CHAPTER 218
SALES AND SERVICES RELATED TO VEHICLES
701—218.1(423) Armored car. Persons engaged in the business of either providing armored car service to others or converting a vehicle into an armored car are selling a service subject to sales tax. For purposes of this rule, “armored car” means a wheeled vehicle affording defensive protection by use of a metal covering or other elements of ordinance.
This rule is intended to implement Iowa Code section 423.2(6)“b.”
[ARC 7716C, IAB 3/6/24, effective 4/10/24]
701—218.2(423) Vehicle repair.
	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 of restoration, renovation or replacement of any motor, engine, working parts, accessories, body, or interior of a vehicle. “Repair” does not include the installation of new parts or accessories, which are not replacements, added to a vehicle.
“Vehicle” means the same as defined in Iowa Code section 321.1(90).
	218.2(3) Disposal fees. Fees charged with the disposal of any item in connection with the performance of this service are subject to sales tax if the disposal fee of the item is not separately contracted for or itemized in the billing of the repair service. If the disposal fee is itemized or separately contracted for, the disposal fee is not subject to sales tax. Items that may be subject to disposal fee include but are not limited to air filters, batteries, oil, or tires.
This rule is intended to implement Iowa Code section 423.2(6)“c.”
[ARC 7716C, IAB 3/6/24, effective 4/10/24]
701—218.3(423) Motorcycle, scooter, and bicycle repair.
	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” includes autocycles.
“Repair” means the same as defined in rule 701—211.1(423).
This rule is intended to implement Iowa Code section 423.2(6)“ag.”
[ARC 7716C, IAB 3/6/24, effective 4/10/24]
701—218.4(423) Battery, tire, and allied.
	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 the business of installing, repairing, or maintaining tires and any services related to or connected therewith are selling a service subject to sales tax.
	218.4(3) Disposal fees. Disposal fees charged in connection with the performance of the services identified in this rule are subject to sales tax if the disposal fee is not itemized or separately contracted for in the billing for the charge of the service. If the disposal fee charged in connection with the performance of the services identified in this rule are itemized or separately contracted for, then the disposal fee is not subject to sales tax. Items that may be subject to disposal fee include but are not limited to air filters, oil, tires, and batteries.
This rule is intended to implement Iowa Code sections 423.2(6)“d” and 423.2(7)“a”(1).
[ARC 7716C, IAB 3/6/24, effective 4/10/24]
701—218.5(423) Boat repair.
	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 section 462A.2.
This rule is intended to implement Iowa Code section 423.2(6)“h.”
[ARC 7716C, IAB 3/6/24, effective 4/10/24]
701—218.6(423) Vehicle wash and wax.
	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 701—225.7(423) contains more information on purchases of inputs in vehicle wash and wax services.
	218.6(2) Definition. For purposes of this rule:
“Vehicle” means the same as defined in Iowa Code section 321.1(90).
This rule is intended to implement Iowa Code section 423.2(6)“i.”
[ARC 7716C, IAB 3/6/24, effective 4/10/24]
701—218.7(423) Wrecker and towing.
	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 this rule:
“Towing” includes any means of pushing, pulling, carrying, or freeing any vehicle from mud, snow, or any other impediment, including any incidental hoisting. “Towing” does not include transporting operable vehicles from one location to another when no operative aspect of the vehicle is integral to the transporting.
“Vehicle” means the same as defined in Iowa Code section 321.1(90).
This rule is intended to implement Iowa Code sections 423.1(7) and 423.2(6)“bn.”
[ARC 7716C, IAB 3/6/24, effective 4/10/24]
701—218.8(423) Flying service.
	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 tax.
	218.8(2) Not included. Flying services do not include those relating to agricultural aerial application, those relating to aerial commercial and chartered transportation services, and those services exempted by rule 701—211.2(423).
	218.8(3) Flight instruction charges. Charges relating to flight instruction can be taxable or nontaxable. Taxable charges include but are not limited to the sales price for the following:
	a. 	Instructors’ services, ground instruction, and ground school.
	b. 	Students learning to fly with an instructor and dual flying.
	c. 	Rental of a plane. Rule 701—218.9(423) contains more information.
This rule is intended to implement Iowa Code section 423.2(6)“s.”
[ARC 7716C, IAB 3/6/24, effective 4/10/24]
701—218.9(423) Aircraft rental.
	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 drone aircraft or any aircraft transporting only the pilot.
This rule is intended to implement Iowa Code section 423.2(6)“bf.”
[ARC 7716C, IAB 3/6/24, effective 4/10/24]
701—218.10(423) Snowmobiles, motorboats, and certain other vehicles. The sales price of snowmobiles, all-terrain vehicles, dirt bikes, race karts or go-carts, and motorboats is taxable when purchased and not classified as vehicles subject to registration.
This rule is intended to implement Iowa Code chapter 423.
[ARC 7716C, IAB 3/6/24, effective 4/10/24]
701—218.11(423) Motor fuel, special fuel, electric fuel, aviation fuels and gasoline.
	218.11(1) In general. The sales price from the sale of motor fuel, including ethanol, special fuel, and electric fuel is exempt from sales tax if (1) the fuel is consumed for highway use, in watercraft, or in aircraft, (2) the Iowa fuel tax has been imposed and paid, and (3) no refund or credit of fuel tax has been made or will be allowed. The sales price from the sale of special fuel for diesel engines used in commercial watercraft on rivers bordering Iowa is exempt from sales tax, even though no fuel tax has been imposed and paid, providing the seller delivers the fuel to the owner’s watercraft while it is afloat.
	218.11(2) Refunds or credits of motor fuel and special fuel. Claims for refund or credit of fuel taxes under the provisions of Iowa Code chapter 452A must be reduced by any sales or use tax owing the state unless a sales tax exemption is applicable. Generally, refund claims or credits are allowed where fuel is purchased tax-paid and used for purposes other than to propel a motor vehicle or used in watercraft.
	218.11(3) Refunds of tax on fuel purchased in Iowa and consumed outside of Iowa. Even though fuel is purchased in Iowa, fuel tax is paid in Iowa, and the fuel tax is subject to refund under the provisions of division III of Iowa Code chapter 452A relating to interstate motor vehicle operations, the refund of the fuel tax does not subject the purchase of the fuel to sales tax.
	218.11(4) Tax base. The basis for computing the Iowa sales tax will be the retail sales price of the fuel less any Iowa fuel tax included in such price. Federal excise tax should not be removed from the sales price in determining the proper sales tax due. Rule 701—288.12(423) contains more information.
This rule is intended to implement Iowa Code section 423.3(56).
[ARC 7716C, IAB 3/6/24, effective 4/10/24]
701—218.12(423) Ships, barges, and other waterborne vessels. Tax will not be imposed upon the use, 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 as a part for the repair of any such ship, barge, or waterborne vessel. The use must be on a river or rivers bordering Iowa, not on any river or rivers bounded on both banks by Iowa territory.
This rule is intended to implement Iowa Code section 423.4(10).
[ARC 7716C, IAB 3/6/24, effective 4/10/24]
[Filed ARC 6704C (Notice ARC 6577C, IAB 10/5/22), IAB 11/30/22, effective 1/4/23]
[Editorial change: IAC Supplement 10/18/23]
[Filed ARC 7716C (Notice ARC 7200C, IAB 12/27/23), IAB 3/6/24, effective 4/10/24]