I charge a minimum cost for water service, regardless of use. Is that cost subject to WET?Yes, the minimum charge for water service is subject to WET. WET is an excise tax on the provision of water service, not only on the metered sale of water. If the minimum charge is for the service itself, then it is subject to WET., I currently sell water service to my customers, not as a separate item. Am I required to collect and remit WET?I currently sell water service to my customers, not as a separate item. Am I required to collect and remit WET?Yes, you are still subject to WET. Beginning July 1, 2018, water utilities must separate WET from sales tax for collection and remittance to the Department beginning July 1, 2018. By January 1, 2019, WET must be separately itemized and stated on all bills and receipts, and must be identified separately from any other taxes collected, if any. The Department will not monitor how water utilities decide to separately collect and remit WET prior to January 1, 2019., I do not currently collect sales tax for the sale of water service. Must I now collect WET?It depends. Only sales of water service for compensation by certain entities (see “Who is required to collect” above) are subject to WET. Any sales of water service that are 1) sold for an itemized price or 2) separately identifiable on bills, receipts, etc. are subject to WET. Water service that is incidental to the rental of real property or freely available to the public at no cost or compensation with no requirement that users be customers is not subject to WET.Example: Campground A charges $10 per night for its campsites, which includes access to water service. Campground A only grants access to that water for paying customers. Campground A is therefore making sales of water service for compensation, and must separately collect and remit WET on that portion of the $10 per-night campsite fee that is charged for water service.Example: Campground B charges $10 per night for its campsites, and on the premises provides access to water service for the public; any member of the public, whether they are a paying customer or not, may use the water service as desired. No portion of Campground B’s $10 per-night campsite fee would be subject to WET.Where water service is provided in connection with the rental of real property, such as with an apartment unit or lot in a manufactured housing community, water service is not furnished for compensation if the inclusion of water service is incidental to the rental. For example, lot or unit rental prices do not change based on whether water service is included in the rental and water service is not otherwise listed for an itemized or identifiable price on a rental agreement or monthly bill.Example: An apartment owner purchases water from a city water utility and distributes the water to each unit through a system of pipes. The city meters the apartment owner’s use of water each month and charges the apartment owner for the water service. The apartment owner separately bills each of the tenants $40 per month for water service, including the cost of water and maintenance on the water distribution system. The apartment owner is a water utility and must collect and remit water service excise tax on the $40 monthly charge for water service. Importantly, the apartment owner may purchase the water from the city tax exempt as a sale for resale.Example: A Manufactured Housing Community (MHC) owner owns a well and pipes water to the lots. The MHC owner charges tenants $500 per month for each lot rental. Water from the well is included in the $500 rental charge. The MHC owner does not charge a flat water fee, does not charge tenants based on their actual water used, and does not offer comparable lots at a lower price that do not have access to water service. The MHC owner is not required to collect or remit water service excise tax because water is not being furnished for compensation; it is incidental to the rental of real property., I have a sales tax exemption certificate. I am now also exempt from paying WET. Can I use this certificate?If you are exempt from WET, then an exemption certificate must be on file with the seller. An existing, valid Iowa Sales Tax Exemption Certificate which is currently on file is acceptable. However, if the reason for exemption has changed, you will need to complete a new exemption certificate. The current Iowa Sales Tax Exemption Certificate can be found on our website., Is WET an additional tax on top of sales and use tax for water service?No. WET replaces the sales and use tax for sales of water service only., Is WET subject to the Local Option Sales Tax (LOST)?No. There is no LOST on the WET., I should have been collecting tax on the sale of water piped for compensation previously but I didn't. What should I do?You should apply for a Sales Tax Permit and file past returns with your sales information and the amount of tax due. You should also pay any tax, penalty, and interest that is due. You may be a candidate to utilize our voluntary disclosure program. View more information about the Voluntary Disclosure Program., My sales of water service were previously exempt from sales tax. Are my sales of water service still exempt from WET?All of the sales tax exemptions found in Iowa Code section 423.3 that applied to the sale of water service apply to WET.

