Sales Tax Exemption for Car Washes

As of May 25, 2012 a new sales tax exemption came in effect for items used by car washes.

The following items are exempt:
• Chemicals, solvents, sorbents or reagents (soaps, waxes, sealants or drying agents)
• Water and electricity
o 100% of the electricity and water purchased for stand-alone vehicle wash and wax facilities will be used for the exempt vehicle wash and wax service.
o For businesses such as convenience stores, gas stations, automobile dealerships, etc. that provide vehicle wash and wax services, the best solution is to have separate meters for the water and electricity used in the vehicle wash and wax service. If not possible, determine and document a reasonable basis for the exempt percentage of water and electricity.

Retailers need to submit a completed Iowa Sales Tax Exemption Certificate. The purchaser should indicate that it is doing business as a “Retailer” and for the “reason purchaser is claiming exemption” retailers should check “Other” and indicate “Car Wash Exemption.”