Iowa Administrative Code › Agency 701 - Revenue Department › Title III - Sales, Use, and Excise Tax › Chapter 219 - Sales and Use Tax on Construction Activities › Rule 701-219.3 - Sales of Building Materials, Supplies, and Equipment to Contractors, Subcontractors, Builders or Owners

Current through Register Vol. 47, No. 3, July 24, 2024
Suppliers or dealers that sell materials and supplies to
				  contractors, subcontractors, builders or owners are required to collect Iowa
				  sales tax from those persons based upon the sales price from such sales.
				  Reference 701-subrule 19.12(5), which deals with construction contracts with
				  designated exempt entities, for an explanation of one of the few exceptions to
				  this requirement. The fact that a contractor, subcontractor, or builder holds
				  an Iowa retail sales tax permit and has a tax number does not entitle that
				  person to purchase building materials, supplies and equipment without paying
				  sales tax to the vendor See rules 219.2(423) and 219.4(423). Materials
				  purchased out of state for use in Iowa are subject to the Iowa use tax which is
				  payable in the quarter that the materials are delivered into the state.
(1)
Building materials.
The
				term "building materials" as used in this rule means materials used in
				construction work, and is not limited to materials used in constructing a
				building with sides and covering. The term may also include any type of
				materials used for improvement of the premises or anything essential to the
				completion of a building or structure for the use intended.
State v.
				James A. Head & company, Inc.,
306 So. 2d 5 (Ala. 1974).
(2)
Building supplies.
The
				term "building supplies" as used in this rule means anything that is furnished
				for and used directly in the carrying on of the work of an owner, contractor,
				subcontractor or builder and which is used or consumed by the contractor Such
				items do not have to enter into and become a physical part of the structure
				like building materials, but they do become as much a part of the structure as
				the labor which is performed on it.
United States Fidelity &
				Guaranty Co. v. Feenaughty Machinery Co.,
85 P.2d 1085, 197 Wash.
				569.
(3)
Typical
				items.
While not intended to be inclusive, the following is a list of
				typical items regarded as building materials and supplies:
Asphalt
Bricks
Builders' hardware
Caulking material
Cement
Central air conditioning
Cleaning compounds
Conduit
Doors
Ducts
Electric wiring, connections, and switching devices
Fencing materials
Flooring1
Glass
Gravel
Insulation
Lath
Lead
Lighting fixtures
Lime1
Linoleum
Lubricants
Lumber
Macadam
Millwork
Modular and mobile homes
Mortar
Oil
Paint
Paper
Piping, valves, and pipe fittings
Plaster
Plates and rods used to anchor masonry foundations
Plumbing supplies
Polyethylene covers
Power poles, towers, and lines
Putty
Reinforcing mesh
Rock salt
Roofing
Rope
Sand
Sheet metal
Steel
Stone
Stucco
Tile
Wallboard
Wall coping
Water conditioners
Weather stripping
Windows
Window screens
Wire netting and screen
Wood preserver
(4)
Building equipment.
The
				term "building equipment" as used in this rule means any vehicle, machine,
				tool, implement or other device used by a contractor in erecting structures for
				others, or reconstructing, altering, expanding or remodeling property of others
				which does not become a physical component part of the property upon which work
				is performed, and which is not necessarily consumed in the performance of such
				work. "Building equipment" includes, but is not limited to, such items as:
Compressors
Drill presses
Electric generators
Forms
Hand tools
Lathes
Replacement parts for equipment
Scaffolds
Tools
Vehicles including grading, lifting and excavating
				  vehicles
Construction equipment purchased by a contractor which is
				  intended for use in the performance of an Iowa construction contract is subject
				  to the Iowa sales or use tax. Equipment which is rented for use on or in
				  connection with an Iowa construction contract would normally be rented subject
				  to tax. See rule 219.21(423) for an explanation of the existing exemption in
				  favor of rented machinery used by a contractor on a job site.
1Floor coverings which are shaped
				  to fit a particular room or area and which are attached to the supporting floor
				  with cement, tacks or tack strips or by some other method making a permanent
				  attachment are considered to be building materials. Reference rule
				  701-16.48(422,423) for an exception concerning carpeting. Carpeting (whether
				  attached to the floor or not) is not treated as a building material for the
				  purposes of this chapter Rugs, mats and linoleum types of floor coverings which
				  are not attached but which are simply laid on finished floors are also not
				  considered to be building materials.