On December 21, 2009 the Director issued a Declaratory Order in response to a Petition submitted by the Petitioner requesting a determination by the Director regarding four issues. The Petitioner designs, manufactures, sells at retail, installs, and repairs walk-in coolers, refrigerated display cases and other equipment used by grocery stores, quick shops and other merchants to store refrigerated or frozen foods. All the equipment which the Petitioner manufacturers, sells, or installs is affixed to the real estate to one degree or another.
The Petitioner presented four issues to the Director for resolution. First the Petitioner inquires if the equipment which it installs remains tangible personal property after installation or does that equipment become a fixture, a part of the real estate? The Director declined to answer this question citing its highly and variably factual nature. The Petitioner then asked, assuming the equipment becomes a fixture after installation, are the installation and repair of this equipment taxable services? The Director replied that, assuming the equipment became a fixture, any taxable services performed during the installation would be exempt from tax, but any taxable repair services would remain taxable. The Petitioner next asked that if the equipment it installs becomes real property should they charge sales tax on an invoice to the Petitioner’s customers or would the Petitioner be liable for use tax? The Director answered the first portion of the question, stating that the Petitioner could not charge tax on any invoice to a customer. The Director declined to answer the second portion of the question for lack of information as whether the Petitioner was or was not a manufacturer. The Petitioner’s fourth and final question asked if “selling or installing” equipment which becomes real estate had a tax consequence different from merely “installing” that same equipment. The Director replied that there is a difference. A person who was installing the equipment only would have no obligation to collect or pay Iowa tax. A person who is installing and selling equipment could have various tax obligations depending upon whether that person was a contractor or manufacturer.
The Petitioner has 60 days from the date of issuance to appeal this Declaratory Order if it chooses. Otherwise, the decision reached in this Declaratory Order will become effective February 19, 2010