Docket No. 07-30-6-0244
On February 25, 2008, the Director issued a Declaratory Order in response to a Petition submitted by the Petitioner requesting a determination by the director regarding the taxability of various items of tangible personal property and services performed by the Petitioner. The Petitioner is a construction company and often provides specific portions of a construction contract for the building and installation of fuel storage and dispensing systems. Consequently, the Petitioner installs various items of tangible personal property and the Petitioner requests that the Director rule on whether specific items remain tangible personal property after installation or if they become part of the realty. In addition, the Petitioner has asked if the services provided by the Petitioner are subject to Iowa sales tax.
The Director's Order states that the sale and installation of property in Iowa by the Petitioner along with the Petitioner performing various services as part of the installation, may be taxable or exempt from Iowa sales and use tax depending on the circumstances in which the contract is performed, how the contract components are billed, and if the claiming of an exemption may be claimed by the customer of the Petitioner pursuant to Iowa Code sections 423.2(2007) and 423.3(2007) and department rules 701 IAC 19.1 and 19.9. The tank monitoring system is not considered to be an exempt purchase of a computer as defined in department rule 701 IAC 18.58. In addition, a contract for construction and the sale of equipment by a contractor is considered to be a “mixed contract” under Iowa sales tax law and the sale of the equipment by the Petitioner to the customer would be subject to Iowa sales and use tax.