This rulemaking implements the excise tax on electric fuel, enacted by the Iowa Legislature in 2019 Iowa Acts, House File 767, that will become effective July 1, 2023. These rules provide guidance as to what entities need to obtain a license to sell or dispense electric fuel either as a user, dealer, or both. Several changes were made to the Notice of Intended Action for these rules, ARC 6921C. Read more about those changes in the rule filing.
Pursuant to Part IV of Executive Order 10, the Department proposed this Notice of Intended Action in light of the concerns received after the official public comment period for ARC 6577C and the effective date of the new rule implementing the taxable service of commercial recreation. The Department is rescinding rule 701—216.3(423) and replacing it with the text previously found in rule 701—26.24(422), with minor updates for consistency with other administrative rules. No changes were made from the Notice of Intended Action for this rulemaking.
The Iowa Legislature enacted a sales tax exemption for diapers in 2022 Iowa Acts, Senate File 2367, division II, which took effect January 1, 2023. New Iowa Code section 423.3(109) specifically exempts from sales tax “[t]he sales price from the sale of a child or adult diaper, whether cloth or disposable.” This adopted rule defines “diaper” in accordance with the definition adopted by the Streamlined Sales Tax Governing Board, of which Iowa is a member state. No changes were made to ARC 6920C.
The Department previously adopted rule 701—215.2(423) to implement an exemption found in Iowa Code section 423.3(49) for manufacturers of “marketable food products for human consumption.” Senate File 2367, division VIII, amended that exemption, such that it now applies to manufacturers of “food or food ingredients.” The Department has amended the rule implementing that exemption so that it conforms to the statutory change. The Department made changes from ARC 6924C to clarify that a business that cannot claim this exemption may still be able to claim other exemptions in the law.
As part of an ongoing effort to review and revise its rules, the Department rescinds Chapters 19 and 287. There is one rule in Chapter 19 that was not replicated in Chapter 219 on construction contracts with designated exempt entities. This rulemaking provides an updated version of that rule to be located in Chapter 219. In addition, the Department is renumbering rule 701—14.3(423) to include it in Chapter 203 and is rescinding and reserving 701—Chapter 14 since it no longer has any rules.
The Department adopted this rulemaking to replace its longstanding chapter of rules on services subject to sales tax. Chapter 26 includes several out-of-date elements that prompted this rulemaking: references to terms such as “gross receipts” rather than “sales price” and references to Iowa Code sections that have been repealed for several years. In addition to these mostly non substantive revisions, the Department adopted three substantive changes to current rules in Chapter 26 on machine operators, mini-storage, and commercial recreation.
This rulemaking reorganizes the Department's chapters of rules related to sales, use, and excise taxes. This rulemaking moves any sales or excise tax chapters that will be kept mostly intact substantively into new chapters. Any sales or use tax chapters not being moved in this rulemaking are likely to be significantly revised or rescinded entirely in future rulemakings. View the rulemaking for a table that lists existing chapters and identifies their new chapter numbers. This rulemaking rescinds Chapter 16 and adopts some of those rules in a new chapter.
Pursuant to 2022 Iowa Acts, Senate File 2367, the Department proposes this rulemaking to replace its existing chapters of rules related to permits, filing returns, and payments of sales and use taxes. The Department will no longer refer to different use tax obligations as “consumer’s use tax” and “retailer’s use tax”; those terms are being replaced by references to “purchases subject to use tax” and “sales subject to use tax,” respectively. See the rule filing for highlighted updates and additions to the Department's rules from Chapters 12 and 13 to the new Chapters 201 and 202.
This rulemaking amends subrule 68.2(1) to adjust the excise tax rate on biodiesel blended fuel rated B-11 or higher from 30.4¢ per gallon (ending June 30, 2022) to 30.1¢ per gallon (beginning July 1, 2022), pursuant to the formula prescribed by Iowa Code section 452A.3. The distribution percentage for biodiesel blended fuel rated B-11 or higher for calendar year 2021 is 57.75 percent, a decrease from the 2020 distribution percentage of 61.49 percent.
The Department has several chapters of rules that implement a variety of sales tax administrative procedures set forth in Iowa Code chapter 423. This rule making updates those chapters to make a variety of non substantive changes and also amends rules in other chapters to update affected cross-references.