Iowa Admin. Code r. 701-211.17
"Machine" includes but is not limited to typewriters, computers, calculators, cash registers, and manufacturing machinery and equipment. "Machine" does not include telephones, automobiles, or airplanes.
"Machine operator" is a person who manages, controls, and conducts a mechanical device or a combination of mechanical powers and devices used to perform a function and produce a certain result or effect.
EXAMPLE 1: Employee A is hired to perform data entry on a computer for A's employer. While Employee A is performing the service of a machine operator, because Employee A is performing the service directly for A's employer, A's service is not subject to sales tax.
EXAMPLE 2: Through a temporary employment agency, Worker B performs data entry on a computer for Company Z. Company Z pays a set per-hour fee for data entry services. Worker B is performing the service of a machine operator, not directly for Company Z but for the temporary employment agency. Company Z must pay sales or use tax on the fee imposed by the temporary employment agency. Rule 701-211.23 (423) contains information about the service of private employment agencies.
EXAMPLE 3: Through a temporary employment agency, Worker C performs telemarketing services for Company X. Because Worker C is operating a telephone, which is not considered a machine for purposes of this rule, Company X would not pay sales or use tax on the fee imposed by the temporary employment agency.
EXAMPLE 4: Company Y hires Lawyer D through a temporary employment agency. Lawyer D spends most of the work time performing legal research and writing memoranda, both of which are done at a computer. Lawyer D is not a machine operator just because Lawyer D uses a computer. Lawyer D was hired by Company Y to perform legal services. Lawyer D's use of the computer is incidental to the legal services Lawyer D was hired to perform.
EXAMPLE 5: Company X hires Employee A as a purchaser. In this role, Employee A procures materials for Company X, negotiates and manages purchasing agreements, and communicates with vendors. To perform these job duties, Employee A spends the majority of working hours on a computer. Employee A is not a machine operator, because the central function of the job is as a purchaser and the computer use is incidental to the performance of job duties.
This rule is intended to implement Iowa Code section 423.2(6)"ad."
Iowa Admin. Code r. 701-211.17