CHAPTER 226
AGRICULTURAL RULES
701—226.1(423) Sale or rental of farm machinery and equipment. The sales price from the sale or rental of farm machinery and equipment is exempt from sales and use tax.
	226.1(1) Farm machinery and equipment.
	a. 	Exempt. To be eligible under this rule for exemption from the tax, the farm machinery or equipment must be directly and primarily used in production of agricultural products and must also be one of the following:
	(1)	A self-propelled implement; or
	(2)	An implement customarily drawn or attached to a self-propelled implement; or
	(3)	A grain dryer; or
	(4)	An auxiliary attachment which improves the performance, safety, operation, or efficiency of a qualifying implement or grain dryer; or
	(5)	A replacement part for any item described in subparagraph (1), (2), (3), or (4).
	b. 	Taxable. A vehicle subject to registration as defined in Iowa Code section 423.1, an implement customarily drawn or attached to a vehicle, an auxiliary attachment for a vehicle, or any replacement part for a vehicle, implement, or auxiliary attachment for a vehicle is not eligible for the exemption allowed under this rule.
	226.1(2) Definitions and specific provisions. For the purposes of this rule, the following definitions and provisions apply.
	a. 	Production of agricultural products. The term “production of agricultural products” means the same as the term “agricultural production,” which is defined in rule 701—211.1(423) to mean a farming operation undertaken for profit by the raising of crops or livestock. Not included within the meaning of the term is the clearing or preparation of previously uncultivated land, the creation of farm ponds, or the erection of machine sheds, confinement facilities, storage bins, or other farm buildings. See Trullinger v. Fremont County, 223 Iowa 677, 273 N.W. 124 (1937). Machinery and equipment used for these purposes would be used for activities which are preparatory to, but not a part of, the production of agricultural products and, therefore, are not exempt.
	b. 	Farm machinery and equipment. The term “farm machinery and equipment” means machinery and equipment specifically designed for use in the production of agricultural products and machinery and equipment that are not specifically designed for use in the production of agricultural products but are directly and primarily used for that purpose.
Example: Farmer Jones raises livestock, and his farming operation requires that fences be built to confine the livestock. Farmer Jones purchases a posthole digger that is customarily attached to a tractor and uses the digger to construct the fences used to confine the livestock. The posthole digger is not specifically designed for use in the production of agricultural products but is directly and primarily used in the production of agricultural products. Therefore, the exemption would apply.
	c. 	Self-propelled implement. The term “self-propelled implement” means an implement which is capable of movement from one place to another under its own power. The term “self-propelled implement” includes, but is not limited to, the following items: skid loaders and tractors. The term also includes, but is not limited to, the following machinery if capable of movement under its own power: combines, corn pickers, fertilizer spreaders, hay conditioners and windrowers, sprayers, and bean buggies.
	d. 	Implements customarily drawn or attached to self-propelled implements. The following is a nonexclusive, representative list of implements which are customarily drawn or attached to self-propelled implements: augers, balers, blowers, combines, conveyers, cultivators, disks, drags, dryers (portable), farm wagons, feeder wagons, fertilizer spreaders, front- and rear-end loaders, harrows, hay loaders, hay mowers, hay rakes, husking machines, manure spreaders, planters, plows, rotary hoes, sprayers and tanks, and tillage equipment.
	e. 	Directly used in agricultural production.
	(1)	Property is “directly used” only if it is used to initiate, sustain, or terminate an exempt activity. In determining whether any property is directly used, consideration should be given to the following factors:
	1.	The physical proximity of the property to other property clearly exempt as directly used in agricultural production. The closer the property is to exempt property, the more likely it is that the property is directly used in agricultural production.
	2.	The chronological proximity of the use of the property in question to the use of property clearly exempt as directly used in agricultural production. The closer the proximity of the property’s use within the production process to the use of exempt property, the more likely the use is direct rather than remote.
	3.	The active causal relationship between the use of the property in question and agricultural production. The fewer intervening causes between the use of the property and the production of the product, the more likely it is that the property is directly used in agricultural production.
	(2)	The fact that particular machinery or equipment is essential to the production of agricultural products because its use is required either by law or practical necessity does not, of itself, mean that the machinery or equipment is directly used in the production of agricultural products. Machinery or equipment that comes into actual physical contact with the soil or crops during the operations of planting, cultivating, harvesting, and soil preparation will be presumed to be machinery or equipment used in agricultural production.
	f. 	Primarily used in agricultural production. Property is “primarily used” in agricultural production based on the total time it is used in agricultural production in comparison to the time it is used for other purposes. Any property used in agricultural production more than 50 percent of its total use time is eligible for exemption.
	g. 	Beginning and end of agricultural production. Agricultural production begins with the cultivation of land previously cleared for the planting of crops or begins with the purchase or breeding of livestock or domesticated fowl. Agricultural production ceases when an agricultural product has been transported to the point where it will be sold by the producer or processed for further use.
Example: Farmer Brown uses a tractor and wagon to haul harvested corn from a field to a grain dryer located on the farm. After the corn is dried, the same tractor and wagon are used to move the grain to a storage bin, also located on the farm. Later, the same tractor and wagon are used to deliver the corn from the farm to the local elevator where the corn is sold. After Farmer Brown deposits the corn there, the local elevator uses its own tractor and wagon to move the corn to a place of relatively permanent storage. Farmer Brown has used the tractor and wagon in the production of agricultural products, and the exemption would apply. However, the elevator has not used its tractor and wagon in agricultural production; thus, the exemption would not be allowed.
	h. 	Grain dryer. The term “grain dryer” includes the heater and the blower necessary to force the warmed air into a grain storage bin. The term “grain dryer” does not include equipment, such as augers and spreaders, used in grain storage or movement, nor does it include any other equipment, such as specialized flooring, that is not a grain dryer. Equipment that is not a grain dryer but is used in grain drying may be exempt if the equipment is a self-propelled implement or customarily drawn or attached to a self-propelled implement.
	i. 	Replacement parts. The term “replacement parts” means any farm machinery or equipment which is substituted for another part that has broken, worn out or has become obsolete or otherwise unable to perform its intended function. Replacement parts are those parts which materially add to the value of farm machinery or equipment, appreciably prolong its life or keep it in its ordinarily efficient operating condition. Excluded from the meaning of the term “replacement parts” are supplies and computer software. Sales of supplies and computer software are taxable. Nonexclusive examples of supplies include: lubricants, oils, greases, and coolants.
Tangible personal property which has an expected useful life of 12 months or more and is used in the operation of farm machinery or equipment is rebuttably presumed to be a replacement part. Tangible personal property which is used in the same manner but has an expected useful life of less than 12 months is rebuttably presumed to be a supply.
	(1)	For periods prior to July 1, 2008, the sale or lease of a replacement part is exempt from tax if the replacement part is essential to any repair or reconstruction necessary to the exempt piece of farm machinery or equipment used in the production of agricultural products. The term “replacement parts” does not include attachments and accessories which are not essential to the operation of the farm machinery or equipment. Nonexclusive examples of attachments or accessories that are not essential include: cigarette lighters, radios, portable global positioning devices, and add-on air-conditioning units.
