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CHAPTER 282RECEIPTS SUBJECT TO USE TAX DEPENDING ON METHOD OF TRANSACTION[Prior to 12/17/86, Revenue Department[730]][Prior to 11/2/22, see Revenue Department[701] Ch 33]701—282.1(423) Transaction consummated outside this state. Iowa use tax applies to purchases of tangible personal property, specified digital products, and services as described in Iowa Code section 423.5 on which sales tax was not collected. This would most commonly occur if the good or service was purchased from a retailer that does not have nexus with Iowa.This rule is intended to implement Iowa Code section 423.5(1).Related ARC(s): 7717C701—282.2(423) Sales by federal government or agencies to consumers. A consumer purchasing tangible personal property, specified digital products, or a taxable enumerated service for use in Iowa from the federal government or any of its agencies is liable for the payment of Iowa use tax and shall report and remit the tax due on a sales and use tax return furnished by the department.This rule is intended to implement Iowa Code section 423.5(1)“c.”Related ARC(s): 7717C701—282.3(423) Fuel consumed in creating power, heat or steam for processing or generating electric current. Tangible personal property purchased outside the state and consumed in creating power, heat or steam for processing tangible personal property or for generating electric current intended to be sold ultimately at retail is exempt from sales and use tax. If the property purchased to be consumed as fuel in creating power, heat or steam for processing is also used in the heating of the factory or office, ventilation of the building, lighting of the premises or for any use other than that of direct processing, that portion of the property so used is subject to use tax.When buying tangible personal property, part of which is exempt as fuel under the provisions of the law, from an out-of-state seller registered to collect tax for the state, the purchaser shall furnish to such registered seller a written certificate certifying the cost of the property that is to be used for processing and is, therefore, exempt. The certificate shall also show the cost of the property that is not to be used in processing and is, therefore, taxable in order that the registered seller may properly bill the amount of use tax due.This rule is intended to implement Iowa Code section 423.6(3)“b.”Related ARC(s): 7717C701—282.4(423) Taxation of Native Americans. 282.4(1) Definitions.
"Native Americans" means all persons who are descendants of and who are members of any recognized tribe.
"Settlement" means all lands recognized as a tribal government settlement or reservation within the boundaries of the state of Iowa.
282.4(2) Use tax. Out-of-state purchases made by Native Americans that are purchased for use on a recognized settlement where delivery occurs on a settlement to Native Americans who are members of the tribe located on that settlement are exempt from tax. Out-of-state purchases made by Native Americans where delivery occurs off a recognized settlement are subject to tax even though purchased for use on a recognized settlement.More information on purchases that may be subject to sales tax is found in rule 701—285.8(423).This rule is intended to implement Iowa Code section 423.6(6).Related ARC(s): 7717C701—282.5(423) Property used to manufacture certain vehicles to be leased. Tangible personal property that becomes an integral part of a vehicle as described in Iowa Code section 423.6(8) is exempt from use tax, subject to the limitations provided in Iowa Code section 423.6(8). However, this rule does not exempt the sale of the tangible personal property used from the imposition of sales tax under Iowa Code section 423.2 if that property is otherwise subject to sales tax.This rule is intended to implement Iowa Code section 423.6(8).Related ARC(s): 7717C701—282.6(423) Out-of-state rental of vehicles subject to registration subsequently used in Iowa. The rental of vehicles that do not meet the definition of transportation equipment as defined in Iowa Code section 423.15(3) will be sourced for tax purposes as described in Iowa Code section 423.17.This rule is intended to implement Iowa Code sections 423.15(3) and 423.17.Related ARC(s): 7717C701—282.7(423) Sales of mobile homes, manufactured housing, and related property and services. 282.7(1) Sales of mobile homes, manufactured housing, and related property and services for one package price. This rule is applicable only to mobile homes and manufactured housing sold as tangible personal property rather than in the form of real property. If, at the time of the sale, a mobile home or manufactured housing is real property, this rule is not applicable to it. If a mobile home dealer buys a mobile home, incorporates that mobile home into real estate in the manner required by and described in Iowa Code section 435.26, and then sells the mobile home to a consumer, the sale of that mobile home, the sale of any services used to transform the mobile home from tangible personal property to real property, and the sale of any tangible personal property with the mobile home (such as furniture) are governed by rule 701—Chapter 219, which deals with building contracts and building contractors. Sales of manufactured housing in the form of real estate are governed by rule 701—282.8(423).When a customer purchases a mobile home or manufactured housing from a dealer, the customer often wants the dealer to prepare the mobile home or manufactured housing so that it is ready for the customer to move into it. To render a mobile home or manufactured housing “ready to move into,” a dealer may sell, with the home or housing, certain tangible personal property