Bills › 90th General Assembly
Where it is now
- Done: IntroducedFebruary 8, 2024
- Done: SubcommitteeFebruary 8, 2024
- Done: House committeeFebruary 28, 2024
- Skipped: Passes the HouseContinued as HF 2635
- Next: Senate committee
- Next: Passes the Senate
- Next: To the Governor
- Next: Signed into law
Became HF 2635 → Its progress continues under the new number. Go to HF 2635 What’s a funnel?
What’s in it
AI summary Companies that provide telecommunications services would no longer have to pay sales or use tax on certain types of equipment. This change removes a requirement that the equipment must be used primarily for those services to qualify for the tax break. It applies to all purchases of central office and transmission equipment used to provide these services.1
Read the official explanation
This bill relates to the sales tax exemption for the purchase of central office equipment or transmission equipment used by certain entities in the furnishing of telecommunications services on a commercial basis. The bill expands the sales tax exemption for the purchase of central office equipment or transmission equipment by striking the term “primarily” and making all such purchases used in the furnishing of telecommunications services exempt from sales tax. Code section 423.3(47A) defines the terms “central office equipment” and “transmission equipment”. 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.
House subcommittee
Named February 8, 2024. On February 22, 2024 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 expands sales and use tax exemptions for certain telecommunications equipment used to provide commercial services. It is estimated to reduce annual revenues by $0.8 million for the General Fund, $0.2 million for the SAVE Fund, and $0.2 million for the LOST starting in fiscal year 2025. These reductions are projected to continue through fiscal year 2029.3
Read the fiscal note
Description
House File 2635 expands the sales and use tax exemption found in Iowa Code section 423.3(47A)(a) by making all purchases of central office equipment or transmission equipment used by certain entities in the furnishing of telecommunications services on a commercial basis exempt from sales and use tax.
Background
Under current law, a sales tax exemption is available only for central office equipment or transmission equipment primarily used by local exchange carriers and competitive local exchange service providers; by franchised cable television operators, mutual companies, municipal utilities, cooperatives, certain communication services companies; by long distance companies; or for a commercial mobile radio service in the furnishing of telecommunications services on a commercial basis.
“Central office equipment” is defined as equipment utilized in the initiating, processing, amplifying, switching, or monitoring of telecommunications services. Central office equipment also includes ancillary equipment and apparatus that support, regulate, control, repair, test, or enable such equipment to accomplish its function.
“Transmission equipment” is defined as equipment utilized in the process of sending information from one location to another location. Transmission equipment also includes ancillary equipment and apparatus that support, regulate, control, repair, test, or enable such equipment to accomplish its function.
Assumptions
- The Bill is effective July 1, 2024 (FY 2025).
- It is assumed that there are 116 telecommunications providers affected by the Bill.
- Estimated taxable expenditures made exempt by the Bill are based on appeals information filed with the Iowa Department of Revenue related to the sales tax exemption in Iowa Code section 423.3(47A)(a) and scaled to include all telecommunications providers in the State.
- The estimated value of purchases made exempt under the Bill is assumed to increase by 2.0% annually.
- Secure an Advanced Vision for Education (SAVE) refunds are 1.0% of taxable expenditures. Local Option Sales Tax (LOST) distributions are estimated to be 0.97% of taxable expenditures.
Fiscal Impact
House File 2635 is estimated to reduce annual revenues to the General Fund, the SAVE Fund, and the LOST by the amounts in Figure 1.
Figure 1 — Fiscal Impact of HF 2635 (in Millions)
Sources
- Iowa Department of Revenue
- Iowa Communications Alliance
- Communications Network Equipment Sales Tax Exemption · March 1, 2024
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Earlier and later bills are matched by wording or an identical title.
Similar bills
- HF 960 Relating to the sales tax exemption for the purchase of central office equipment or transm…91st General Assembly · Signed by GovernorNearly identical
- HSB 126 Relating to the sales tax exemption for the purchase of central office equipment or transm…91st General Assembly · In committeeNearly identical
Matched by wording or an identical title.