	(2)	For periods beginning on and after July 1, 2008, the sale or lease of a replacement part is exempt from tax if the replacement part is used in any repair or reconstruction of the exempt piece of farm machinery or equipment used in the production of agricultural products. Nonexclusive examples of replacement parts to machinery and equipment which would be exempt include: air-conditioning parts, computer equipment parts, fire equipment parts, glass parts, mirrors, headlights, communication systems, and global positioning equipment parts.
	226.1(3) Taxable and nontaxable transactions. The following are nonexclusive examples of sales and leases of and services for farm machinery or equipment subject to or exempt from tax. Taxable services performed on farm machinery or equipment are subject to tax even when the replacement parts are exempt.
	a. 	A lessor’s purchase of farm machinery or equipment is not subject to tax if the machinery or equipment is leased to a lessee who uses it directly and primarily in the production of agricultural products and if the lessee’s use of the machinery or equipment is otherwise exempt. To claim exemption from tax, the lessor does not need to make an exempt use of the machinery or equipment as long as the lessee uses the machinery or equipment for an exempt purpose. On and after July 1, 2004, the lease of tangible personal property is treated as the sale of that property for the purposes of Iowa sales and use tax law because leases of tangible personal property are taxable retail sales of that property.
	b. 	The owner or lessee of farm machinery or equipment need not be a farmer as long as the machinery or equipment is directly and primarily used in the production of agricultural products and the owner or lessee and the machinery or equipment meet the other requirements of this rule. For example, a person who purchases an airplane designed for use in agricultural aerial spraying and who uses the airplane directly and primarily for agricultural production is entitled to the benefits provided under this rule even though that person is not the owner or occupant of the land where the airplane is used.
	c. 	The sale or lease, within Iowa, of any farm machinery, equipment, or replacement part for direct and primary use in agricultural production outside of Iowa is a transaction eligible for the exemption if the transaction is otherwise qualified under this rule.
	226.1(4) Auxiliary attachments. The following is a noninclusive list of auxiliary attachments for which the sale or use in Iowa is exempt from tax: auxiliary hydraulic valves, cabs, coil tine harrows, corn head pickup reels, dry till shanks, dual tires, extension shanks, fenders, fertilizer attachments and openers, fold kits, grain bin extensions, herbicide and insecticide attachments, kit wraps, no-till coulters, quick couplers, rear-wheel assists, rock boxes, rollover protection systems, rotary shields, stalk choppers, step extensions, trash whips, upper beaters, silage bags, and weights.
This rule is intended to implement Iowa Code subsections 423.3(8) and 423.3(11).
[ARC 7870B, IAB 6/17/09, effective 7/22/09]
701—226.2(423) Packaging material used in agricultural production. The sales price from the sale of property which is a container, label, carton, pallet, packing case, wrapping, baling wire, twine, bag, bottle, shipping case, or other similar article or receptacle sold for use in agricultural, livestock, or dairy production is exempt from sales tax.
This rule is intended to implement Iowa Code subsection 423.3(15).
[ARC 7870B, IAB 6/17/09, effective 7/22/09]
701—226.3(423) Irrigation equipment used in agricultural production. The sales price from the sale or rental of irrigation equipment used in agricultural production is exempt from tax. The term “irrigation equipment” includes, but is not limited to, circle irrigation systems and trickle irrigation systems, whether installed aboveground or belowground, as long as the equipment is sold or rented by a contractor or farmer and the equipment is directly and primarily used in agricultural production. The term “agricultural production” is defined in rule 701—211.1(423).
This rule is intended to implement Iowa Code subsections 423.3(12) and 423.3(13).
[ARC 7870B, IAB 6/17/09, effective 7/22/09]
701—226.4(423) Sale of a draft horse. The sales price from the sale of draft horses, when they are purchased for use and used as draft horses, is not subject to tax. Draft horses are horses that pull loads, including loads in shows, or transport persons or property. For purposes of this rule, horses commonly known as Clydesdales, Belgians, Shires, and Percherons are draft horses. However, upon proper showing by the person or entity claiming exemption, the sales price exemption will be granted by the director for other breeds. However, the burden of proof lies with the person or entity claiming exemption.
This rule is intended to implement Iowa Code subsection 423.3(14).
[ARC 7870B, IAB 6/17/09, effective 7/22/09]
701—226.5(423) Veterinary services. Veterinary services are not subject to sales tax. Purchases of food, drugs, medicines, bandages, dressings, serums, tonics, and the like which are used in treating livestock raised as part of agricultural production are exempt from tax. Where these same items are used in treating animals maintained as pets or for hobby purposes, sales tax is due. Purchases of equipment and tools used in the veterinary practice are subject to tax. Rule 701—226.17(423) explains the exemption for machinery or equipment used in livestock or dairy production which may be applicable to veterinarians, but should only be claimed with caution. A veterinarian must charge sales tax on any sales of tangible property or enumerated services, such as pet grooming, that are not part of professional veterinarian services.
This rule is intended to implement Iowa Code subsection 423.3(5).
[ARC 7870B, IAB 6/17/09, effective 7/22/09]
701—226.6(423) Commercial fertilizer and agricultural limestone. Sales of commercial fertilizer and agricultural limestone are exempt from tax only if the purchaser intends to use the fertilizer or limestone for the health promotion of plants produced for market as part of agricultural production. See rule 701—211.1(423) for definitions of “agricultural production” and “plants.” Plant hormones are considered to be commercial fertilizer. Sales of commercial fertilizer or agricultural limestone used for other purposes are subject to sales tax. Examples of taxable use include, but are not limited to: commercial fertilizer sold for application on a lawn, golf course, or cemetery.
This rule is intended to implement Iowa Code subsections 423.3(4) and 423.3(5).
[ARC 7870B, IAB 6/17/09, effective 7/22/09]
701—226.7(423) Sales of breeding livestock. The sale of agricultural livestock is exempt from tax only if at the time of purchase the purchaser intends to use the livestock primarily for breeding. The sale of agricultural livestock which is capable of breeding, but will not be used for breeding or primarily for breeding, is not exempt from tax. However, sales of most nonbreeding agricultural livestock to farmers would be a sale for resale and exempt from tax. See rule 701—211.1(423) for a definition of “livestock.”
Example 1: A breeding service purchases a prize bull from a farmer. At the time of sale, the intent of the purchaser is to use the bull for breeding other cattle. The sale of the bull is exempt from tax even though three years later the breeding service sells the bull to a meat packer.
Example 2: A farmer purchases dairy cows. To ensure production of milk over a sustained period of time, dairy cows must be bred to produce calves. If a farmer purchases dairy cows for the primary purpose of using them to produce milk and incidentally breeds them to ensure that this milk will be produced, the sale of the dairy cows to the farmer is not exempt from tax. If the farmer purchases the dairy cows for the primary purpose of using them to produce calves and, incidental to that purpose, at times sells the milk which the cows produce, the sale of the dairy cows to the farmer is exempt from tax.
This rule is intended to implement Iowa Code subsection 423.3(3).
