This spring, the Iowa legislature enacted an Iowa sales tax exemption for grain bins, which Governor Reynolds signed into law on May 3, 2019. This exemption is found in House File 779 and will be effective July 1, 2019.
The new language in Iowa law is:
Iowa Code Section 423.3, Code 2019
NEW SUBSECTION. 16A. a. The sales price from the sale of a grain bin, including material or replacement parts used to construct or repair a grain bin.
b. For purposes of this subsection, “grain bin” means property that is vented and covered with corrugated metal or similar material, and that is primarily used to hold loose grain for drying or storage.
The Department of Revenue will issue an official guidance document this summer. In conversations with the Department, its informal interpretation is that the sales tax exemption will apply to “anything permanently attached” to the bin; in other words, items that would not be “moved from bin to bin.” Examples include floors and augers.
A few important notes:
- For any Iowa-based dealers who are currently under audit, or have issues related to use tax versus sales tax, Sukup can connect you with the Iowa Department of Revenue to discuss and hopefully resolve the issue. You are welcome to email Rachel at email@example.com
- The change goes into effect July 1, 2019. All sales tax rules apply up until July 1 and need to be paid and remitted to the state.
- The location where the customer receives the product determines the sales tax location.
- If an order is picked up in Sheffield, with dealer’s truck /vehicle, then no Iowa sales tax would be charged after July 1, 2019.
- If an order is shipped via common carrier or Sukup truck from Sheffield, then sales tax would be charged per the shipping destination.
- Several Sukup dealers in Iowa were instrumental in contacting legislators and providing a personal story about how this change would make a positive impact for them and for bin dealers around the state. A huge THANK YOU to them for getting involved and being part of successfully passing this law!
- Also, we know that not every dealer’s operations are the same. If you are looking for external tax advice on this issue, you can contact Brad Hershberger and Joel Anderson at RSM. They can assist you with your company’s specific facts and circumstance regarding sales and purchases of our product and how Iowa’s sales and use tax are properly applied, if you engage them to do so. You can reach them at 515-558-6677.
Individuals from Sukup have been actively working to make grain bins tax-free in Iowa for several years, and we are very pleased to see this positive change made for our dealers who sell to Iowa farmers and customers!