Iowa Administrative Code › Agency 701 - Revenue Department › Title III - Sales, Use, and Excise Tax › Chapter 219 - Sales and Use Tax on Construction Activities › Rule 701-219.7 - Prefabricated Structures

Current through Register Vol. 47, No. 3, July 24, 2024
(1)
Basic concepts and general rules.
A "prefabricated structure" is any structure assembled in a factory
				and capable of transport to the location where it will be used in the
				performance of a construction contract by placement on a foundation either by
				the buyer or a designated contractor The term "prefabricated structure"
				includes a "modular home" as defined in rule
				701-23111. (423), a
				mobile home whether or not sold subject to the issuance of a certificate of
				title, "manufactured housing" (reference definition in rule
				701-3310.
				(423)), sectionalized housing, precut housing packages, and panelized
				construction. With a few major exceptions (see subrule 219.7(2) regarding the
				"60 percent rule" and reference rule
				701-3310.
				(423) regarding the taxation of manufactured housing while it is real
				property), the sales and use tax treatment of prefabricated structures
				generally follows the treatment of construction materials, that is, tax is due
				when those structures are sold to or used by owners, contractors,
				subcontractors, or builders. Sales of prefabricated structures which have not
				been erected on a foundation are considered sales of tangible personal property
				and thus are taxable at the time of retail sale. The usual basis for computing
				sales or use tax is the purchase price charged to a consumer or user by the
				seller of a prefabricated structure.
Custom Built Homes Co. v. Kansas
				State commission of Revenue and Taxation,
184 Kan. 31, 334 P.2d 808
				(1959). Sales or use tax is due on the full purchase price when a prefabricated
				structure is delivered under a contract for sale or sold for use in
				Iowa.
Dodgen Industries Inc. v. Iowa State Tax commission,
160
				N.W.2d 289 (Iowa 1968).
(2)
Exceptions to the general rules.
There are a number of
				exceptions to the general rules stated above in 219.7(1). Those exceptions are
				applicable to modular and mobile homes and manufactured housing. They are
				explained as follows:
a.
Modular
				homes.
Only 60 percent of the sales price from the sale of a modular
				home is subject to Iowa tax. See rule
				701-23111. (423).
				This 60 percent rule is applicable only to a "modular home" as that phrase is
				defined in rule
				701-23111. (423)
				and not to other types of prefabricated structures which do not meet the
				definition of the term "modular home" such as sectionalized housing or
				panelized construction. Also, the 60 percent rule is not applicable to the sale
				of materials used in the assembly of a modular home, only to the sale of the
				finished product.
b.
Mobile homes and manufactured housing.
Iowa use tax and not Iowa sales
				tax is imposed on mobile homes or manufactured housing sold subject to the
				issuance of a certificate of title, and, similar to 219.7(2) "a" above, use tax
				is imposed only upon 60 percent of the purchase price of these mobile homes or
				manufactured housing. Reference rule
				701-323.
				(423). All mobile homes sold in Iowa or sold outside Iowa for use in this state
				are sold subject to Iowa use tax, whether sold for placement within or outside
				a mobile home park; see 2005 Iowa Code chapter 423 and Iowa Code chapter
				435.