A bill for an act relating to the distribution of water exempt from taxation and the use of tax exemption certificates, and providing civil penalties.

This bill requires water utilities in Iowa to accept and retain valid exemption certificates that allow certain water users to avoid sales or water service taxes. It directly affects water utilities and customers who possess these certificates, preventing utilities from forcing customers to seek tax refunds instead of applying the exemption directly. Utilities that refuse valid certificates must pay a civil penalty equal to the tax amount plus interest to the state revenue department. The bill also defines key terms and mandates the revenue department to create rules for implementation.