Sales tax exemption sought for off-duty Iowa cops providing security

An effort to exempt police officers who moonlight on private security jobs from paying state sales tax rang up a no sale response from an Iowa Senate panel Tuesday.

Representatives of various peace officer groups said no sales tax is charged on business contracts with a local police department for security services but law enforcement officers who contract individually for off-duty gigs are subject to sales tax provisions.

Kellie Paschke, an attorney representing the Iowa State Police Association, called the position taken by the state Department of Revenue inequitable and confusing for law officers seeking a sales tax exemption through Senate Study Bill 1238.

Last year, state Iowa Department of Revenue officials announced they were collecting back taxes from at least 46 Iowa police officers who hadn't paid sales tax for off-duty assignments, such as wedding receptions and business security.

Sen. Herman Quirmbach, D-Ames, chairman of a Senate subcommittee that declined to advance the measure, expressed concern that providing the tax exemption for off-duty police officers would create a competitive disadvantage for private businesses offering the same services subject to tax. He also expressed concern that police departments or sheriff's offices would be contracting their officers for off-duty jobs.

“I'm not particularly comfortable with the privatization of what is a core public function,” he said. “I think we're close to a line that I'm not comfortable with.”

Sen. Rick Bertrand, R-Sioux City, said local law enforcement agencies have the choice to opt out of such arrangements with private businesses and he would support providing a sales tax exemption to treat police officers in the same manner regardless whether their off-duty work went through a department contract or was set up independently.

Sen. Bill Dotzler, D-Waterloo, said there was a companion bill (House File 337) in the House dealing with the same subject matter and he wanted to see how the issue fared in that chamber before forwarding the issue to the Senate Ways and Means Committee.

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