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, and
				  equipment 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 219.23(4), 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, unless the building materials,
				  supplies, or equipment are purchased for resale. Materials purchased out of
				  state for use in Iowa are subject to the Iowa use tax, which is payable in the
				  tax period that the materials are delivered into the state.
(1)
Examples of building materials
				and supplies.
The following is a nonexhaustive list of typical items
				that are 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
(2)
Examples of building
				equipment.
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
(3)
Taxability of equipment.
Construction equipment purchased by a
				contractor that is intended for use in the performance of an Iowa construction
				contract is subject to the Iowa sales or use tax. Equipment that is rented for
				use on or in connection with an Iowa construction contract would normally be
				rented subject to tax. Rule
				701-219.20 (423) provides an
				explanation of the existing exemption in favor of rented machinery used by a
				contractor on a job site.
This rule is intended to implement Iowa Code sections
				  423.2(1)
"b"
and 423.5.
1 Floor coverings that are shaped
				  to fit a particular room or area and that 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. 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 that are not
				  attached but are simply laid on finished floors are also not considered to be
				  building materials.