[ARC 7870B, IAB 6/17/09, effective 7/22/09]
701—226.8(423) Domesticated fowl. The purchase of any domesticated fowl for the purpose of providing eggs or meat is exempt from tax, whether purchased by a person engaged in agricultural production or not. See rule 701—211.1(423) for a definition of the term “domesticated fowl.”
This rule is intended to implement Iowa Code subsection 423.3(3).
[ARC 7870B, IAB 6/17/09, effective 7/22/09]
701—226.9(423) Agricultural health promotion items.
	226.9(1) Definitions. For purposes of this rule, the following definitions apply:
“Adjuvant” means any substance which is added to a herbicide, a pesticide, or an insecticide to increase its potency.
“Agricultural production” means the same as defined in rule 701—211.1(423).
“Food” includes vitamins, minerals, other nutritional food supplements, and hormones sold to promote the growth of livestock.
“Herbicide” means any substance intended to prevent, destroy, or retard the growth of plants including fungi. The term shall include preemergence, postemergence, lay-by, pasture, defoliant, and desiccant herbicides and fungicides.
“Insecticide” means any substance used to kill insects. Any substance used merely to repel insects is not an insecticide. Mechanical devices which are used to kill insects are not insecticides.
“Livestock” means the same as defined in rule 701—211.1(423). For the purposes of this rule, “livestock” includes domesticated fowl.
“Medication” includes antibiotics or other similar drugs administered to livestock.
“Pesticide” means any substance which is used to kill rodents or smaller vermin, other than insects, such as nematodes, spiders, or bacteria. For the purposes of this rule, a disinfectant is a pesticide. Excluded from the term “pesticide” is any substance which merely repels pests or any device, such as a rat trap, which kills pests by mechanical action.
“Plants” means the same as defined in rule 701—211.1(423).
“Surfactant” means a substance which is active on a surface.
	226.9(2) Sales of agricultural health promotion items and adjuvants. Sales of herbicides, pesticides, insecticides, food, and medication which are to be used in disease, weed, or insect control or health promotion of plants or livestock produced as part of agricultural production for market are exempt from tax. Sales of adjuvants, surfactants, and other products which enhance the effects of herbicides, pesticides, or insecticides used in disease, weed, or insect control or health promotion of plants or livestock produced as part of agricultural production for market are also exempt from tax. Sales of herbicides, pesticides, insecticides, food, medication, and products to any person not engaged in agricultural production for market are exempt if the property sold will be used for an exempt purpose, e.g., in disease control or on the behalf of another person engaged in agricultural production for market.
This rule is intended to implement Iowa Code subsections 423.3(5) and 423.3(16).
[ARC 7870B, IAB 6/17/09, effective 7/22/09]
701—226.10(423) Drainage tile. The sale or installation of drainage tile which is to be used in disease control or weed control or in health promotion of plants or livestock produced as part of agricultural production for market is exempt from tax. In all other cases, drainage tile will be considered a building material and subject to tax under the provisions of Iowa Code section 423.2. Sales of the following materials associated with the installation of agricultural drainage tile are also exempt from tax: tile intakes, outlet pipes and outlet guards, aluminum and gabion structures, erosion control fabric, water control structures, and tile fittings.
This rule is intended to implement Iowa Code section 423.3.
[ARC 7870B, IAB 6/17/09, effective 7/22/09]
701—226.11(423) Materials used for seed inoculations. Materials used for seed inoculations are exempt from sales tax. All forms of inoculation, whether for promotion of better growth and healthier plants or for the prevention or cure of plant mildew or disease of seeds and bulbs, are intended for the same general purpose and are therefore exempt.
This rule is intended to implement Iowa Code section 423.3.
[ARC 7870B, IAB 6/17/09, effective 7/22/09]
701—226.12(423) Fuel used in agricultural production.
	226.12(1) Definitions. For purposes of this rule, the following definitions apply:
“Aquaculture” means the cultivation of aquatic animals and plants, including fish, shellfish, and seaweed, in natural or controlled marine or freshwater environments.
“Fuel” includes electricity.
“Implement of husbandry” means the same as defined in rule 701—211.1(423).
“Livestock” means the same as defined in rule 701—211.1(423) and includes domesticated fowl.
“Plants” means flowering, ornamental, or vegetable plants intended for sale in the ordinary course of business. The term does not include trees, shrubs, other woody perennials, or fungi.
	226.12(2) Exemptions.
	a. 	Fuel used for livestock buildings. The sale of fuel used to provide heating or cooling for livestock buildings is exempt from tax.
	b. 	Fuel used for plant production buildings.
	(1)	Sales of fuel for heating or cooling greenhouses, buildings, or parts of buildings used for the production of flowering, ornamental, or vegetable plants intended for sale in the ordinary course of business are exempt from tax. See subparagraph (3) for the formula for calculating exempt use if a building is only partially used for growing plants.
	(2)	Fuel used in a plant production building for purposes other than heating or cooling (e.g., lighting) or for purposes other than direct use in plant production (e.g., heating or cooling office space) is not eligible for this exemption. Examples of nonexempt purposes for which a portion of a greenhouse might be used include, but are not limited to, portions used for office space, loading docks, storage of property other than plants, housing of heating and cooling equipment, and packaging plants for shipment.
	(3)	Calculating proportional exemption. It may be possible to calculate the amount of total fuel used in plant production by dividing the number of square feet of the greenhouse heated or cooled and used for raising plants by the number of square feet heated or cooled in the entire greenhouse. It may be necessary to alter this formula (by the use of separate metering, for example) if a greenhouse has a walk-in cooler and the cooler is used directly in plant production. See 701—subrule 15.3(3) regarding fuel exemption certificates and subrule 226.18(12) regarding seller’s and purchaser’s liability for sales tax.
Example 1: Bill Brown’s herb farming operation has a separate greenhouse used to grow his herbs. All other aspects of his farm operations are conducted in other facilities. Because the greenhouse is used exclusively for raising plants, Bill Brown is able to claim exemption from sales tax on the cost of fuel used to heat and cool the greenhouse.
Example 2: Martha Green’s greenhouse has a separate meter to track the electricity used only for heating or cooling. Her greenhouse is used partially for growing plants and partially for a nonexempt purpose. Martha Green is able to claim a proportional exemption from sales tax on the cost of fuel used to heat and cool her growing plants. Martha Green calculates her exempt amount by dividing the number of heated or cooled square feet of her greenhouse that are used for raising plants by the total number of square feet heated or cooled in the entire greenhouse.

Total square footage used for raising plants	=	800	
Total square footage	=	1,000	
TOTAL: 	800 ÷ 1,000	=	.80 or 80%	
Thus, 80 percent of the cost of the fuel used to heat and cool Martha Green’s greenhouse is exempt from sales tax.
	c. 	Sales of fuel used for aquaculture. Sales of fuel used in the raising of agricultural products by aquaculture are exempt from tax.
	d. 	Sales of fuel, gas, electricity, water, and heat consumed in implements of husbandry. The sale of fuel used in any implement of husbandry, whether self-propelled or not, is exempt from tax if the fuel is consumed while the implement is engaged in agricultural production. For example, the sale of fuel used not only in tractors or combines, but also used in implements which cannot move under their own power, is exempt from tax. The sale of fuel used in milk coolers and milking machines, grain dryers, and stationary irrigation equipment and in implements used to handle feed, grain, and hay and to provide water for livestock is exempt from tax even though these implements of husbandry would not ordinarily be considered self-propelled.