and will also perform or arrange for other parties to perform various services.With respect to any one particular mobile home or manufactured house that a dealer may sell, a dealer may provide any combination of the following services or provide the following services and sell the below-listed property to any person purchasing the home or house: a. Connect the electricity. b. Connect the water. c. Connect sewer system lines. d. Sell and install skirting. Skirting is used to fill the space between the bottom of the mobile home or manufactured house and the ground. It gives the home or house an appearance more like a conventional home because it covers up this space. e. Build and install steps for a door. f. Build a deck. g. Do minor repairs. h. Install and sell a foundation upon which to place the mobile home or manufactured housing. i. Sell furniture or appliances (e.g., air conditioners, refrigerators, and stoves) for use in the mobile home or manufactured housing. Install the appliance (e.g., an air conditioner) if necessary.A dealer selling a mobile home or manufactured housing on a “ready-to-move-into” basis usually sells that home or housing and the services and additional property necessary to render it livable for one “package price.” The dealer and customer do not bargain separately for the sale of the various articles of tangible personal property (e.g., the mobile home or manufactured house and appliances) or the services (e.g., electrical installation) that are part of this package price; nor is the dealer’s package price broken down to indicate any of the expenses that are components of the package price either in the dealer’s sales contract or on any sales invoice.The package price of any one particular mobile home or manufactured house will vary depending upon how many services the dealer will provide or how much tangible personal property the dealer will sell in addition to the home or house. In many cases, a dealer will contract with a third party to perform the services promised in the dealer’s contract to a customer. For example, the dealer will contract with a third party to hook up the home or house purchaser’s electricity, install window air conditioning, or build a deck or perform minor repairs on the mobile home or manufactured house.In the situation described above, the “purchase price” of a mobile home or manufactured house is the entire package price charged for the home or house, additional personal property for use in and around the home or house, and services performed to render the home or house livable. The entire amount of the package price, reduced by 80 percent, as explained in rule 701—219.7(423), is used to calculate the amount of use tax due resulting from the sale of the mobile home or manufactured house. No part of the package price is subject to Iowa sales tax; rather, it is subject to Iowa use tax. 282.7(2) Sales of property and rendition of service under separate contract. If the personal property and services listed in subrule 282.7(1) are purchased under separate contract and not as part of one package price with a mobile home or manufactured house, either from a mobile home dealer or from another party, the price paid for those items of property or services will not be a part of the purchase price of the home or house. Because the price of the property or services is not part of the “purchase price” of a home or house, that price will not be reduced by 80 percent as required under rule 701—219.7(423) in computing the use tax due upon the sale of a mobile home. Also, if sold in Iowa, the property would be subject to Iowa sales tax. The same is true of services rendered in Iowa.If separately contracted for, the sales price of the following services sold is subject to Iowa sales tax under Iowa Code section 423.2(6): a. Electrical hookup and air conditioning installation (electrical installation). b. Water and sewer system hookup (plumbing). c. Skirting installation and building and installation of steps and decks (carpentry). d. Nearly all “minor repairs.” The sale, under separate contract, of skirting, steps, decks, furniture, appliances, and other tangible personal property to customers purchasing mobile homes or manufactured housing are sales of tangible personal property; the sales price is subject to Iowa sales rather than use tax.The installation of a concrete slab on which to place the mobile home or manufactured housing is not a service taxable to the home or housing owner since this installation involves “new construction” and the service performed upon this new construction is thus exempt from tax. The person installing the concrete slab is treated as a construction contractor and pays sales tax upon any tangible personal property purchased and used in the construction of the slab. More information is contained in rule 701—Chapter 219. 282.7(3) Dealer purchases of tangible personal property and services for resale. Regardless of whether the tangible personal property and services connected with the purchase of a mobile home or manufactured housing have been purchased as part of a package price or whether their purchase has been separately contracted for, a dealer’s or other retailer’s purchase of the tangible personal property or service for subsequent resale to a mobile home or manufactured housing purchaser is a purchase “for resale” and thus exempt from Iowa sales or use tax.This rule is intended to implement Iowa Code section 423.6(10).Related ARC(s): 7717C701—282.8(423) Tax imposed on the use of manufactured housing as tangible personal property and as real estate. Tax is imposed on the use of “manufactured housing” in Iowa. 282.8(1) Definition. "Manufactured housing" means the same as defined in Iowa Code section 321.1.
