Iowa Administrative Code › Agency 701 - Revenue Department › Title III - Sales, Use, and Excise Tax › Chapter 284 - Exempt Sales › Rule 701-284.37 - Temporary Exemption From Sales Tax on Certain Utilities

Current through Register Vol. 47, No. 3, July 24, 2024
Effective February 5, 2001, the sales of specific energy
				  sources are exempt from Iowa sales tax. Specified sales of energy are exempt
				  from local option taxes as well; see rule
				  701-107.9 (422B).
This exemption is not applicable to electricity, regardless
				  of whether the electricity is used for heat. Electricity charges on utility
				  bills will continue to be subject to Iowa sales and local option taxes. This
				  exemption does not impact franchise fees. Franchise fees will continue to be
				  imposed where applicable.
(1)
Definitions.
The following definitions are applicable to this
				rule:
"Fuel"
means a liquid source of energy for a
				  residential dwelling, individual apartment unit, or condominium. "Fuel"
				  includes propane, heating fuel, and kerosene. However, "fuel" does not include
				  blended kerosene used as motor fuel or special fuel.
"Heat"
means to increase or maintain the
				  temperature of a residential dwelling, apartment unit, or condominium. Due to
				  metered gases and fuels being used for other purposes in the dwelling, such as
				  clothes dryers, gas stoves, and hot water heaters, this temporary exemption for
				  metered gas used for heating purposes will also be extended to metered gases
				  and fuels used for appliances in the residential dwelling, individually metered
				  apartment unit, or individually metered condominium.
"Metered gas"
means natural gas that is
				  billed based on metered usage to provide energy to a residential dwelling,
				  individually metered apartment unit, or individually metered
				  condominium.
"Residential dwelling"
means a structure
				  used exclusively for human occupancy. This does not include commercial or
				  agricultural structures, nor does it include nonresidential buildings attached
				  to or detached from a residential dwelling, such as a detached garage or
				  outbuilding. However, a garage attached to the residential dwelling that is
				  used strictly for residential purposes will fall within the exemption. Also
				  excluded from this exemption are classified commercial facilities. Classified
				  commercial facilities include, but are not limited to, nursing homes, adult
				  living facilities, assisted living facilities, halfway houses, charitable
				  residential facilities, YMCA residential facilities, YWCA residential
				  facilities, apartment units not individually metered, and group homes.
(2)
Metered gas
				exemption.
Effective February 5, 2001, the gross receipts from the
				sale, furnishing or service of metered gas for residential customers which is
				used to provide energy to residential dwellings, individually metered apartment
				units, and individually metered condominiums, and that has a billing date of
				March 2001 or April 2001, are exempt from sales tax.
a.
Billing date
				determinative.
The determining factor for exemption for metered gas is
				the billing date for the metered gas. The exemption applies only to bills for
				metered gas which are dated in March 2001 or April 2001.
If a billing for the same usage period needs to be billed
				  more than once due to loss of the original bill or some other error, the
				  billing date of the original bill controls qualification for exemption of
				  metered gas. For example, a utility company issues a billing for metered gas on
				  January 8, 2001, and customer A loses the billing. Customer A calls the utility
				  company in late February and requests that a new billing be issued. The utility
				  company issues a replacement billing to customer A and the replacement bill has
				  a date of March 3, 2001. The date of the original billing issued to customer A
				  is determinative for the purpose of qualifying for the exemption. The fact that
				  a previously taxable billing was reissued during an exemption period does not
				  qualify the reissued billing for the exemption.
b.
Qualifying usage.
All
				metered gas billed to a residential customer during March 2001 and April 2001,
				which will be used as energy for a residential dwelling, individually metered
				apartment unit, or individually metered condominium as defined in this rule,
				qualifies for exemption. This exemption includes metered gas used to operate
				heating units, appliances, and hot water heaters.
c.
Qualifying structures.
Structures that include both residential and commercial usage on the same meter
				are subject to a proration formula to obtain the qualifying portion eligible
				for exemption. To qualify for proration, the structure must be used for both
				commercial and residential purposes. The purchaser must furnish an exemption
				certificate to the supplier with respect to that percentage of metered gas that
				is eligible for exemption. See 701-subrule 15.3(2). The exemption certificate
				must be in writing and detail how the percentages of exempt residential usage
				and taxable nonresidential usage were developed. For example, a gift shop, Miss
				Barb's Bangles and Baubles, is located on the town square of Indianola, Iowa.
				Above the gift shop is an apartment. The gas usage of the apartment and the
				gift shop are monitored by one gas meter. The metered gas usage for the
				apartment is exempt, but usage for the gift shop is not. As a result, a
				proration formula must be established to separately reflect the metered gas
				usage of the apartment and the gift shop. In addition, the occupant of the
				apartment must provide an exemption certificate to the metered gas utility
				company to request the exemption. Approved exemption certificates are available
				upon request from the department.
It is important to note that the exemption for metered gas is
				  limited to metered gas provided to residential customers. Consequently, a
				  building containing apartment units is not considered to be residential.
				  Instead, if it is classified as commercial property for property tax or any
				  other purpose it is not eligible for exemption unless each apartment has a
				  separate meter to monitor usage.
d.
Credit.
A utility company
				that sells, furnishes or services metered gas to residential customers may bill
				customers sales tax even if the customer qualifies for the exemption from sales
				tax under this subrule in March and April 2001 if the utility company cannot
				adjust its billing process in time to accommodate this exemption. Subsequently,
				the utility company must provide a credit for tax collected from a qualifying
				utility customer during the exemption period and the credit is to appear on the
				first possible billing date after March 31, 2001.