	226.12(3) Partial use. If a building is used partially for an exempt agricultural purpose and partially for a nonexempt purpose, a proportional exemption from sales tax may be claimed based upon a percentage obtained by dividing the number of square feet of the building heated or cooled and used for an exempt agricultural purpose by the number of square feet heated or cooled in the entire building.
This rule is intended to implement Iowa Code subsection 423.3(6).
[ARC 7870B, IAB 6/17/09, effective 7/22/09]
701—226.13(423) Water used in agricultural production. Water sold to farmers who are purchasing water for household use, sanitation, swimming pools, or other personal use is subject to sales tax. Water sold to farmers and others and used directly as drinking water for livestock production (including the production of domesticated fowl) is exempt from sales tax. When water is used for exempt purposes, as in livestock production, as well as for taxable purposes, the water may, when practical, be separately metered and separately billed to clearly distinguish the water consumed for exempt purposes from taxable purposes. When it is impractical to separately meter exempt water from taxable water, the purchaser may furnish to the seller a statement enabling the seller to determine the percentage of water subject to exemption. In the absence of proof to the contrary, the retailer of the water shall bill and collect tax on the first 5,000 gallons of water per month. The first 5,000 gallons of water per month will be considered to be for nonexempt use, and the balance will be considered to be used as part of agricultural production.
This rule is intended to implement Iowa Code subsection 423.3(5).
[ARC 7870B, IAB 6/17/09, effective 7/22/09]
701—226.14(423) Bedding for agricultural livestock or fowl. The sales price from the sale of woodchips, sawdust, hay, straw, paper, or any other materials used for bedding in the production of agricultural livestock (including domesticated fowl) is exempt from tax. See rule 701—211.1(423) for definitions applicable to this rule.
This rule is intended to implement Iowa Code subsection 423.3(9).
[ARC 7870B, IAB 6/17/09, effective 7/22/09]
701—226.15(423) Sales by farmers. The sale of grain, livestock, or any other farm or garden product by the producer thereof ordinarily constitutes a sale for resale, processing, or human consumption, and is not subject to tax. Farmers selling tangible personal property not otherwise exempt to ultimate consumers or users shall hold a permit and collect and remit sales tax on the sales price from their sales.
This rule is intended to implement Iowa Code subsections 423.3(2), 423.3(51), and 423.3(57).
[ARC 7870B, IAB 6/17/09, effective 7/22/09]
701—226.16(423) Sales of livestock (including domesticated fowl) feeds. Tax shall not apply to the sale of feed for any form of animal life when the product of the animals constitutes food for human consumption. Tax shall apply on feed sold for consumption by pets. Antibiotics that are administered as an additive to feed or drinking water and vitamins and minerals that are sold for livestock (including domesticated fowl) are exempt from tax.
This rule is intended to implement Iowa Code subsection 423.3(16).
[ARC 7870B, IAB 6/17/09, effective 7/22/09]
701—226.17(423) Farm machinery, equipment, and replacement parts used in livestock or dairy production.
	226.17(1) Sales or rentals of farm machinery, equipment, and replacement parts used in livestock or dairy production are exempt from sales and use tax.
	226.17(2) Definitions and special provisions. For purposes of this rule, the following definitions and special provisions apply.
	a. 	Machinery. The term “machinery” means major mechanical machines, or major components thereof, which contribute directly and primarily to the livestock or dairy production process. Usually, a machine is a large object with moving parts which performs work through the expenditure of energy, either mechanical (e.g., gasoline or other fuel) or electrical.
	b. 	Equipment. The term “equipment” means tangible personal property (other than a machine) that is directly and primarily used in livestock or dairy production. Equipment may be characterized as property which performs a specialized function and which has no moving parts, or if the equipment does possess moving parts, its source of power is external to it. The following nonexclusive examples differentiate between machinery and equipment:
Example 1: An auger places feed into a cattle feeder. The auger is a piece of machinery; the cattle feeder is a piece of equipment.
Example 2: An electric pump is used to pump milk into a bulk milk tank. The electric pump is a piece of machinery; the bulk milk tank is equipment.
	c. 	Property used in livestock or dairy production which is neither equipment nor machinery.
	(1)	Real property. The ground or the earth is not machinery or equipment. A building is not machinery or equipment. See Cloverleaf Cold Storage Co.	v.	Dep’t of Revenue and Fin., 2002 WL 31769009 (Iowa Dept.	Insp.	App.	July 26, 2002). Therefore, tangible personal property which is sold for incorporation into the ground or a building in such a manner that the property will become a part of the ground or the building is taxable except for machinery and equipment. Generally, property incorporated into the ground or a building has become a part of the ground or the building if its removal would substantially damage the property, ground, or building or would substantially diminish the value of the property, ground, or building. Fence posts embedded in concrete, electrical wiring, light fixtures, fuse boxes, and switches are examples of property sold for incorporation into the ground or a building, respectively. For the purpose of the following example, assume that property is being sold to a contractor rather than a person engaged in livestock or dairy production. If the property is sold to a contractor, the retailer would be required to consider the property building material and charge the contractor sales tax upon the purchase price of the building material. If the property is building material, sale of the property is not exempt from Iowa sales tax. Rule 701—219.3(423) contains a characterization of building material and a list of specific examples of building material.
	(2)	Supplies. Supplies are neither machinery nor equipment. Tangible personal property is a farm supply if it is used up or destroyed by virtue of its use in livestock or dairy production or, because of its nature, can only be used once in livestock or dairy production. A light bulb is an example of a farm supply which is not machinery or equipment. See subrule 226.19(4) for examples of farm supplies which could be mistaken for equipment and are not exempt from tax on other grounds.
	d. 	Hand tools. The term “hand tools” means tools which can be held in the hand or hands and which are powered by human effort. Hand tools specifically designed for use in livestock or dairy production are exempt from tax as equipment. Mechanical devices that are held in the hand and driven by electricity from some source other than human muscle power are, if they meet all other qualifications, exempt from tax as farm machinery.
	e. 	“Directly used” in livestock or dairy production. To determine if machinery or equipment is “directly used” in livestock or dairy production, one must first ensure that the machinery or equipment is used during livestock or dairy production and not before that process has begun or after it has ended. See paragraph “g” of this subrule for an explanation of when livestock or dairy production begins and ends.
	(1)	Definition. If the machinery or equipment is used in livestock or dairy production, “directly used” means the use is an integral and essential part of production as distinguished from use that is incidental or merely convenient to production or use that is remote from production. Machinery or equipment may be necessary to livestock or dairy production, but its use is so remote from production that it is not directly used in that production.
	(2)	Determination. In determining whether machinery or equipment is directly used, consideration should be given to the following factors:
	1.	The physical proximity of the machinery or equipment to other machinery or equipment clearly exempt as directly used in livestock or dairy production. The closer the machinery or equipment is to exempt machinery or equipment, the more likely it is that the machinery or equipment is directly used in livestock or dairy production.
