SF 2470

Senate
File
2470
-
Reprinted
SENATE
FILE
2470
BY
COMMITTEE
ON
WAYS
AND
MEANS
(SUCCESSOR
TO
SF
2085)
(As
Amended
and
Passed
by
the
Senate
March
31,
2026
)
A
BILL
FOR
An
Act
relating
to
event-driven
contracts
traded
on
dedicated
1
contract
markets
by
requiring
a
permit
to
conduct
business
2
in
the
state,
imposing
a
tax
on
adjusted
revenues
or
amounts
3
traded,
making
adjustments
to
individual
and
corporate
4
income
taxes,
providing
for
fees,
and
including
contingent
5
effective
date,
applicability,
and
retroactive
applicability
6
provisions.
7
BE
IT
ENACTED
BY
THE
GENERAL
ASSEMBLY
OF
THE
STATE
OF
IOWA:
8
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DIVISION
I
1
DESIGNATED
CONTRACT
MARKET
TAX
2
Section
1.
NEW
SECTION
.
99H.1
Definitions.
3
As
used
in
this
chapter,
unless
the
context
otherwise
4
requires:
5
1.
“Adjusted
revenues”
means
for
each
event-driven
contract
6
the
amount
equal
to
the
total
charges
and
fees
collected
from
7
all
traders
participating
in
the
event-driven
contract
less
8
payouts
made
to
traders
participating
in
the
event-driven
9
contract,
multiplied
by
the
location
percentage.
10
2.
“Department”
means
the
department
of
revenue.
11
3.
“Designated
contract
market”
means
a
digital
marketplace
12
for
trading
event-driven
contracts
that
is
also
regulated
by
13
the
federal
commodity
futures
trading
commission.
14
4.
“Director”
means
the
director
of
revenue.
15
5.
“Economic
indicators”
means
a
statistic
or
data
point
16
about
an
economic
activity
that
allows
an
analyst
to
assess
17
current
economic
performance.
18
6.
“Event-driven
contract”
means
a
financial
derivative
19
traded
on
a
designated
contract
market
that
provides
a
fixed
20
binary
payout
based
upon
the
occurrence
or
nonoccurrence
of
a
21
specific
future
event
that
is
contingent
upon
and
determined
22
solely
by
the
definitive
outcome
of
a
verifiable
specific
event
23
or
external
measure
rather
than
being
based
upon
the
continuous
24
fluctuation
of
a
security
price,
commodity
value,
or
interest
25
rate
that
may
or
may
not
correlate
with
traditional
market
26
prices
or
broad
economic
measures.
An
“event-driven
contract”
27
is
limited
to
those
financial
derivatives
that
provide
a
fixed
28
binary
payout
related
to
sporting
activities,
lotteries,
29
elections,
legislative
actions,
and
economic
indicators.
30
7.
“Location
percentage”
means
for
each
event-driven
31
contract,
the
percentage
rounded
to
the
nearest
one
32
ten-thousandth
of
a
percent,
equal
to
the
total
charges
and
33
fees
collected
from
all
traders
located
in
this
state
divided
34
by
the
total
charges
and
fees
collected
from
all
traders
in
the
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event-driven
contract.
1
8.
“Sporting
activities”
means
the
outcome
of
a
sporting
2
event,
outcomes
within
the
event,
or
outcomes
surrounding
the
3
event.
4
9.
“Trader”
means
any
person
buying
or
selling
event-driven
5
contracts
on
a
designated
contract
marketplace.
6
Sec.
2.
NEW
SECTION
.
99H.2
Administration
——
rules.
7
1.
The
department
shall
administer
this
chapter.
The
8
department
shall
collect,
supervise,
and
enforce
the
collection
9
of
all
fees
and
taxes
imposed
under
this
chapter.
10
2.
The
director
may
adopt
rules
pursuant
to
chapter
17A
that
11
are
necessary
to
enforce
this
chapter.
12
3.
The
director
may
designate
employees
to
administer
13
and
enforce
the
provisions
of
this
chapter,
including
the
14
collection
of
all
taxes
provided
for
in
this
chapter.
In
the
15
enforcement,
the
director
may
request
aid
from
the
attorney
16
general,
the
special
agents
of
the
state,
any
county
attorney,
17
or
any
peace
officer.
The
director
may
appoint
clerks
and
18
additional
help
as
may
be
needed
to
administer
this
chapter.
19
Sec.
3.
NEW
SECTION
.
99H.3
Scope
of
provisions.
20
This
chapter
does
not
apply
to
the
pari-mutuel
system
of
21
wagering
used
or
intended
to
be
used
in
connection
with
the
22
horse-race
or
dog-race
meetings
as
authorized
under
chapter
23
99D,
fantasy
sports
contests
as
authorized
under
chapter
24
99E,
sports
wagering
authorized
under
chapter
99F,
or
other
25
financial
derivatives
that
are
not
event-driven
contracts.
