Administrative Orders

Petitioner, a CPA firm, requested a declaratory order to determine whether installment payments from sales that occurred prior to January 1, 2023 qualify for the capital gain deduction for sales of certain stock under Iowa Code section 422.7(42). The Director refused to issue a Declaratory Order because the issue presented is better suited for a rulemaking due to the broad applicability of the answer and is trying to establish the effect of prior conduct instead of planning future conduct. Additionally, the question presented would potentially determine the income tax liabilities of the clients of Petitioner and not Petitioner itself, making the clients necessary parties who have not consented in writing to the determination of the issue by a Declaratory Order.

Petitioner, a South Dakota research company, requested a determination on whether two of its services, corn breeding and yield trial testing, are services subject to sales tax. The Petitioner further inquired on how to source its services for Iowa sales tax purposes. The Director determined that Petitioner’s service of yield trial testing is a service subject to sales tax pursuant to Iowa Code section 423.2(6)(bc) while its service of corn breeding is not a service subject to sales tax. The Director further determined that sales of Petitioner’s yield trial testing shall be sourced according to the rules found in Iowa Code section 423.15(1).

Petitioner, a contracting firm, requested a declaratory order to determine whether installation charges for qualified manufacturing equipment, either new or used, are required to be separately stated to be exempt from sales tax and whether one lump sum charge renders the total charge taxable or exempt. The Director found that under Iowa Code section 423.3(48) and Iowa Administrative Code rule 701—215.22, only the installation of new industrial machinery or equipment is exempt from sales tax. Further, if there is one lump-sum charge for both exempt and non-exempt equipment and installation, that amount would be subject to tax because the new equipment is not separately identified and charged.

Petitioner, a franchise dealer operating a sauna studio business, requested a declaratory order to determine whether the use of the infrared saunas provided at Petitioner’s studio is a service subject to Iowa sales tax pursuant to Iowa Code section 423.2(6). The Director found that the services offered by Petitioner meet the definitions of 'commercial recreation,' 'Turkish baths,' and 'reducing salons.' As a result, those services are subject to Iowa sales tax pursuant to Iowa Code 423.2(6)(v) and (bg) and the applicable administrative rules. As such, Petitioner is required to collect and remit sales tax for those services.

Petitioner, a franchise dealer, requested a declaratory order to determine whether cleaning and maintenance services provided by another entity, which is under audit, are taxable as janitorial services pursuant to Iowa Code section 423.2(6) and Iowa Administrative Code rule 701—211.37(423). The Director refused to issue a Declaratory Order because the question presented is the subject of an audit of another entity and an order would determine the legal rights, duties, or responsibilities of this third party. Furthermore, the question presented could be more properly resolved through other proceedings

Taxpayer appealed an Administrative Law Judge’s (ALJ) decision upholding the Department’s denial of the taxpayer’s claim for refund of sales tax as the claim was filed after all of the limitation periods provided in Iowa Code section 423.47. After review, the Director affirmed the ALJ’s decision on the basis that the taxpayer’s claim was filed beyond all of the possible prescribed limitation periods stated in Iowa Code section 423.47 and the statute provides no authority to waive or grant exception to the stated limitation periods to allow for a refund.

Petitioner, a health maintenance organization, is subject to Iowa's gross premium tax on insurance companies but does not pay the tax due to an exemption. Petitioner asks whether they are considered an insurance company as the term is used in Iowa Code section 422.34 which would exempt them from Iowa corporate income tax. The Director found that Petitioner is considered an insurance company as that term is used in Iowa Code section 422.34 and therefore, is exempt from Iowa corporate income tax.

The Administrative Law Judge held that the Department did not err in including social security payments in calculating Taxpayer’s income for purposes of determining rent- reimbursement eligibility. Therefore, the ALJ affirmed the Department’s denial of Taxpayer’s claim for rent reimbursement. Neither party appeal the proposed decision of the ALJ; therefore, it became the Department’s final order under Iowa Administrative Code rule 701-7.19(8)(d).

Petitioner, a nonresident entity, entered into an agreement with an Iowa excursion gambling boat to run their online sportsbook, including serving as its withholding agent. Petitioner asked if it is required to withhold Iowa income tax on payments of sports wagering winnings. The Director found that Petitioner is required to withhold Iowa income tax on sports wagering winnings received by nonresidents, but not on sports wagering winnings received by Iowa resident pursuant to Iowa Code section 422.16.