	2.	The chronological proximity of the use of machinery or equipment in question to the use of machinery clearly exempt as directly used in livestock or dairy production. The closer the proximity of the machinery’s or equipment’s use within the production process to the use of exempt machinery or equipment, the more likely the use is direct rather than remote.
	3.	The active causal relationship between the use of the machinery or equipment in question and livestock or dairy production. The fewer intervening causes between the use of the machinery or equipment and the production of the product, the more likely it is that the machinery or equipment is directly used in production.
	f. 	“Primarily used” in livestock or dairy production. Machinery or equipment is “primarily used” in livestock or dairy production based on the total time it is used in livestock or dairy production in comparison to the time it is used for other purposes. Any unit of machinery or equipment directly used in livestock or dairy production more than 50 percent of its total use time is eligible for exemption.
	g. 	Beginning and end of livestock or dairy production. Livestock or dairy production begins with the purchase or breeding of livestock or dairy animals. Livestock or dairy production ceases when an animal or the product of an animal’s body (e.g., wool) has been transported to the point where it will be sold by the farmer or processed.
	h. 	Machinery and equipment design. Farm machinery and equipment used in livestock or dairy production is eligible for exemption if specifically designed for use in livestock or dairy production. Farm machinery and equipment which are not specifically designed for use in livestock or dairy production, but are directly and primarily used in livestock or dairy production, are eligible for exemption with the exception of common or ordinary hand tools.
Example: Farmer Jones raises livestock and must use fans to cool the animals. Farmer Jones buys electric fans designed for use in a residence, but uses them directly and primarily to cool the livestock. The fans’ use would be considered exempt.
	i. 	Replacement parts. The term “replacement parts” means the same as defined in subrule 226.1(2), paragraph “i.”
	226.17(3) Examples of machinery and equipment directly used in livestock or dairy production.
	a. 	Machinery and equipment used to transport or limit the movement of livestock or dairy animals (e.g., electric fence equipment, portable fencing, head gates, and loading chutes) are directly used in livestock or dairy production.
	b. 	Machinery and equipment used in the conception, birth, feeding, and watering of livestock or dairy animals (e.g., artificial insemination equipment, portable farrowing pens, feed carts, and automatic watering equipment) are directly used in livestock or dairy production.
	c. 	Machinery and equipment used to maintain healthful or sanitary conditions in the immediate area where livestock are kept (e.g., manure gutter cleaners, automatic cattle oilers, fans, and heaters if not real property) are directly used in livestock or dairy production.
	d. 	Machinery and equipment used to test or inspect livestock during production are directly used in livestock or dairy production.
	226.17(4) Taxable examples. The following are nonexclusive examples of machinery or equipment which would not be directly used in livestock or dairy production.
	a. 	Machinery or equipment used to assemble, maintain, or repair other machinery or equipment directly used in livestock or dairy production (e.g., welders, paint sprayers, and lubricators).
	b. 	Machinery or equipment used in farm management, administration, advertising, or selling (e.g., a computer used for record keeping, calculator, office safe, telephone, books, and farm magazines).
	c. 	Machinery or equipment used in the exhibit of livestock or dairy animals (e.g., blankets, halters, prods, leads, and harnesses).
	d. 	Machinery or equipment used in safety or fire prevention, even though the machinery or equipment is required by law.
	e. 	Machinery or equipment for employee or personal use. Machinery or equipment used for the personal comfort, convenience, or use by a farmer, the farmer’s family or employees, or persons associated with the farmer is not exempt from tax. Examples of such machinery and equipment include the following: beds, mattresses, blankets, tableware, stoves, refrigerators, and other equipment used in conjunction with the operation of a farm home, or other facilities for farm employees.
	f. 	Machinery or equipment used for heating, cooling, ventilation, and lighting of farm buildings generally.
	g. 	Vehicles subject to registration.
	226.17(5) The sales price, not including services, of the following machinery or equipment is exempt from tax regardless of whether the machinery or equipment remains tangible personal property after installation or is incorporated into the realty: auxiliary attachments which improve the performance, safety, operation, or efficiency of the machinery and equipment, including auger systems, curtains and curtain systems, drip systems, fan and fan systems, shutters, inlets, shutter or inlet systems, refrigerators, and replacement parts if all of the following conditions are met:
	a. 	The implement, machinery, or equipment is directly and primarily used in livestock or dairy production.
	b. 	The implement is not a self-propelled implement or implement customarily drawn or attached to self-propelled implements.
	c. 	The replacement part is used in a repair or reconstruction of the exempt piece of farm machinery or equipment used in the production of agricultural products.
	226.17(6) Auxiliary attachments exemption. Sales of auxiliary attachments which improve the performance, safety, operation, or efficiency of exempt machinery or equipment are exempt from tax. Sales of replacement parts for these auxiliary attachments are also exempt.
	226.17(7) Seller’s and purchaser’s liability for sales tax. The seller shall be relieved of sales tax liability if the seller takes from the purchaser an exemption certificate stating that the purchase is of machinery and equipment meeting the requirements of this rule. The exemption certificate must be fully completed. If items purchased tax-free pursuant to an exemption certificate are used or disposed of by the purchaser in a nonexempt manner, the purchaser is solely and directly liable for sales tax and shall remit the tax to the department.
This rule is intended to implement Iowa Code subsections 423.3(11) and 423.3(15).
[ARC 7870B, IAB 6/17/09, effective 7/22/09]
701—226.18(423) Machinery, equipment, and replacement parts used in the production of flowering, ornamental, and vegetable plants.
	226.18(1) The sales or rentals of machinery, equipment, and replacement parts used in the production of flowering, ornamental, and vegetable plants are exempt from sales and use tax. The production of flowering, ornamental, or vegetable plants by a grower in a commercial greenhouse or at another location is considered to be a part of agricultural production and exempt from sales tax. The term “plants” does not include trees, shrubs, other woody perennials, or fungi.
	226.18(2) Definitions and special provisions. For purposes of this rule, the following definitions and special provisions apply.
	a. 	Machinery. The term “machinery” means major mechanical machines, or major components thereof, which contribute directly and primarily to the flowering, ornamental, or vegetable plant production process. Usually, a machine is a large object with moving parts which performs work through the expenditure of energy, either mechanical (e.g., gasoline or other fuel) or electrical.
	b. 	Equipment. The term “equipment” means tangible personal property (other than a machine) that is directly and primarily used in the flowering, ornamental, or vegetable plant production process. Equipment may be characterized as property which performs a specialized function which, of itself, has no moving parts, or if the equipment does possess moving parts, its source of power is external to it.
	c. 	Plants. The term “plants” means flowering, ornamental, or vegetable plants intended for sale in the ordinary course of business. The term does not include trees, shrubs, other woody perennials, or fungi.
	d. 	Property used in the flowering, ornamental, or vegetable plant production process which is neither equipment nor machinery.