26
Sec.
4.
NEW
SECTION
.
99H.4
Application
——
permit
——
27
registration.
28
1.
A
person
shall
not
engage
in
the
business
of
serving
as
29
a
designated
contract
market
at
any
place
of
business
in
this
30
state
or
through
delivery
sales,
unless
the
person
obtains
a
31
permit
through
the
department.
32
2.
An
application
for
a
permit
under
this
chapter
shall
33
be
made
to
the
department
in
an
electronic
format
or
made
34
in
any
other
manner
prescribed
by
the
department
accompanied
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by
any
associated
fees
required
for
the
permit
and
any
other
1
supporting
documentation
required.
The
application
shall
2
include
information
that
is
reasonably
necessary
to
identify
3
the
person
applying
for
the
permit
and
to
administer
and
4
collect
the
taxes
imposed
under
this
chapter.
5
3.
a.
A
person
issued
a
permit
shall
pay
an
initial
permit
6
fee
of
twenty
million
dollars.
7
b.
All
permits
expire
June
30
each
year.
The
annual
renewal
8
permit
fee
shall
be
one
hundred
thousand
dollars.
9
Sec.
5.
NEW
SECTION
.
99H.5
Designated
contract
market
tax.
10
A
tax
is
imposed
on
the
adjusted
revenues
received
each
11
calendar
year
by
a
designated
contract
market
from
the
12
event-driven
contracts
authorized
under
this
chapter
at
the
13
rate
of
twenty
percent.
The
taxes
imposed
for
event-driven
14
contracts
under
this
chapter
shall
be
paid
by
the
designated
15
contract
market
to
the
treasurer
of
state
as
determined
by
the
16
department.
17
Sec.
6.
NEW
SECTION
.
99H.6
Revenues.
18
All
revenues
generated
under
this
chapter
shall
be
deposited
19
into
the
general
fund
of
the
state.
20
Sec.
7.
NEW
SECTION
.
99H.7
Withholding.
21
All
payouts
made
to
traders
participating
in
an
event-driven
22
contract
are
Iowa
earned
income
and
are
subject
to
state
and
23
federal
income
tax
laws.
An
amount
deducted
from
revenues
24
for
payment
of
the
state
tax,
pursuant
to
section
422.16,
25
subsection
2,
shall
be
remitted
to
the
department
of
revenue
on
26
behalf
of
the
trader
by
the
designated
contract
market.
27
Sec.
8.
NEW
SECTION
.
99H.8
Applicability.
28
This
chapter
applies
to
a
designated
contract
market
29
permitting
persons
in
this
state
to
trade
event-driven
30
contracts
until
such
time
a
court
of
competent
jurisdiction,
31
after
all
appeals
have
been
exhausted,
determines
that
32
event-driven
contracts
are
subject
to
regulation
under
chapter
33
99F.
34
Sec.
9.
Section
422.7,
Code
2026,
is
amended
by
adding
the
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following
new
subsection:
1
NEW
SUBSECTION
.
41.
a.
For
purposes
of
this
subsection,
2
“event-driven
contract”
means
the
same
as
defined
in
section
3
99H.1.
4
b.
Section
1256
of
the
Internal
Revenue
Code,
with
respect
5
to
event-driven
contracts,
does
not
apply
in
computing
net
6
income
for
state
tax
purposes.
If
the
taxpayer’s
federal
7
taxable
income
for
the
tax
year
was
increased
or
decreased
8
by
reason
of
the
application
of
section
1256
of
the
Internal
9
Revenue
Code
with
regard
to
event-driven
contracts,
the
10
taxpayer
shall
recompute
net
income
for
state
tax
purposes
as
11
follows:
12
(1)
Subtract
net
gain
or
add
net
loss
from
event-driven
13
contracts,
including
any
loss
carried
back
from
a
previous
tax
14
year.
15
(2)
Add
gain
from
each
event-driven
contract.
16
(3)
If
the
taxpayer
itemized
deductions,
subtract
the
total
17
loss
from
each
event-driven
contract
for
the
same
tax
year
18
up
to
an
amount
equal
to
ninety
percent
of
the
gain
added
in
19
subparagraph
(2).
20
c.
The
director
shall
prescribe
rules
to
carry
out
the
21
provisions
of
this
subsection,
including
the
creation
of
forms
22
for
a
taxpayer
to
use
to
report
gain
and
loss
for
event-driven
23
contracts.
24
Sec.
10.
Section
422.16,
subsection
2,
Code
2026,
is
amended
25
by
adding
the
following
new
paragraph:
26
NEW
PARAGRAPH
.
