Iowa Administrative Code › Agency 701 - Revenue Department › Title III - Sales, Use, and Excise Tax › Chapter 214 - Agricultural Rules › Rule 701-214.12 - Fuel Used in Agricultural Production

Current through Register Vol. 47, No. 3, July 24, 2024
(1)
Definitions.
For
				purposes of this rule, the following definitions apply:
"Aquaculture"
means the same as defined in
				  rule 701-200.1 (423).
"Fuel"
includes electricity.
"Implement of husbandry"
means the same as
				  defined in rule 701-200.1 (423).
"Livestock"
means the same as defined in
				  rule 701-200.1 (423) and includes domesticated fowl.
(2)
Exemptions.
a.
Fuel used for livestock
				buildings.
The sale of fuel used to provide heating or cooling for
				livestock buildings is exempt from tax.
b.
Fuel used for flowering,
				ornamental, or vegetable plant production buildings.
(1) Sales of fuel for heating or cooling
				greenhouses, buildings, or parts of buildings used for the production of
				flowering, ornamental, or vegetable plants intended for sale in the ordinary
				course of business are exempt from tax. See subparagraph (3) for the formula
				for calculating exempt use if a building is only partially used for growing
				flowering, ornamental, or vegetable plants.
(2) Fuel used in a flowering, ornamental, or
				vegetable plant production building for purposes other than heating or cooling
				(e.g., lighting) or for purposes other than direct use in flowering,
				ornamental, or vegetable plant production (e.g., heating or cooling office
				space) is not eligible for this exemption. Examples of nonexempt purposes for
				which a portion of a greenhouse might be used include, but are not limited to,
				portions used for office space; loading docks; storage of property other than
				flowering, ornamental, or vegetable plants; housing of heating and cooling
				equipment; and packaging flowering, ornamental, or vegetable plants for
				shipment.
(3) Calculating
				proportional exemption. It may be possible to calculate the amount of total
				fuel used in plant production by dividing the number of square feet of the
				greenhouse heated or cooled and used for raising flowering, ornamental, or
				vegetable plants by the number of square feet heated or cooled in the entire
				greenhouse. It may be necessary to alter this formula (by the use of separate
				metering, for example) if a greenhouse has a walk-in cooler and the cooler is
				used directly in flowering, ornamental, or vegetable plant production. See
				701-subrule 15.3(3) regarding fuel exemption certificates and subrule
				226.18(12) regarding seller's and purchaser's liability for sales tax.
EXAMPLE 1: Bill Brown's herb farming operation has a separate
				  greenhouse used to grow his herbs. All other aspects of his farm operations are
				  conducted in other facilities. Because the greenhouse is used exclusively for
				  raising flowering, ornamental, or vegetable plants, Bill Brown is able to claim
				  exemption from sales tax on the cost of fuel used to heat and cool the
				  greenhouse.
EXAMPLE 2: Martha Green's greenhouse has a separate meter to
				  track the electricity used only for heating or cooling. Her greenhouse is used
				  partially for growing flowering, ornamental, or vegetable plants and partially
				  for a nonexempt purpose. Martha Green is able to claim a proportional exemption
				  from sales tax on the cost of fuel used to heat and cool her growing flowering,
				  ornamental, or vegetable plants. Martha Green calculates her exempt amount by
				  dividing the number of heated or cooled square feet of her greenhouse that are
				  used for raising flowering, ornamental, or vegetable plants by the total number
				  of square feet heated or cooled in the entire greenhouse.
Total square footage used for raising flowering,
							 ornamental, or vegetable plants =
800
Total square footage =
1,000
TOTAL: 800 Ã· 1,000 =
.80 or 80%
Thus, 80 percent of the cost of the fuel used to heat and
				  cool Martha Green's greenhouse is exempt from sales tax.
c.
Sales of fuel used for
				aquaculture.
Sales of fuel used in the raising of agricultural
				products by aquaculture are exempt from tax.
d.
Sales of fuel, gas, electricity,
				water, and heat consumed in implements of husbandry.
The sale of fuel
				used in any implement of husbandry, whether self-propelled or not, is exempt
				from tax if the fuel is consumed while the implement is engaged in agricultural
				production. For example, the sale of fuel used not only in tractors or
				combines, but also used in implements which cannot move under their own power,
				is exempt from tax. The sale of fuel used in milk coolers and milking machines,
				grain dryers, and stationary irrigation equipment and in implements used to
				handle feed, grain, and hay and to provide water for livestock is exempt from
				tax even though these implements of husbandry would not ordinarily be
				considered self-propelled.