New Sales Tax Exemption for
Items Used by Car Washes

Iowa Acts 2012 Senate File 2342, effective May 25, 2012, created a new sales and use tax exemption for "[t]he sales price from the sales of water, electricity, chemicals, solvents, sorbents, or reagents to a retailer to be used in providing a service that includes a vehicle wash and wax, which vehicle wash and wax service is subject to section 423.2, subsection 6." Because this exemption became effective upon enactment, the Department is providing the following guidance for retailers and utilities in advance of actual rulemaking.

What Items Are Exempt?

Claiming the Exemption

To claim the exemption, retailers should submit to their suppliers and water and electricity providers a completed Iowa Sales Tax Exemption Certificate: http://www.iowa.gov/tax/forms/31014.pdf

The Exemption Certificate should indicate the purchaser is doing business as a "Retailer." For the "reason purchaser is claiming exemption," retailers should check the "Other" box and indicate "Car Wash Exemption."