Iowa Administrative Code › Agency 701 - Revenue Department › Title III - Sales, Use, and Excise Tax › Chapter 211 - Taxable Services › Rule 701-211.9 - Machine Operators

Current through Register Vol. 47, No. 3, July 24, 2024
(1)
In
				general.
Persons engaged in the business of operating machines of all
				kinds that belong to other persons and charge a fee for operating are selling a
				service subject to sales tax. Operation of the machine must be the central
				function of the service being performed and not incidental to the performance
				of the service the operator was hired to perform.
(2)
Definitions.
For
				purposes of this rule:
"Machine"
includes but is not limited to
				  typewriters, computers, calculators, cash registers, and manufacturing
				  machinery and equipment. "Machine" does not include telephones, automobiles, or
				  airplanes.
"Machine operator"
is a person who manages,
				  controls, and conducts a mechanical device or a combination of mechanical
				  powers and devices used to perform a function and produce a certain result or
				  effect.
(3)
Machine
				operators as employees.
The services of a machine operator are not
				subject to sales tax if the operation of machinery is by an employee directly
				for an employer. Rule
				701-211.3 (423) contains
				information about services performed by an employee for an employer.
EXAMPLE 1: Employee A is hired to perform data entry on a
				  computer for A's employer. While Employee A is performing the service of a
				  machine operator, because Employee A is performing the service directly for A's
				  employer, A's service is not subject to sales tax.
EXAMPLE 2: Through a temporary employment agency, Worker B
				  performs data entry on a computer for Company Z. Company Z pays a set per-hour
				  fee for data entry services. Worker B is performing the service of a machine
				  operator, not directly for Company Z but for the temporary employment agency.
				  Company Z must pay sales or use tax on the fee imposed by the temporary
				  employment agency. Rule
				  701-211.23 (423) contains
				  information about the service of private employment agencies.
EXAMPLE 3: Through a temporary employment agency, Worker C
				  performs telemarketing services for Company X. Because Worker C is operating a
				  telephone, which is not considered a machine for purposes of this rule, Company
				  X would not pay sales or use tax on the fee imposed by the temporary employment
				  agency.
EXAMPLE 4: Company Y hires Lawyer D through a temporary
				  employment agency. Lawyer D spends most of the work time performing legal
				  research and writing memoranda, both of which are done at a computer. Lawyer D
				  is not a machine operator just because Lawyer D uses a computer. Lawyer D was
				  hired by Company Y to perform legal services. Lawyer D's use of the computer is
				  incidental to the legal services Lawyer D was hired to perform.
EXAMPLE 5: Company X hires Employee A as a purchaser. In this
				  role, Employee A procures materials for Company X, negotiates and manages
				  purchasing agreements, and communicates with vendors. To perform these job
				  duties, Employee A spends the majority of working hours on a computer. Employee
				  A is not a machine operator, because the central function of the job is as a
				  purchaser and the computer use is incidental to the performance of job
				  duties.
This rule is intended to implement Iowa Code section
				  423.2(6)
"ad."