Department of Revenue and local assessors must result in tanks qualifying for the property tax exemption that do not qualify under current law. If the enactment of this Bill results in a property tax exemption applicable to all aboveground storage tanks regardless of size, the annual State General Fund appropriation for school aid is projected to increase $1.6 million and annual local government property tax revenue is projected to decrease $8.6 million. The annual fiscal impacts would begin with FY 2025.
Sources
- Iowa State Association of Assessors
- Department of Revenue
- Department of Management property tax rate and value files
- Legislative Services Agency calculations
- Property Tax Assessments, Aboveground Storage Tanks · February 14, 2023
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Similar bills
- HSB 238 Relating to the assessment of property containing certain aboveground storage tanks and in…91st General Assembly · Renumbered as HF 1050Nearly identical
Matched by wording or an identical title.