This bill establishes new regulations regarding the distribution of water that is exempt from taxation and the use of tax exemption certificates in Iowa. It mandates that water utilities must accept and retain valid exemption certificates, which are defined as certificates that exempt all or part of a person's water use from taxes imposed under specific chapters. The bill prohibits water utilities from requiring individuals to seek a tax refund from the Department of Revenue instead of honoring the exemption certificate.

Additionally, the bill imposes civil penalties on water utilities that fail to accept valid exemption certificates. Specifically, such utilities will be required to pay a penalty equal to the amount of tax refunded to the individual who presented the valid certificate, along with interest. The Department of Revenue is tasked with adopting rules to effectively administer these provisions. Overall, the bill aims to streamline the process for individuals using tax-exempt water and ensure compliance among water utilities.