H.F. 2478 Section 1. Section 423.3, subsection 2, Code 2018, is 1 amended to read as follows: 2 2. The sales price of sales for resale of tangible personal 3 property or taxable services, or for resale of tangible 4 personal property in connection with the furnishing of taxable 5 services except for sales, other than leases or rentals, which 6 are sales of machinery, equipment, attachments, and replacement 7 parts specifically enumerated in subsection 37 and used in the 8 manner described in subsection 37 or the purchase of tangible 9 personal property, the leasing or rental of which is exempted 10 from tax by subsection 49. 11 EXPLANATION 12 The inclusion of this explanation does not constitute agreement with 13 the explanation’s substance by the members of the general assembly. 14 This bill relates to the sales tax imposed on certain 15 construction equipment. 16 CURRENT LAW. Under current law in Code section 423.3(37), 17 the lease or rental of machinery, equipment, attachments, and 18 replacement parts directly and primarily used in specified 19 construction services by an owner, contractor, subcontractor, 20 or builder is exempt from the sales tax (construction 21 equipment exemption). Also under current law, in Code section 22 423.3(2), the purchase of tangible personal property for 23 subsequent resale, lease, or rental is exempt from the sales 24 tax (sale-for-resale exemption). However, the purchase of 25 construction equipment for a subsequent lease or rental that 26 will qualify for the construction equipment exemption does not 27 qualify for the sale-for-resale exemption. 28 BILL CHANGES. The bill strikes language excluding from 29 the sale-for-resale exemption the purchase of construction 30 equipment for a subsequent lease or rental that will qualify 31 for the construction equipment exemption. 32 By operation of Code section 423.6, an item exempt from the 33 imposition of the sales tax is also exempt from the use tax 34 imposed in Code section 423.5. 35 -1- LSB 6178HV (2) 87 mm/jh 1/ 1