Iowa Administrative Code

within Iowa, of any ship, barge, or other waterborne vessel if that use is primarily for the transportation of property or cargo for hire on the rivers bordering this state. This exemption is also applicable to tangible personal property used as material in the construction of or…

218.2(1) In general. Persons engaged in the business of repairing vehicles are selling a service subject to sales tax. Rule 701—225.4(423) contains more information on purchases made by auto body shops. 218.2(2) Definitions. For purposes of this rule: “Repair” includes any type o…

218.3(1) In general. Persons engaged in the business of repairing motorcycles, scooters, and bicycles are selling a service subject to sales tax. 218.3(2) Definitions. For purposes of this rule: “Bicycle” includes human-powered bicycles and electric bicycles. “Motorcycle” include…

218.4(1) Batteries in general. Persons engaged in the business of installing, repairing, maintaining, restoring, or recharging batteries and any services related to or connected therewith are selling a service subject to sales tax. 218.4(2) Tires in general. Persons engaged in th…

218.5(1) In general. Persons engaged in the business of repairing watercraft are selling a service subject to sales tax. 218.5(2) Definitions. For purposes of this rule: “Repair” means the same as defined in rule 701—211.1(423). “Watercraft” means the same as defined in Iowa Code…

218.6(1) In general. Persons engaged in the business of vehicle washing and waxing are selling a service subject to sales tax, whether performed by hand, machine, or coin-operated device. Rule

218.7(1) In general. Persons engaged in the business of towing any vehicle are selling a service subject to sales tax. Included in this are service charges for a person to travel to any place to lift, extricate, tow, or salvage a vehicle. 218.7(2) Definitions. For purposes of thi…

218.8(1) In general. Persons engaged in the business of teaching a course of instruction in the art of operation and flying of an airplane, and instructions in repairing, renovating, reconditioning an airplane, or any other related service are selling a service subject to sales t…

218.9(1) In general. Persons engaged in the business of renting aircraft for 60 days or less are selling a service subject to sales tax. 218.9(2) Definition. For purposes of this rule: “Aircraft” means the same as defined in Iowa Code section 328.1. “Aircraft” also includes any d…

(6) Mobile and modular homes installed on foundations. (7) Planted nursery stock. (8) Residential water heaters, water softeners, intercoms, garage door opening equipment, pneumatic tube systems and music and sound equipment (except portable equipment). (9) Safe deposit boxes, dr…

219.1(1) Definitions. For purposes of this chapter, terms mean the same as defined in Iowa Code section 423.1 and as defined in this rule. “Building equipment” means any vehicle, machine, tool, implement, or other device used by a contractor in erecting structures for others, or …

contracts for reconstruction, alteration, expansion, or remodeling with equipment sales, commonly known as mixed contracts, place a dual burden on the contractor, as a contractor is a consumer of construction materials and also a retailer of the machinery and equipment. 219.10(1)…

contract or a contract for reconstruction, alteration, expansion, or remodeling does not include a contract for the sale and installation of machinery or equipment. Machinery and equipment are tangible personal property when it is purchased and remains tangible personal property …

tangible personal property can, by their nature, become structures. However, the determination is factual and must be made on an item-by-item basis. 219.12(1) Criteria to determine if tangible personal property has become a structure. The following are intended only to be a summa…

423.2 is a tax on labor. When such services are performed on or connected with new construction, reconstruction, alteration, expansion or remodeling of structures, the services are exempt from tax. Neither the repair nor the rental of machinery on the job site is exempt from tax …

Iowa sales and use tax when they are separately contracted or, if no written contract exists, are separately itemized on the billing from the seller to the purchaser. More information can be found in rule 701—204.8(423). This rule is intended to implement Iowa Code sections 423.2…

actual construction of a structure has the same status and tax responsibilities as a contractor under Iowa statutes. However, where an individual or firm is hired to provide machinery and equipment to a contractor or a subcontractor, the individual or firm is considered a materia…

incurred on building materials, supplies, and equipment by a contractor or subcontractor in the completion of a construction contract or a contract for reconstruction, alteration, expansion, or remodeling. Likewise, a contractor cannot be held responsible for the tax liability in…

contractor may be asked to withhold the final payment of the contract as a guarantee that sales and use taxes will be paid. The withholding requirement may also apply to registered out-of-state contractors at the discretion of the department. The department will issue a notice to…

personal property after installation is purchased for a machinery and equipment contract by a contractor from a supplier, it should be purchased for resale. Rule 701—219.9(423) provides more information on this topic. Resale purchases are most commonly related to machinery and eq…

sales and use tax return. Tax is due in the tax period the materials are delivered into Iowa. Nonresident contractors should report use tax on a sales and use tax return, which is available directly from the department of revenue, unless the contractor is registered with the depa…

219.2(1) Inapplicability of resale exemption. A contractor, subcontractor, or builder cannot claim an exemption for resale when purchasing building materials or supplies even if the contractor, subcontractor, or builder later separately itemizes material and labor charges for con…

builders. 219.20(1) Exempt lease or rental of machinery and equipment. The sales price on the lease or rental only of the following types of machinery and equipment is exempt from tax: all machinery, equipment, and replacement parts directly and primarily used by contractors, sub…

contractor on a job site. The distinction between a repair and new construction, reconstruction, alteration, expansion, and remodeling activities can, oftentimes, be difficult to grasp. Therefore, the intent of the parties and the scope of the project are factors that determine w…

sales of building materials, supplies, equipment, or services to certain persons performing construction contracts for sponsors that are designated exempt entities and the continuing right of designated exempt entities and other persons to seek refund of taxes paid by persons per…

builders, or owners. Suppliers or dealers that sell materials, and supplies, and equipment to contractors, subcontractors, builders, or owners are required to collect Iowa sales tax from those persons based upon the sales price from such sales. Reference 701—subrule 219.23(4), wh…

contractors, subcontractors, and builders are in a dual business that includes reselling to the general public on a recurring over-the-counter basis the same type of building materials and supplies that are used by the contractors, subcontractors, and builders in their own constr…

construction contracts within and outside Iowa. 219.5(1) Use by manufacturer. a. Outside of Iowa. The use of building materials, supplies, or equipment in the performance of construction contracts or contracts for reconstruction, alteration, expansion, or remodeling by the manufa…

person who is primarily engaged in the manufacture of building materials, supplies, or equipment for sale and not for the person’s own use or consumption, considering the totality of the business, from time to time uses or consumes the building materials, supplies, or equipment f…

