Iowa Admin. Code r. 701-219.3

Current through Regsiter Vol. 46, No. 26, June 12, 2024

Rule 701-219.3 - Sales of building materials, supplies, and equipment to contractors, subcontractors, builders or owners

Suppliers or dealers that sell materials and supplies to contractors, subcontractors, builders or owners are required to collect Iowa sales tax from those persons based upon the sales price from such sales. Reference 701-subrule 19.12(5), which deals with construction contracts with designated exempt entities, for an explanation of one of the few exceptions to this requirement. The fact that a contractor, subcontractor, or builder holds an Iowa retail sales tax permit and has a tax number does not entitle that person to purchase building materials, supplies and equipment without paying sales tax to the vendor See rules 219.2(423) and 219.4(423). Materials purchased out of state for use in Iowa are subject to the Iowa use tax which is payable in the quarter that the materials are delivered into the state.

(1)Building materials. The term "building materials" as used in this rule means materials used in construction work, and is not limited to materials used in constructing a building with sides and covering. The term may also include any type of materials used for improvement of the premises or anything essential to the completion of a building or structure for the use intended.State v. James A. Head & company, Inc., 306 So. 2d 5 (Ala. 1974).

(2)Building supplies. The term "building supplies" as used in this rule means anything that is furnished for and used directly in the carrying on of the work of an owner, contractor, subcontractor or builder and which is used or consumed by the contractor Such items do not have to enter into and become a physical part of the structure like building materials, but they do become as much a part of the structure as the labor which is performed on it.United States Fidelity & Guaranty Co. v. Feenaughty Machinery Co., 85 P.2d 1085, 197 Wash. 569.

(3)Typical items. While not intended to be inclusive, the following is a list of typical items regarded as building materials and supplies:

Asphalt

Bricks

Builders' hardware

Caulking material

Cement

Central air conditioning

Cleaning compounds

Conduit

Doors

Ducts

Electric wiring, connections, and switching devices

Fencing materials

Flooring¹

Glass

Gravel

Insulation

Lath

Lead

Lighting fixtures

Lime¹

Linoleum

Lubricants

Lumber

Macadam

Millwork

Modular and mobile homes

Mortar

Oil

Paint

Paper

Piping, valves, and pipe fittings

Plaster

Plates and rods used to anchor masonry foundations

Plumbing supplies

Polyethylene covers

Power poles, towers, and lines

Putty

Reinforcing mesh

Rock salt

Roofing

Rope

Sand

Sheet metal

Steel

Stone

Stucco

Tile

Wallboard

Wall coping

Water conditioners

Weather stripping

Windows

Window screens

Wire netting and screen

Wood preserver

(4)Building equipment. The term "building equipment" as used in this rule means any vehicle, machine, tool, implement or other device used by a contractor in erecting structures for others, or reconstructing, altering, expanding or remodeling property of others which does not become a physical component part of the property upon which work is performed, and which is not necessarily consumed in the performance of such work. "Building equipment" includes, but is not limited to, such items as:

Compressors

Drill presses

Electric generators

Forms

Hand tools

Lathes

Replacement parts for equipment

Scaffolds

Tools

Vehicles including grading, lifting and excavating vehicles

Construction equipment purchased by a contractor which is intended for use in the performance of an Iowa construction contract is subject to the Iowa sales or use tax. Equipment which is rented for use on or in connection with an Iowa construction contract would normally be rented subject to tax. See rule 219.21(423) for an explanation of the existing exemption in favor of rented machinery used by a contractor on a job site.

¹Floor coverings which are shaped to fit a particular room or area and which are attached to the supporting floor with cement, tacks or tack strips or by some other method making a permanent attachment are considered to be building materials. Reference rule 701-16.48(422,423) for an exception concerning carpeting. Carpeting (whether attached to the floor or not) is not treated as a building material for the purposes of this chapter Rugs, mats and linoleum types of floor coverings which are not attached but which are simply laid on finished floors are also not considered to be building materials.

Iowa Admin. Code r. 701-219.3