701—64.13 (452A) Reduction of refund or credit—sales tax. Under Iowa Code section 422.45(11) the gross receipts from the sale of motor fuel and special fuel consumed for highway use or in watercraft or aircraft where the fuel tax has been imposed and paid and no refund has been or will be allowed are exempt from Iowa sales tax. Therefore, unless the fuel is used for some other exempt purpose under Iowa Code section 422.42(3) or 422.45 (e.g., used for processing, used for agricultural purpose, used by an exempt government entity, used by a private nonprofit educational institution), the refund or credit of taxes on motor fuel or special fuel will be reduced by the applicable sales tax. See sales tax rule 701—18.37(422,423). The sale base upon which the sales tax will be applied shall include all federal excise taxes, but will not include the Iowa motor vehicle fuel tax. W.M. Gurley v.	Arny Rhoden, 421 U.S. 200, 44 L.Ed.	110, 95 S.Ct.	1605.
This rule is intended to implement Iowa Code section 452A.17.