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Iowa Exemption for Items Used by Car Washes

  • Oct 5, 2012 | Gail Cole

As of May 25, 2012, there is a new sales and use tax exemption for car washes on the books in Iowa.

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:

  • soaps
  • sealants
  • drying agents
  • waxes

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.

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Sales tax rates, rules, and regulations change frequently. Although we hope you'll find this information helpful, this blog is for informational purposes only and does not provide legal or tax advice.
Gail Cole
Avalara Author
Gail Cole
Gail Cole
Avalara Author Gail Cole
Gail began researching and writing about sales tax in 2012 and has been fascinated with it ever since. She has a penchant for uncovering unusual tax facts, and endeavors to make complex sales tax laws more digestible for both experts and laypeople.