0e.
(1)
For
purposes
of
this
subsection,
27
state
income
tax
shall
be
withheld
on
gains
in
excess
of
six
28
hundred
dollars
derived
from
an
event-driven
contract
that
is
29
subject
to
federal
taxation
under
section
1256
of
the
Internal
30
Revenue
Code.
31
(2)
For
purposes
of
this
paragraph,
“event-driven
contract”
32
means
the
same
as
defined
in
section
99H.1.
33
Sec.
11.
Section
422.35,
Code
2026,
is
amended
by
adding
the
34
following
new
subsection:
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NEW
SUBSECTION
.
15.
a.
For
purposes
of
this
subsection,
1
“event-driven
contract”
means
the
same
as
defined
in
section
2
99H.1.
3
b.
Section
1256
of
the
Internal
Revenue
Code,
with
respect
4
to
event-driven
contracts,
does
not
apply
in
computing
net
5
income
for
state
tax
purposes.
If
the
taxpayer’s
federal
6
taxable
income
for
the
tax
year
was
increased
or
decreased
7
by
reason
of
the
application
of
section
1256
of
the
Internal
8
Revenue
Code
with
regard
to
event-driven
contracts,
the
9
taxpayer
shall
recompute
net
income
for
state
tax
purposes
as
10
follows:
11
(1)
Subtract
net
gain
or
add
net
loss
from
event-driven
12
contracts,
including
any
loss
carried
back
from
a
previous
tax
13
year.
14
(2)
Add
gain
from
each
event-driven
contract.
15
(3)
If
the
taxpayer
itemized
deductions,
subtract
the
total
16
loss
from
each
event-driven
contract
for
the
same
tax
year
17
up
to
an
amount
equal
to
ninety
percent
of
the
gain
added
in
18
subparagraph
(2).
19
c.
The
director
shall
prescribe
rules
to
carry
out
the
20
provisions
of
this
subsection,
including
the
creation
of
forms
21
for
a
taxpayer
to
use
to
report
gain
and
loss
for
event-driven
22
contracts.
23
Sec.
12.
RETROACTIVE
APPLICABILITY.
The
following
apply
24
retroactively
to
January
1,
2026,
for
tax
years
beginning
on
25
or
after
that
date:
26
1.
The
section
of
this
division
of
this
Act
enacting
section
27
422.7,
subsection
41.
28
2.
The
section
of
this
division
of
this
Act
enacting
section
29
422.35,
subsection
15.
30
Sec.
13.
APPLICABILITY.
For
purposes
of
the
imposition
and
31
collection
of
the
designated
contract
market
tax
in
new
Code
32
chapter
99H,
if
enacted
by
this
Act,
the
first
tax
year
shall
33
begin
July
1,
2026,
and
end
December
31,
2026,
and
afterwards
34
each
tax
year
shall
begin
January
1.
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DIVISION
II
1
EVENT-DRIVEN
CONTRACT
EXCISE
TAX
2
Sec.
14.
NEW
SECTION
.
453F.1
Definitions.
3
As
used
in
this
chapter,
unless
the
context
otherwise
4
requires:
5
1.
“Department”
means
the
department
of
revenue.
6
2.
“Designated
contract
market”
means
a
digital
marketplace
7
for
trading
event-driven
contracts
that
is
also
regulated
by
8
the
federal
commodity
futures
trading
commission.
9
3.
“Director”
means
the
director
of
revenue.
10
4.
“Economic
indicators”
means
a
statistic
or
data
point
11
about
an
economic
activity
that
allows
an
analyst
to
assess
12
current
economic
performance.
13
5.
“Event-driven
contract”
means
a
financial
derivative
14
traded
on
a
designated
contract
market
that
provides
a
fixed
15
binary
payout
based
upon
the
occurrence
or
nonoccurrence
of
a
16
specific
future
event
that
is
contingent
upon
and
determined
17
solely
by
the
definitive
outcome
of
a
verifiable
specific
event
18
or
external
measure
rather
than
being
based
upon
the
continuous
19
fluctuation
of
a
security
price,
commodity
value,
or
interest
20
rate
that
may
or
may
not
correlate
with
traditional
market
21
prices
or
broad
economic
measures.
An
“event-driven
contract”
22
is
limited
to
those
financial
derivatives
that
provide
a
fixed
23
binary
payout
related
to
sporting
activities,
lotteries,
24
elections,
legislative
actions,
and
economic
indicators.
25
6.
“Sporting
activities”
means
the
outcome
of
a
sporting
26
event,
outcomes
within
the
event,
or
outcomes
surrounding
the
27
event.
28
7.
“Trader”
means
any
person
buying
or
selling
event-driven
29
contracts
on
a
designated
contract
market.
30
Sec.
15.