282.8(2) Tax treatment of manufactured housing that is similar to the tax treatment of mobile homes. a. Manufactured housing is subject to Iowa use tax to the extent provided in Iowa Code section 423.6(10) and shall be paid as provided in Iowa Code section 423.26A. b. The use of manufactured housing previously subject to tax and upon which the tax has been paid is exempt from further tax. c. The taxation of manufactured housing that is sold in the form of tangible personal property is similar to the taxation of mobile homes that are sold in the form of tangible personal property. More information is contained in rule 701—282.7(423). 282.8(3) Taxable use of manufactured housing in the form of real estate. Unlike mobile homes, the use of which can be taxed only when the homes are in the form of tangible personal property, under certain conditions, the use of manufactured housing in the form of real estate can be subject to tax. If a developer has placed a manufactured home on a foundation in a lot in Iowa and hooked up the necessary utilities and completed the necessary landscaping to convert the home from tangible personal property to realty, the sale of the manufactured home to a user is a taxable use of the home on the user’s part.Example: Company A buys land with enough space for 100 lots for manufactured housing and for the streets necessary to provide access to the lots. Company A then buys 100 manufactured houses. It lawfully buys these houses exempt from use tax based on the assertion that they have been purchased for subsequent resale. Company A then develops the land, installing water, sewer and electric lines, placing the manufactured homes on foundations, and otherwise taking steps to convert the homes from tangible personal property to real estate. Company A then sells the homes on the lots to various customers. Each purchase of a home by a customer is a taxable use of the home on that customer’s part, and the customer is obligated to pay the appropriate county treasurer the amount of Iowa use tax due. a. Installed purchase price. When tax is due on the use of manufactured housing in the form of real estate, the basis for computing the tax is the “installed purchase price” of the manufactured housing. Installed purchase price means the same as defined in Iowa Code section 423.1(23). Use tax is due on 20 percent of the amount of the installed purchase price. (1) Included in the installed purchase price. Included within the meaning of “installed purchase price” are amounts charged to a buyer of a manufactured home to build and install a foundation on which to place a home; amounts charged to hook up electric, water, gas, sewer system, and other lines for necessary utilities; amounts charged to sell and install “skirting” as described in subrule 282.7(1); amounts charged to build and install any steps for a door; and amounts separately charged for any appliances or other items that become a part of the housing after installation, e.g., dishwashers and whirlpool tubs. (2) Exclusions from installed purchase price. Excluded from the meaning of “installed purchase price” is any amount charged for the purchase of land on which to place a manufactured house; any amount charged for landscaping in connection with the installation of a manufactured house; any amount charged to build and install any deck or similar appurtenance to a manufactured home; and any amounts charged for the sale of furniture or appliances that remain tangible personal property after installation, e.g., furniture, room air conditioners, and refrigerators. This list of inclusions and exclusions is not exclusive. Furthermore, the purchase of furniture or appliances that remain tangible personal property is subject to Iowa sales or use tax. b. The exemption in favor of taxable services performed on or in connection with new construction as described in Iowa Code section 423.3(37) is not applicable when calculating the amount of any installed purchase price.This rule is intended to implement Iowa Code section 423.6(10).Related ARC(s): 7717CRelated ARC(s): 7717C