Iowa Exemption for Items Used by Car Washes
- Oct 5, 2012 | Gail Cole
Iowa Acts 2012 Senate File 2342 exempts:
"[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."
Items that could qualify for the new exemption include but are not limited to:
- drying agents
Stand-alone Car Washes
The Iowa Department of Revenue presumes 100% of electricity and water purchased by a stand alone car wash will qualify for the exemption.
Car Washes Combined with Other Businesses
When a car wash is part of another business, such as a gas station or convenience store, "the Department's presumption is that less than 100% of the water and electricity purchased will be used in the vehicle was and wax service." Separate meters are suggested as the "best solution."
Where there are not separate meters, "the retailer should determine and document a reasonable basis for the exempt percentage of water and electricity."
Businesses must complete an Iowa Sales Tax Exemption Certificate to claim the exemption.