NEW
SECTION
.
453F.2
Scope
of
chapter.
31
This
chapter
does
not
apply
to
the
pari-mutuel
system
of
32
wagering
used
or
intended
to
be
used
in
connection
with
the
33
horse-race
or
dog-race
meetings
as
authorized
under
chapter
34
99D,
fantasy
sports
contests
as
authorized
under
chapter
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99E,
sports
wagering
authorized
under
chapter
99F,
or
other
1
financial
derivatives
that
are
not
event-driven
contracts.
2
Sec.
16.
NEW
SECTION
.
453F.3
Event-driven
contract
excise
3
tax.
4
For
the
privilege
of
doing
business
in
the
state
as
a
5
designated
contract
market,
a
tax
is
imposed
on
the
amount
6
to
buy
an
event-driven
contract
on
a
designated
contract
7
market
at
the
rate
of
twenty
percent
of
the
amount
to
buy
the
8
event-driven
contract.
The
taxes
imposed
for
event-driven
9
contracts
under
this
chapter
shall
be
collected
by
the
10
designated
contract
market
and
paid
to
the
treasurer
of
state
11
as
determined
by
the
department.
12
Sec.
17.
NEW
SECTION
.
453F.4
Revenues.
13
All
revenues
generated
under
this
chapter
shall
be
deposited
14
into
the
general
fund
of
the
state.
15
Sec.
18.
NEW
SECTION
.
453F.5
Administration.
16
1.
The
director
shall
administer
the
excise
tax
imposed
17
under
this
chapter
as
nearly
as
possible
in
conjunction
with
18
the
administration
of
the
state
sales
and
use
tax
law,
except
19
that
portion
of
the
law
that
implements
the
streamlined
sales
20
and
use
tax
agreement.
The
director
shall
provide
appropriate
21
forms,
or
provide
on
the
regular
state
tax
forms,
for
reporting
22
event-driven
contract
excise
tax
liability,
and
for
ease
23
of
administration
may
require
event-driven
contract
excise
24
tax
liability
to
be
identified,
reported,
and
remitted
to
25
the
department
as
sales
and
use
tax
liability,
provided
the
26
department
has
the
ability
to
properly
identify
such
amounts
as
27
event-driven
contract
excise
tax
revenues
upon
receipt.
28
2.
The
director
may
require
all
persons
who
are
engaged
29
in
the
business
of
deriving
any
sales
price
or
purchase
30
price
subject
to
tax
under
this
chapter
to
register
with
31
the
department.
The
director
may
also
require
a
tax
permit
32
applicable
only
to
this
section
for
any
designated
contract
33
market
not
collecting,
or
any
trader
not
paying,
taxes
under
34
chapter
423.
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3.
Section
422.25,
subsection
4,
sections
422.30,
422.67,
1
and
422.68,
section
422.69,
subsection
1,
sections
422.70,
2
422.71,
422.72,
422.74,
and
422.75,
section
423.14,
subsection
3
1,
and
sections
423.23,
423.24,
423.25,
423.31
through
423.35,
4
423.37,
423.39
through
423.42,
and
423.47,
consistent
with
5
the
provisions
of
this
chapter,
shall
apply
with
respect
to
6
the
tax
authorized
under
this
chapter
in
the
same
manner
and
7
with
the
same
effect
as
if
the
excise
taxes
on
the
trades
8
were
retail
sales
taxes
within
the
meaning
of
those
statutes.
9
Notwithstanding
this
subsection,
the
director
shall
provide
for
10
monthly
filing
of
returns
and
for
other
than
monthly
filing
of
11
returns
both
as
prescribed
in
section
423.31.
12
4.
The
tax
imposed
by
this
chapter
shall
not
apply
with
13
respect
to
any
trades
which
under
the
constitution
and
laws
of
14
the
United
States
may
not
be
made
the
subject
of
taxation
by
15
this
state.
16
5.
The
tax
imposed
by
this
chapter
shall
be
in
addition
to
17
any
other
taxes
imposed
by
law.
18
6.
All
excise
taxes
collected
under
this
chapter
by
any
19
person
are
deemed
to
be
held
in
trust
for
the
state
of
Iowa.
20
7.
The
department
shall
adopt
rules
pursuant
to
chapter
17A
21
to
administer
this
chapter.
22
Sec.
19.
CONTINGENT
EFFECTIVE
DATE.
This
division
of
this
23
Act
takes
effect
six
months
from
the
date
the
attorney
general
24
notifies
the
general
assembly
and
the
Code
editor
that
the
tax
25
imposed
in
section
99H.5,
if
enacted
by
this
Act,
has
been
26
declared
unconstitutional
or
is
otherwise
unenforceable
by
the
27
state,
and
all
appeals
have
been
exhausted.
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