	(1)	Real property. The ground or the earth is not machinery or equipment. A building is not machinery or equipment. See Cloverleaf Cold Storage Co.	v.	Dep’t of Revenue and Fin., 2002 WL 31769009 (Iowa Dept.	Insp.	App.	July 26, 2002). Therefore, tangible personal property which is sold for incorporation into the ground or a building in such a manner that the property will become a part of the ground or the building is taxable except for machinery and equipment. Generally, property incorporated into the ground or a building has become a part of the ground or the building if its removal would substantially damage the property, ground, or building or would substantially diminish the value of the property, ground, or building. Fence posts embedded in concrete, electrical wiring, light fixtures, fuse boxes, and switches are examples of property sold for incorporation into the ground or a building, respectively. For the purpose of this example, assume that the property is being sold to a contractor rather than a person engaged in the flowering, ornamental, or vegetable plant production process. If the property is sold to a contractor, the retailer would be required to consider the property building material and charge the contractor sales tax upon the purchase price of this building material. If the property is building material, sale of the property is not exempt from Iowa sales tax. Rule 701—219.3(423) contains a characterization of building material and a list of specific examples of building material.
	(2)	Supplies. Supplies are neither machinery nor equipment. Tangible personal property is a supply if it is used up or destroyed by virtue of its use in the flowering, ornamental, or vegetable plant production process or, because of its nature, can only be used once in the flowering, ornamental, or vegetable plant production process. A light bulb is an example of a supply which is not machinery or equipment. See subrule 226.19(4)for examples of supplies which could be mistaken for equipment and are not exempt from tax on other grounds.
	e. 	Hand tools. The term “hand tools” means tools which can be held in the hand or hands and which are powered by human effort. Hand tools specifically designed for use in the flowering, ornamental, or vegetable plant production process are exempt from tax as equipment. Mechanical devices that are held in the hand and driven by electricity from some source other than human muscle power are, if they meet all other qualifications, exempt from tax.
	f. 	“Directly used” in the flowering, ornamental, or vegetable plant production process. To determine if machinery or equipment is “directly used” in the flowering, ornamental, or vegetable plant production process, one must first ensure that the machinery or equipment is used during the flowering, ornamental, or vegetable plant production process and not before that process has begun or after it has ended. See paragraph “h” of this subrule for an explanation as to when the flowering, ornamental, or vegetable plant production process begins and ends.
	(1)	Definition. If the machinery or equipment is used in the flowering, ornamental, or vegetable plant production process, “directly used” means the use is an integral and essential part of production as distinguished from use that is incidental or merely convenient to production or use that is remote from production. Machinery or equipment may be necessary to the flowering, ornamental, or vegetable plant production process, but its use is so remote from production that it is not directly used in that production.
	(2)	Determination. In determining whether machinery or equipment is directly used, consideration should be given to the following factors:
	1.	The physical proximity of the machinery or equipment to other machinery or equipment clearly exempt as directly used in the flowering, ornamental, or vegetable plant production process. The closer the machinery or equipment is to exempt machinery or equipment, the more likely it is that the machinery or equipment is directly used in the flowering, ornamental, or vegetable plant production process.
	2.	The chronological proximity of the use of machinery or equipment in question to the use of machinery clearly exempt as directly used in the flowering, ornamental, or vegetable plant production process. The closer the proximity of the machinery’s or equipment’s use within the production process is to the use of exempt machinery or equipment, the more likely the use is direct rather than remote.
	3.	The active causal relationship between the use of the machinery or equipment in question and the flowering, ornamental, or vegetable plant production process. The fewer intervening causes between the use of the machinery or equipment and the production of the product, the more likely it is that the machinery or equipment is directly used in production.
	g. 	“Primarily used” in flowering, ornamental, or vegetable plant production. Machinery or equipment is “primarily used” in flowering, ornamental, or vegetable plant production based upon the total time it is used in flowering, ornamental, or vegetable plant production in comparison to the time it is used for other purposes. Any unit of machinery or equipment directly used in flowering, ornamental, or vegetable plant production more than 50 percent of its total use time is eligible for exemption.
	h. 	Beginning and end of flowering, ornamental, or vegetable plant production. Flowering, ornamental, or vegetable plant production begins with the purchase of seeds or starter plants. Flowering, ornamental, or vegetable plant production ceases when a plant has grown to the size or weight at which it will be prepared for shipment to the destination where it will be marketed.
	i. 	Machinery and equipment design. Machinery and equipment used in flowering, ornamental, or vegetable plant production are eligible for exemption if they were specifically designed for use in flowering, ornamental, or vegetable plant production. Machinery and equipment which are not specifically designed for use in flowering, ornamental, or vegetable plant production, but are directly and primarily used in flowering, ornamental, or vegetable plant production, are eligible for exemption with the exception of common or ordinary hand tools.
Example: Bob Jones raises tulips and must use a thermometer to monitor the temperature in his greenhouse. Bob Jones buys a thermometer designed for use in a residence, but uses it directly and primarily to monitor the temperature in his greenhouse. The thermometer’s use would be considered exempt.
	j. 	Replacement parts. The term “replacement parts” means the same as defined in subrule 226.1(2), paragraph “i.”
	226.18(3) Examples of machinery and equipment directly used in flowering, ornamental, or vegetable plant production can be found in subrule 226.19(3).
	226.18(4) Taxable examples. The following are nonexclusive examples of machinery or equipment which would not be directly used in flowering, ornamental, or vegetable plant production.
	a. 	Machinery or equipment used to assemble, maintain, or repair other machinery or equipment directly used in flowering, ornamental, or vegetable plant production.
	b. 	Machinery or equipment used in the growing operation’s management, administration, advertising, or selling (e.g., calculators, office safes, telephones, books, and plant magazines).
	c. 	Machinery or equipment used in the exhibit of flowering, ornamental, or vegetable plants.
	d. 	Machinery or equipment used in safety or fire prevention, even though the machinery or equipment is required by law.
	e. 	Machinery or equipment for employee or personal use. Machinery or equipment used for the personal comfort, convenience, or use by a grower, the grower’s family or employees, or persons associated with the grower is not exempt from tax. Examples of such machinery and equipment include the following: beds, mattresses, blankets, tableware, stoves, refrigerators, and other equipment used in conjunction with the operation of a grower’s home, or other facilities for the grower’s employees.
	f. 	Machinery or equipment used for heating, cooling, ventilation, and lighting of office, retail, or display buildings where production does not occur.
	g. 	Vehicles subject to registration.
	226.18(5) Packing material used in flowering, ornamental, or vegetable plant production. The sales price for the sale of property which is a container, label, carton, pallet, packing case, wrapping, baling wire, twine, bag, bottle, shipping case, or other similar article or receptacle sold for use in the production of flowering, ornamental, or vegetable plants in commercial greenhouses or other places which sell such items in the ordinary course of business is not subject to sales tax. Containers and packaging materials include but are not limited to boxes, trays, labels, sleeves, tape, and staples.
	226.18(6) Sales of self-propelled implements. Sales of self-propelled implements or implements customarily drawn or attached to self-propelled implements and replacement parts for the same are exempt from tax if the implements are used directly and primarily in the production of plants in commercial greenhouses or elsewhere. Exempt implements include, but are not limited to, forklifts used to transport pallets of plants, wagons containing sterilized soil, and tractors used to pull these items.
