Iowa Administrative Code › Agency 701 - Revenue Department › Title III - Sales, Use, and Excise Tax › Chapter 285 - Taxable and Exempt Sales Determined by Method of Transaction or Usage › Rule 701-285.12 - Maintenance or Repair of Fabric or Clothing

Current through Register Vol. 47, No. 3, July 24, 2024
(1) Sales of chemicals, solvents, sorbents,
				or reagents consumed in the maintenance or repair of fabric or clothing are
				exempt from tax. See rule
				701-200.1 (423) for definitions
				of the terms "chemical," "solvent," "sorbent" or "reagent." This subrule's
				exemption is mainly applicable to drycleaning and laundry establishments;
				however, it is also applicable to soap or any chemical or solvent used to clean
				carpeting. The department presumes that a substance is "directly used" in the
				maintenance or repair of fabric or clothing if the substance comes in contact
				with the fabric or clothing during the maintenance or repair process.
				Substances that do not come into direct contact with fabric or clothing may,
				under appropriate circumstances, be directly used in the maintenance or repair
				of the fabric or clothing but direct use will not be presumed.
The following are examples of substances directly used and
				  consumed in the maintenance or repair of fabric or clothing: perchloroethylene
				  "perch" or petroleum solvents used in dry-cleaning machines and coming in
				  direct contact with the clothing being dry-cleaned. Substances used to clean or
				  filter the "perch" or petroleum solvents would also be exempt from tax, even
				  though these substances do not come in direct contact with the clothing being
				  cleaned. The sale of soap or detergents especially made for mixing with "perch"
				  or petroleum solvents is exempt. The sale of stain removers to dry cleaners is
				  exempt from tax.
A commercial laundry's purchase of detergents, bleaches, and
				  fabric softeners is exempt from tax. A commercial laundry's purchase of water,
				  which is a solvent, is also exempt from tax if purchased for use in the
				  cleaning of clothing.
The purchase of starch by laundries and "sizing" by dry
				  cleaners is not exempt from tax.
(2) The sale of property that is a container,
				label, or similar article or receptacle for transfer in association with the
				maintenance or repair of fabric or clothing is exempt from tax. In general, the
				sale of any article that protects dry-cleaned or laundered clothing from dirt
				or helps the dry-cleaned or laundered clothing to maintain its proper shape or
				form in the same fashion as a container does would be exempt from tax under
				this subrule. By way of nonexclusive example, the sale of plastic garment bags,
				which protect clothing from dirt, is exempt from tax. The sale of "shirt
				boards" and garment hangers, both of which help clothing to maintain its proper
				shape, would also be exempt.
A container, label, or similar article's sale is exempt from
				  tax only if the item is transferred to the customer of a commercial laundry,
				  dry cleaner, or other retailer. Thus, "bundle bags" and "Meese carts," used to
				  transfer or transport clothing within a dry-cleaning establishment, are not
				  subject to the exemption because these bags and carts remain with the dry
				  cleaner and are not transferred to a customer.
Concerning labels, the sale of which would be exempt from
				  tax, these labels must be affixed to the dry-cleaned or laundered clothing and
				  transferred to the customer of the dry-cleaning or laundering establishment. By
				  way of nonexclusive example, the sale to dry cleaners of "special attention,"
				  "invoice" and "sorry" tags would be exempt from tax.
The sale of safety pins and other types of clips used to hang
				  skirts and other garments from hangers would not be exempt from tax. These
				  items do not sufficiently resemble containers or labels to the extent that
				  their sale is exempt from tax.
This rule is intended to implement Iowa Code sections
				  423.3(45)  and
				  423.3(51).