§ 437B.3 — Replacement tax imposed on delivery of water

Iowa § 437B.3

• Jurisdiction: Iowa
• Title X: FINANCIAL RESOURCES
• Ch. 437B: TAXES ON RATE-REGULATED WATER UTILITIES

Text

1. A replacement delivery tax is imposed on each water utility that delivers water to a
consumer within the water utility’s service area. The replacement delivery tax imposed by
this section is equal to the number of gallons of water delivered to consumers in the water
utility’s service area by the taxpayer during the tax year multiplied by the replacement
delivery tax rate in effect for the service area.
2. The replacement delivery tax rate for each service area shall be calculated by the
director as follows:
a. The director shall determine the centrally assessed property tax liability allocated to
water delivery for those water utilities operating within the service area for the assessment
year 2011 based on property tax amounts due and payable as the result of that assessment
year.
b. The director shall determine the number of gallons of water delivered to consumers
3 TAXES ON RATE-REGULATED WATER UTILITIES, §437B.3
in the service area which would have been subject to taxation under this section in calendar
year 2011, had such section been in effect for calendar year 2011.
c. The director shall determine a replacement delivery tax rate for each service area by
dividing the centrally assessed property tax liability, as determined in paragraph “a”, by the
number of gallons of water delivered, as specified in paragraph “b”.
3. a. If for any tax year after calendar year 2012, the total number of gallons of water
required to be reported by a water utility pursuant to section 437B.4, subsection 1, paragraph
“a”, increases or decreases by more than the threshold percentage from the average of the
base year amounts for that water utility for the immediately preceding five calendar years,
the replacement tax rate imposed under subsection 1 for that tax year shall be recalculated
by the director for that water utility so that the total of the tentative replacement delivery
taxes required to be reported pursuant to section 437B.4, subsection 1, paragraph “b”, for
that water utility with respect to the tax imposed under subsection 1, shall be as follows:
(1) If the number of gallons of water required to be reported increased by more than the
threshold percentage, one hundred two percent of such taxes required to be reported by the
water utility for that water utility for the immediately preceding tax year.
(2) If the number of gallons of water required to be reported decreased by more than the
threshold percentage, ninety-eight percent of such taxes required to be reported by the water
utility for that water utility for the immediately preceding tax year.
b. For purposes of paragraph “a”, subparagraphs (1) and (2), in computing the tax rate
under subsection 1, for tax year 2013, the director shall use the centrally assessed property
tax liability allocated to water sales computed pursuant to subsection 2, paragraph “a”, or
the water utility’s centrally assessed property tax liability for the assessment year 2010,
whichever is greater, in lieu of the taxes required to be reported for that water utility for the
immediately preceding tax year. In addition, notwithstanding the provisions of this section to
the contrary, for tax years 2013, 2014, and 2015, if the total amount of replacement delivery
taxes imposed on the water utility in any of those tax years is less than the utility’s centrally
assessedpropertytaxliabilityfortheassessmentyear2010, thereplacementtaxrateimposed
under subsection 1 for that tax year shall be recalculated by the director so that the total
amount of replacement delivery taxes imposed on the water utility for such tax year equals
the water utility’s centrally assessed property tax liability for the assessment year 2010.
c. For purposes of this section, “base year amount” means for calendar years prior to tax
year 2013, the number of gallons of water delivered to consumers by the water utility which
would have been subject to taxation under this section had this section been in effect for such
calendar year, and for tax years after calendar year 2012, the number of gallons of water
required to be reported by the water utility pursuant to section 437B.4, subsection 1.
d. The threshold percentage shall be five percent.
4. The replacement delivery tax rate in effect for each service area shall be published by
the director in the Iowa administrative bulletin on or before May 31 of each year.
5. If recalculation of the replacement delivery tax rate is required pursuant to subsection
3, the new rate shall be published in the Iowa administrative bulletin by the director by no
later than May 31 following the end of the tax year. The director shall adjust the tentative
replacement tax imposed by subsection 1 and required to be shown on any affected water
utility’s return pursuant to section 437B.4, subsection 1, paragraph “b”, to reflect the adjusted
replacement delivery tax rate for the tax year, and report such adjustment to the affected
water utility on or before June 30 following the end of the tax year. The new replacement
delivery tax rate shall apply prospectively, until such time as further adjustment is required.
6. For a service area established as the result of the formation or organization of a new
water utility on or after January 1, 2013, the director shall to the extent possible determine
a replacement delivery tax rate for the new service area using the procedures of this section
and for the information for the year that the water utility was first under the jurisdiction of
the utilities commission.