	226.18(7) Sales of machinery and equipment used in plant production which are not self-propelled or attached to self-propelled machinery and equipment are exempt from tax. Rule 701—226.19(423) includes nonexclusive examples of machinery and equipment which are not self-propelled or attached to self-propelled machinery and equipment and which are directly and primarily used in plant production.
	226.18(8) Fuel used in plant production. See subrule 226.12(2), paragraph “b.”
	226.18(9) Sales of water used in the production of plants are exempt from tax. If water is not separately metered, the plants’ grower must determine by use of a percentage the portion of water used for a taxable purpose and the portion used for an exempt purpose. Nonexclusive examples of taxable usage include rest rooms, sanitation, lawns, and vehicle wash.
	226.18(10) Agricultural health promotion items. Sales to a commercial greenhouse of fertilizer, limestone, herbicides, pesticides, insecticides, plant food, and medication for use in disease, weed, and insect control or in other health promotion of flowering, ornamental, or vegetable plants are exempt from tax. For the purposes of this rule, a virus, bacteria, fungus, or insect which is purchased for use in killing insects or other pests is an insecticide or pesticide. Refer to rule 701—226.9(423) for more information regarding these exemptions.
	226.18(11) Miscellaneous exempt and taxable plant sales.
	a. 	Sales of pots, soil, seeds, bulbs, and starter plants for use in plant production are not the sale of machinery or equipment, but can be sales for resale and exempt from tax if the pots and soil are sold with the final product or become the finished product.
	b. 	Sales of portable buildings which will be used to display plants for retail sales are taxable.
	c. 	Sales of whitewash which will be painted on greenhouses to control the amount of sunlight entering those greenhouses are taxable sales of a supply rather than exempt sales of equipment.
	226.18(12) Seller’s and purchaser’s liability for sales tax. The seller shall be relieved of sales tax liability if the seller receives from the purchaser an exemption certificate stating that the purchase is of machinery and equipment meeting the requirements of this rule. The exemption certificate must be fully completed. If items purchased tax-free pursuant to an exemption certificate are used or disposed of by the purchaser in a nonexempt manner, the purchaser is solely and directly liable for the sales tax and shall remit the tax to the department.
This rule is intended to implement Iowa Code subsections 423.3(11) and 423.3(15).
[ARC 7870B, IAB 6/17/09, effective 7/22/09]
701—226.19(423) Nonexclusive lists. The following tables list items that are taxable or exempt.
	226.19(1) Exempt for agricultural production.

adjuvants	irrigation equipment	
alternators and generators*	kill cones	
augers*	limestone, agricultural	
balers	manure spreaders	
bale transportation equipment	mowers, hay	
baling wire and binding twine	oil filters	
batteries for exempt machinery	oil pumps	
blowers, grain dryer	packing materials	
brush hogs*	pesticides	
combines, cornheads, platforms	pickers	
conveyors, temporary or portable*	plants (seeds)	
corn pickers	planters	
crawlers, tractor	plows	
cultipackers	piston rings	
cultivators	pruning and picking equipment*	
discs	replacement parts	
draft horses	rock pickers	
drags	rollers*	
drainage pipe and tile	rotary blade mowers; not lawn mowers	
dusters*	rotary hoes	
ensilage cutters	seeders	
ensilage forks and trucks (a pickup does not qualify)	seed cleaners*	
farm wagons and accessories	seed planters	
fertilizer, agricultural	seeds	
fertilizer spreaders	self-propelled implements	
filters	shellers*	
forage harvesters, boxes	silo blowers, unloaders*	
fuel for grain drying or other agricultural
production	sowers	
gaskets	spark plugs for exempt machinery	
grain augers, portable*	sprayers*	
grain drills	spreaders	
grain dryer, heater and blower only	sprinklers	
grain planters	subsoilers	
harrows	surfactants	
hay conditioners	tillers	
hay hooks	tires for exempt machinery	
hay loaders	tractor chains	
herbicides	tractors, farm	
implements customarily drawn or attached
to a self-propelled implement	tractor weights	
insecticides	vegetable harvesters	
 	weeders*	
<fo:wrapper font-size=".69em" baseline-shift=".33em">*</fo:wrapper><fo:wrapper font-size="9pt">Exempt if drawn or attached to a self-propelled farm implement or, if portable, used
directly and primarily in agricultural production.</fo:wrapper>	
	226.19(2) Exempt for dairy and livestock production.

adjuvants	heaters, portable	
alternators and generators<fo:wrapper font-size=".69em" baseline-shift=".33em">1</fo:wrapper>	hog feeders, portable	
artificial insemination equipment	hog ringers<fo:wrapper font-size=".69em" baseline-shift=".33em">3</fo:wrapper>	
auger systems	hoof trimmers, portable<fo:wrapper font-size=".69em" baseline-shift=".33em">3</fo:wrapper>	
automatic feeding systems, portable	hypodermic syringes and needles, nondisposable	
batteries for exempt machinery	implements customarily drawn or attached
to a self-propelled implement	
barn ventilators	incubators, portable	
bedding materials<fo:wrapper font-size=".69em" baseline-shift=".33em">2</fo:wrapper>	inlets and inlet systems	
breeding stock, agricultural	inoculation materials	
bulk feeding tanks, portable	insecticides	
bulk milk coolers and tanks, portable	kill cones	
calf weaners and feeders, portable	livestock feeding, watering and handling
equipment, portable	
cattle feeders, portable	loading chutes, portable	
chain and rope hoists, portable<fo:wrapper font-size=".69em" baseline-shift=".33em">1</fo:wrapper>	manure brooms, portable<fo:wrapper font-size=".69em" baseline-shift=".33em">3</fo:wrapper>	
chicken pickers, plucking equipment	manure handling equipment, includes front-
end and rear-end loaders, portable<fo:wrapper font-size=".69em" baseline-shift=".33em">3</fo:wrapper>	
chick guards	manure scoops, portable<fo:wrapper font-size=".69em" baseline-shift=".33em">1</fo:wrapper>	
clipping machines, portable<fo:wrapper font-size=".69em" baseline-shift=".33em">3</fo:wrapper>	medications	
conveyors, temporary or portable<fo:wrapper font-size=".69em" baseline-shift=".33em">1</fo:wrapper>	milk coolers, portable	
cow stalls, portable	milking equipment, includes cans, etc.<fo:wrapper font-size=".69em" baseline-shift=".33em">3</fo:wrapper>	
cow ties, portable	milking machines	
cow watering and feeding bowls, portable	milk strainers and strainer disks, if not disposable	
crawlers, tractor	milk tanks, portable	
currying and oiling machines, portable	pesticides	
curtains and curtain systems	poultry feeders, portable	
dehorners	poultry founts, portable	
domestic fowl	poultry litters, portable	
draft horses	poultry nests, portable	
drip systems	refrigerators	
electric fence equipment, portable	replacement parts	
fans and fan systems	sawdust<fo:wrapper font-size=".69em" baseline-shift=".33em">2</fo:wrapper>	
farm wagons and accessories	self-propelled implements	
farrowing houses, crates, stalls, portable	shutters and shutter systems	
feed	space heaters, portable	
feed bins, portable	specialized flooring, portable	
feed carts, portable	sprayers<fo:wrapper font-size=".69em" baseline-shift=".33em">1</fo:wrapper>	
feed elevators, portable	squeeze chutes, stalls, portable	
feed grinders, portable	stanchions, portable	
feed scoops<fo:wrapper font-size=".69em" baseline-shift=".33em">3</fo:wrapper>	surfactants	
feed tanks, portable	tires for exempt machinery	
feeder chutes, portable	thermometers<fo:wrapper font-size=".69em" baseline-shift=".33em">3</fo:wrapper>	
feeders, portable	tractor chains	
fence and fencing supplies, temporary or portable	tractors, farm	
foggers	tractor weights	
fuel to heat or cool livestock buildings	vacuum coolers	
gaskets	ventilators	
gates, portable	water filters, heaters, pumps, softeners, portable	
gestation stalls, portable	waterers/watering tanks, portable	
grooming equipment, portable<fo:wrapper font-size=".69em" baseline-shift=".33em">3</fo:wrapper>	weaners	
head gates, portable	wood chips<fo:wrapper font-size=".69em" baseline-shift=".33em">2</fo:wrapper>	
<fo:wrapper font-size=".69em" baseline-shift=".33em">1</fo:wrapper><fo:wrapper font-size="9pt">Exempt if drawn or attached to a self-propelled farm implement or, if portable, used directly and primarily
in dairy or livestock production.</fo:wrapper>
<fo:wrapper font-size=".69em" baseline-shift=".33em">2</fo:wrapper><fo:wrapper font-size="9pt">Exempt when used as livestock and poultry bedding.</fo:wrapper>
<fo:wrapper font-size=".69em" baseline-shift=".33em">3</fo:wrapper><fo:wrapper font-size="9pt">Designed for farm use.</fo:wrapper>	
	226.19(3) Exempt for flowering, ornamental, or vegetable plant production.

