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 701-285.47 - Maintenance or Repair of Fabric or Clothing

Current through Register Vol. 47, No. 3, July 24, 2024
(1) As of July 1, 1987, sales of chemicals,
				solvents, sorbents, or reagents consumed in the maintenance or repair of fabric
				or clothing are exempt from tax. See 701-subrule 17.14(1) for definitions of
				the terms "chemical, solvent, sorbent or reagent." This subrule's exemption is
				mainly applicable to dry-cleaning 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 which 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: perchloroethlyene
				  "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) Also, on and after July 1, 1987, the sale
				of property which 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 which 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 Division IV of Iowa Code
				  chapter 422.