The Petitioner is in the process of building a new development center in Iowa. The construction contract for the facility was entered into prior to January 1, 2003. Currently, the contractor is paying Iowa sales tax on building materials utilized in the construction project. The Petitioner wishes to know if it can obtain a refund of the sales tax paid the building materials.
The Petitioner is licensed as a day care center by the Department of Children and Family Services for the state of Illinois and its early childhood programs have received accreditation from the National Association for the Education of Young Children and NAEYC Academy for Early Childhood Program through May, 2003. Recent contact with the Petitioner's representative provided that the Petitioner is waiting on a validator for accreditation to visit the Petitioner for continuance of the accreditation. To date, the validator has not yet arrived. However, the Petitioner does not anticipate any difficulties with having the Petitioner's accreditation continued.
The goal of the Petitioner's business is to educate children. To effectuate this goal, the Petitioner has developed extensive curriculums for children of various ages. The curriculums are developed by staff, area educators, board members and parents. The curriculums utilize the Illinois Early Learning Standards that were developed by the Illinois State Board of Education and are used as a guide in developing preschool curriculum in the state of Illinois. The curriculums offered by the Petitioner are age appropriate and are offered every year to students. The curriculums are designed to help each child develop and learn in a wide variety of areas.
The Petitioner annually evaluates all of the teachers and assistants employed by the Petitioner. Staff is rated on their interaction with the children, parents and compliance with the curriculum standards and Outcome Studies. Students at the Petitioner's facility are also evaluated for curriculum progress.
The issue presented by the Petitioner is whether the Petitioner qualifies as a private educational institution for the purposes of an exemption from Iowa sales tax pursuant to Iowa Code sections 422.45(7) and (8).
The fact that the Petitioner provides "daycare" for its students as well as education does not hinder the Petitioner from being classified as an educational institution, if the elements of an educational institution are primary and can be met. The Petitioner is a nonprofit organization and has a staff, students and curriculum that is offered regularly. The primary function of the Petitioner's facility is education. As a result, the Director's has ruled that as long as the Petitioner obtains a continuation of the Petitioner's educational accreditation, the Petitioner qualifies as a private nonprofit educational institution for the purposes of Iowa Code sections 422.45(7) and (8). Accordingly, the Petitioner will be, upon validation of accreditation, entitled to an exemption from Iowa sales and use tax on purchases made by the Petitioner for educational purposes and the Petitioner is entitled to a refund of Iowa sales tax paid by a purchasing party under a construction contract for an educational facility.