air-conditioning pads	greenhouse monorail systems<fo:wrapper font-size=".69em" baseline-shift=".33em">*</fo:wrapper>	
airflow control tubes	greenhouse thermometers	
atmospheric CO<fo:wrapper font-size=".69em" baseline-shift="-.25em">2</fo:wrapper> control and monitoring equipment	handcarts used to move plants	
backup generators	lighting which provides artificial sunlight	
bins holding sterilized soil	overhead heating, lighting, and watering systems<fo:wrapper font-size=".69em" baseline-shift=".33em">*</fo:wrapper>	
control panels for heating and cooling systems<fo:wrapper font-size=".69em" baseline-shift=".33em">*</fo:wrapper>	overhead tracks for holding potted plants<fo:wrapper font-size=".69em" baseline-shift=".33em">*</fo:wrapper>	
coolers used to chill plants<fo:wrapper font-size=".69em" baseline-shift=".33em">*</fo:wrapper>	plant tables<fo:wrapper font-size=".69em" baseline-shift=".33em">*</fo:wrapper>	
cooling walls<fo:wrapper font-size=".69em" baseline-shift=".33em">*</fo:wrapper> or membranes	plant watering systems<fo:wrapper font-size=".69em" baseline-shift=".33em">*</fo:wrapper>	
equipment used to control water levels
for subirrigation	portable buildings used to grow plants<fo:wrapper font-size=".69em" baseline-shift=".33em">*</fo:wrapper>	
fans used for cooling and ventilating<fo:wrapper font-size=".69em" baseline-shift=".33em">*</fo:wrapper>	seeding and transplanting machines	
floor mesh for controlling weeds	soil pot and soil flat filling machines	
germination chambers	steam generators for soil sterilization<fo:wrapper font-size=".69em" baseline-shift=".33em">*</fo:wrapper>	
greenhouse boilers<fo:wrapper font-size=".69em" baseline-shift=".33em">*</fo:wrapper>	warning devices which monitor excess heat or cold	
greenhouse netting or mesh when used
for light and heat control	watering booms	
<fo:wrapper font-size=".69em" baseline-shift=".33em">*</fo:wrapper><fo:wrapper font-size="9pt">Exempt if not real property. “Real property” is defined in Iowa Code subsection 4.1(13) as “lands, tenements, hereditaments, and all rights thereto and interests therein, equitable as well as legal.” See 701—Chapter 219.</fo:wrapper>	
	226.19(4) Taxable even if used in agricultural production.

additives	lubricants and fluids	
air compressors	lumber<fo:wrapper font-size=".69em" baseline-shift=".33em">*</fo:wrapper>	
air conditioners, unless a replacement part
for exempt machinery	marking chalk	
air tanks	mops	
antifreeze	motor oils	
axes	nails	
barn cleaner, permanent	office supplies	
baskets	oxygen	
belt dressing	packing room supplies	
bins, permanent	paint and paint sprayers	
brooms	pliers	
buckets	posthole diggers, hand tool	
building materials<fo:wrapper font-size=".69em" baseline-shift=".33em">*</fo:wrapper> and supplies	poultry brooders, permanent	
burlap cleaners	poultry feeders, permanent	
cattle feeders, permanent	poultry nests, permanent	
cement	pruning tools	
chain saws	pumps for household or lawn use	
cleaning brushes	radios, unless a replacement part for
exempt machinery	
cleansing agents and materials	refrigerators for home use	
computers (including laptop), for personal use	repair tools	
computer software	road maintenance equipment	
construction tools	road scraper	
concrete	roofing	
conveyors, permanent	sanders	
cow ties, permanent	scrapers	
ear tags	screwdrivers	
fence, posts, wire, permanent	shingles	
field toilets	shovels	
fire prevention equipment	silos	
freon	snow fence unless portable and used directly
in dairy and livestock production	
fuel additives	snow plows and snow equipment	
fuel tanks and pumps	space heaters, permanent	
garden hoses and rakes	specialized flooring, permanent	
glass	sprinklers, permanent	
grain bins and tanks, permanent<fo:wrapper font-size=".69em" baseline-shift=".33em">*</fo:wrapper>	stalls, permanent	
grease	staples	
grease guns	stanchions, permanent	
hammers	storage tanks	
hog rings	tarps	
hydraulic fluids	tiling machinery and equipment	
hypodermic syringes, disposable	tractors, garden	
lamps	welders	
lanterns	wheel barrows	
light bulbs (for household use)	wrenches	
<fo:wrapper font-size=".69em" baseline-shift=".33em">*</fo:wrapper><fo:wrapper font-size="9pt">The buyer of building materials is responsible for paying sales tax or use tax on those materials, including materials to construct grain bins. The buyer is the person who pays the vendor.</fo:wrapper>	
This rule is intended to implement Iowa Code subsections 423.3(6) and 423.3(11).
[ARC 7870B, IAB 6/17/09, effective 7/22/09]
[Filed ARC 7870B (Notice ARC 7725B, IAB 4/22/09), IAB 6/17/09, effective 7/22/09]