219.7(1) Basic concepts. Prefabricated structures include modular homes, mobile homes, manufactured housing, sectionalized housing, precut housing packages, and panelized construction. 219.7(2) Taxability. a. Sales or use tax on the full purchase price is due when prefabricated s…

219.8(1) Types of construction contracts. Construction contracts include lump-sum contracts; cost plus contracts; time and material contracts; unit price contracts; guaranteed maximum or upset price contracts; construction management contracts; design-built contracts; and turnkey…

219.9(1) Machinery and equipment sales with installation. Machinery and equipment sales contracts with installation are transactions that are considered a sale of tangible personal property to a final consumer. Therefore, the individual who sells the equipment with installation m…

“Central collections unit” means the unit within the department charged with collecting debt for the department and other entities pursuant to Iowa Code section 421.17(27) or any other Iowa statute. “Debtor” means any person having a delinquent account, charge, fee, loan, or othe…

department’s sole discretion. The department may require that a public agency enter into an agreement for collection with the department prior to collecting for the public agency. Agreements will be signed by the director or another staff member of the department designated by th…

have the following duties regarding the department and debtors. 22.3(1) Notification to the department. The public agency must provide a list of debtors to the department of revenue. This list must be in a format and type prescribed by the department and include information relev…

220.1(1) In general. The sales price from the sale of newspapers, free newspapers, and shoppers’ guides is exempt from tax. The sales price from the sale of magazines, newsletters, and other periodicals that are not newspapers is taxable. 220.1(2) General characteristics of a new…

220.10(1) Generally. The sales price from the sale, furnishing, or service of metered natural gas, electricity and fuels, including propane and heating oils, to residential customers for use as energy for residential dwellings and units of apartment, and condominium complexes for…

220.2(1) Most substances can easily be classified either as food, food ingredients, or nonfood items in accordance with Iowa Code section 423.3(57). There are, however, certain substances that are not readily distinguishable as food or nonfood and may present problems in judgment…

220.3(1) Definitions. a. Candy. For the purposes of this rule, “candy” is a preparation of sugar, honey, or other natural or artificial sweeteners in combination with chocolate, fruits, nuts or other ingredients or flavorings in the form of bars, drops, or pieces. “Candy” shall n…

220.4(1) Prepared food. “Prepared food” means any of the following: a. Food sold in a heated state or heated by the seller, including food sold by a caterer. b. Two or more food ingredients mixed or combined by the seller for sale as a single item. c. Food sold with eating utensi…

human use or consumption in accordance with subrules 220.5(3) and 220.5(4) shall be exempt from tax. The sales price from the sale of oxygen or insulin purchased for human use or consumption (whether or not the oxygen or insulin is prescribed) is exempt from tax as a prescription…

from tax. The term “other medical devices” means medical equipment or supplies intended to be dispensed for human use with or without a prescription to an ultimate user. The term “other medical devices” does not include prosthetic devices, durable medical equipment, or mobility e…

220.7(1) Prosthetic devices. The sales price from the sale of prosthetic devices is exempt from tax. 220.7(2) Durable medical equipment and mobility enhancing equipment. The sales price from the sale of durable medical equipment and mobility enhancing equipment prescribed for hum…

due on the sale or use of a qualifying article of clothing or footwear if the sales price of the article is less than $100 and the sale takes place during a period beginning at 12:01 a.m. on the first Friday in August and ending at 12 midnight of the following Saturday. For examp…

220.9(1) In general. The sales price of diapers, whether cloth or disposable, is exempt from sales tax. This includes children’s diapers and adult diapers. 220.9(2) Definitions. “Adult diapers” means diapers other than children’s diapers. “Children’s diapers” means diapers market…

prepaid telephone calling cards) are not sales of tangible personal property and are not sales for which the sales price is subject to Iowa tax. If a purchaser uses a prepaid merchandise card to purchase taxable tangible personal property or taxable services, sales tax is compute…

upon date that are true demurrage charges supported by a written agreement do not constitute taxable sales, and the charges are exempt from tax. This rule is intended to implement Iowa Code sections 423.1(51) and 423.2. [ARC 8163C, IAB 7/24/24, effective 8/28/24]

rule is also applicable to all mandatory beverage container deposits required under the provisions of Iowa Code chapter 455C, including deposits on items sold through vending machines. This rule is intended to implement Iowa Code chapter 455C. [ARC 8163C, IAB 7/24/24, effective 8…

of a client. 221.4(1) In general. a. A true agency relationship depends upon the facts with respect to each transaction. An agent is one who represents another, called the principal, in dealings with third persons. Advertising agencies, commercial artists, and designers (collecti…

221.5(1) Exempt rental. a. The sales price from the rental of films, video and audio tapes or discs, records, photos, copy, scripts, or other media used for the purpose of transmitting that which can be seen, heard, or read shall not be taxable if the lessee either: (1) Imposes a…