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Iowa Sales Tax FAQ&A

Does it matter if the dealer or the supplier cancels a supplier agreement for the Iowa Dealer Protection Law to be applicable?

At the 2021 Iowa legislative session, INEDA added verbiage to the dealer protection law to clarify theintent of the law that regardless of which party
cancels a dealer/supplier agreement, the law abides. “If a dealership agreement is terminated by cancellation or nonrenewal by either the dealer or supplier, the supplier must repurchase equipment and parts in the dealer’s inventory and must repurchase special tools and computer hardware or software required for the dealership.”

Would a non-profit hospital be sales tax exempt for parts and labor in Iowa?

Yes. There is a box on the sales tax exemption form for non-profit hospitals. Make sure to get it completed and signed. There are three types of exempt hospitals in the state of Iowa:

  1. Government-owned and operated hospitals, including VA and county (Broadlawns)
  2. Non-profit hospitals, such as Unity Point and Mercy
  3. Native American or Tribal-owned hospitals, which get a special exemption
Are churches and nonprofit organizations exempt from tax in Iowa?

Nonprofit entities, churches and religious organizations are not automatically exempt from paying state sales tax on taxable goods and services. This is true even if these entities remain exempt from the payment of state and federal income taxes. State sales tax must be paid unless some other general sales tax exemption applies. Local option sales tax must also be paid on purchases made in jurisdictions that impose the tax.

In other words, a nonprofit corporation, church or other religious organization is treated the same as any other private citizen for sales and use tax purposes when purchasing goods and taxable services at retail.

However, sales of items to any private nonprofit educational institution used for educational purposes are exempt. An “educational institution” means an institution that primarily functions as a school, college, or university with students, faculty, and an established curriculum. The faculty of an educational institution must be associated with the institution, and the curriculum must include basic courses that are offered every year. “Education institution” also includes an institution primarily functional as a library. When tangible personal property or services are shared by a parochial school and church, the primary use determines if the purchase is taxable.

Can a manufacturer cancel my contract due to sales performance or market share in Iowa?

A written termination notice must specify each deficiency constituting good cause for the action. The notice must also state that the dealer has 60 days to cure a specified deficiency. If the deficiency is cured within 60 days from the date that the notice is delivered, the notice is void. However, if the deficiency is based on a dealer’s inadequate representation of a manufacturer’s product relating to sales, as provided in section 322F.1, the notice must state that the dealer has 18 months to cure the deficiency. If the deficiency based on inadequate representation of a manufacturer’s product relating to sales is cured within 18 months from the date that notice is delivered, the notice is void.

Do I need a contractor to sign the Iowa Sales Tax Exemption form if claiming construction equipment for the local option sales tax exemption?

Yes. Check the “other” box under the section “Purchaser is doing business as a:” and write in either contractor, subcontractor, or builder. Under the section “Purchaser is claiming exemption for the following reason:” check the “other” box and write in “Qualifying self-propelled building equipment or parts under Section 422B.8 and Section 422E.3.” Also write in the description of the purchase.

What is the biggest item I need to know about the Wayfair ruling?

You need to know the number of transactions and sales volume thresholds of each state you are selling equipment into. If you exceed the thresholds, you are required to report and collect/remit sales tax. This requires someone in the dealership to track sales and know the thresholds. A good source for these thresholds is https://www.streamlinedsalestax.org/

Is the sale of a wheel leader to a co-op sales tax exempt in Iowa?

It depends on the application. When used in ag production in the field (loading fertilizer, lime, etc.) or in the manufacturing process, it is exempt from sales tax. When it is used on the premise to move material, fertilizer, grain, etc. it is taxable.

Nebraska Sales Tax FAQ&A

Is baler twine subject to sales tax in Nebraska?

Yes, as long as the farmer or rancher is feeding the hay to their own livestock. If the hay is being harvested and is for sale, the twine may be purchased sales tax exempt. See also the next Q&A on net wrap. 

Is net wrap subject to sales tax in Nebraska?

Beginning on October 1, 2022, net wrap will be exempt from sales tax. State Senator Julie Slama’s original bill was amended into and passed in LB 984.

Is there an over-width exemption for hauling farm equipment in Nebraska?

Yes. In Nebraska, a farm equipment dealer may haul over-width equipment anywhere in the state during daylight hours as long as you are on a two-lane highway or road. The transportation of the over-width equipment must be in the normal course of a farm equipment dealer doing business. A farm equipment dealer may pass this exemption to a contract carrier with proper documentation.

Do farm tractors, combines and implements have to abide by axle weight limitations identified by the Nebraska Department of Transportation?

Mostly no. INEDA and several other organizations worked to pass LB977 in the 2016 session of the Nebraska Unicameral. This bill provided for a complete exemption from axle load limitations on farm tractors and implements being driven on or towed on Nebraska roadways, as long as they are not on the Interstate Highway System. There is an exception, though. Local municipalities and counties are allowed to restrict travel of such equipment on sections of roadway that are vulnerable during certain times of the year—specifically, during spring thaw when road foundations may become compromised. This restriction is limited in length of time to 180 days. Also, load limitations on bridges and culverts must still be maintained.

Do oil and oil filters qualify for the sales tax exemption for ag repair and replacement parts in Nebraska?

Yes. Because these items are in or on the originally purchased machine that qualified for the ag sales tax exemption, the items also qualify for the exemption. This would also include grease and gear lube.

Do header trailers and seed tenders qualify for the ag sales tax exemption in Nebraska?

With the passage of LB 595, these items will gratify for the ag sales tax exemption beginning October 1, 2021.

Is seed flow lubricant or “talc” subject to sales tax in Nebraska?

Yes. Since this item was not installed in or on the originally purchased machine that qualified for an ag sales tax exemption, the item does not qualify for the sales tax exemption.

Are all tractors sold in Nebraska required to have a permit issued by the Nebraska Tractor Test Lab?

All tractors 100 PTO horsepower and above must have a permit to be sold in Nebraska. While tractors under 100 PTO horsepower may be sold without a permit, they will not qualify for the ag sales tax exemption. However, any under 100 PTO horsepower tractor that does acquire a permit will qualify for the ag sales tax exemption if the tractor is used in production agriculture.

Do farm tractors, combines, and implements in Nebraska have to abide by axle weight limitations identified by the Nebraska Department of Transportation?

Mostly no. The Association and several other organizations worked to pass LB977 in the 2016 session of the Nebraska Unicameral. This bill provided for a complete exemption from axle load limitations on farm tractors and implements being driven on or towed on Nebraska roadways, as long as they are not on the Interstate Highway System. There is an exception though. Local municipalities and counties are allowed to restrict travel of such equipment on sections of roadway that are vulnerable during certain times of the year, specifically, during spring thaw when road foundations may become compromised. This limitation is limited in time length to 180 days. Also, load limitations on bridges and culverts must still be maintained.