Question

I charge a minimum cost for water service, regardless of use. Is that cost subject to WET?Yes, the minimum charge for water service is subject to WET. WET is an excise tax on the provision of water service, not only on the metered sale of water. If the minimum charge is for the service itself, then it is subject to WET.,  I currently sell water service to my customers, not as a separate item. Am I required to collect and remit WET?I currently sell water service to my customers, not as a separate item. Am I required to collect and remit WET?Yes, you are still subject to WET. Beginning July 1, 2018, water utilities must separate WET from sales tax for collection and remittance to the Department beginning July 1, 2018. By January 1, 2019, WET must be separately itemized and stated on all bills and receipts, and must be identified separately from any other taxes collected, if any. The Department will not monitor how water utilities decide to separately collect and remit WET prior to January 1, 2019.,  I do not currently collect sales tax for the sale of water service. Must I now collect WET?It depends. Only sales of water service for compensation by certain entities (see “Who is required to collect” above) are subject to WET. Any sales of water service that are 1) sold for an itemized price or 2) separately identifiable on bills, receipts, etc. are subject to WET. Water service that is incidental to the rental of real property or freely available to the public at no cost or compensation with no requirement that users be customers is not subject to WET.Example: Campground A charges $10 per night for its campsites, which includes access to water service. Campground A only grants access to that water for paying customers. Campground A is therefore making sales of water service for compensation, and must separately collect and remit WET on that portion of the $10 per-night campsite fee that is charged for water service.Example: Campground B charges $10 per night for its campsites, and on the premises provides access to water service for the public; any member of the public, whether they are a paying customer or not, may use the water service as desired. No portion of Campground B’s $10 per-night campsite fee would be subject to WET.Where water service is provided in connection with the rental of real property, such as with an apartment unit or lot in a manufactured housing community, water service is not furnished for compensation if the inclusion of water service is incidental to the rental. For example, lot or unit rental prices do not change based on whether water service is included in the rental and water service is not otherwise listed for an itemized or identifiable price on a rental agreement or monthly bill.Example: An apartment owner purchases water from a city water utility and distributes the water to each unit through a system of pipes. The city meters the apartment owner’s use of water each month and charges the apartment owner for the water service. The apartment owner separately bills each of the tenants $40 per month for water service, including the cost of water and maintenance on the water distribution system. The apartment owner is a water utility and must collect and remit water service excise tax on the $40 monthly charge for water service. Importantly, the apartment owner may purchase the water from the city tax exempt as a sale for resale.Example: A Manufactured Housing Community (MHC) owner owns a well and pipes water to the lots. The MHC owner charges tenants $500 per month for each lot rental. Water from the well is included in the $500 rental charge. The MHC owner does not charge a flat water fee, does not charge tenants based on their actual water used, and does not offer comparable lots at a lower price that do not have access to water service. The MHC owner is not required to collect or remit water service excise tax because water is not being furnished for compensation; it is incidental to the rental of real property.,  I have a sales tax exemption certificate. I am now also exempt from paying WET. Can I use this certificate?If you are exempt from WET, then an exemption certificate must be on file with the seller. An existing, valid Iowa Sales Tax Exemption Certificate which is currently on file is acceptable. However, if the reason for exemption has changed, you will need to complete a new exemption certificate. The current Iowa Sales Tax Exemption Certificate can be found on our website.,  Is WET an additional tax on top of sales and use tax for water service?No. WET replaces the sales and use tax for sales of water service only.,  Is WET subject to the Local Option Sales Tax (LOST)?No. There is no LOST on the WET.,  I should have been collecting tax on the sale of water piped for compensation previously but I didn't. What should I do?You should apply for a Sales Tax Permit and file past returns with your sales information and the amount of tax due. You should also pay any tax, penalty, and interest that is due. You may be a candidate to utilize our voluntary disclosure program.  View more information about the Voluntary Disclosure Program.,  My sales of water service were previously exempt from sales tax. Are my sales of water service still exempt from WET?All of the sales tax exemptions found in Iowa Code section 423.3 that applied to the sale of water service apply to WET.

Accepted Answer

I charge a minimum cost for water service, regardless of use. Is that cost subject to WET?Yes, the minimum charge for water service is subject to WET. WET is an excise tax on the provision of water service, not only on the metered sale of water. If the minimum charge is for the service itself, then it is subject to WET.,  I currently sell water service to my customers, not as a separate item. Am I required to collect and remit WET?I currently sell water service to my customers, not as a separate item. Am I required to collect and remit WET?Yes, you are still subject to WET. Beginning July 1, 2018, water utilities must separate WET from sales tax for collection and remittance to the Department beginning July 1, 2018. By January 1, 2019, WET must be separately itemized and stated on all bills and receipts, and must be identified separately from any other taxes collected, if any. The Department will not monitor how water utilities decide to separately collect and remit WET prior to January 1, 2019.,  I do not currently collect sales tax for the sale of water service. Must I now collect WET?It depends. Only sales of water service for compensation by certain entities (see “Who is required to collect” above) are subject to WET. Any sales of water service that are 1) sold for an itemized price or 2) separately identifiable on bills, receipts, etc. are subject to WET. Water service that is incidental to the rental of real property or freely available to the public at no cost or compensation with no requirement that users be customers is not subject to WET.Example: Campground A charges $10 per night for its campsites, which includes access to water service. Campground A only grants access to that water for paying customers. Campground A is therefore making sales of water service for compensation, and must separately collect and remit WET on that portion of the $10 per-night campsite fee that is charged for water service.Example: Campground B charges $10 per night for its campsites, and on the premises provides access to water service for the public; any member of the public, whether they are a paying customer or not, may use the water service as desired. No portion of Campground B’s $10 per-night campsite fee would be subject to WET.Where water service is provided in connection with the rental of real property, such as with an apartment unit or lot in a manufactured housing community, water service is not furnished for compensation if the inclusion of water service is incidental to the rental. For example, lot or unit rental prices do not change based on whether water service is included in the rental and water service is not otherwise listed for an itemized or identifiable price on a rental agreement or monthly bill.Example: An apartment owner purchases water from a city water utility and distributes the water to each unit through a system of pipes. The city meters the apartment owner’s use of water each month and charges the apartment owner for the water service. The apartment owner separately bills each of the tenants $40 per month for water service, including the cost of water and maintenance on the water distribution system. The apartment owner is a water utility and must collect and remit water service excise tax on the $40 monthly charge for water service. Importantly, the apartment owner may purchase the water from the city tax exempt as a sale for resale.Example: A Manufactured Housing Community (MHC) owner owns a well and pipes water to the lots. The MHC owner charges tenants $500 per month for each lot rental. Water from the well is included in the $500 rental charge. The MHC owner does not charge a flat water fee, does not charge tenants based on their actual water used, and does not offer comparable lots at a lower price that do not have access to water service. The MHC owner is not required to collect or remit water service excise tax because water is not being furnished for compensation; it is incidental to the rental of real property.,  I have a sales tax exemption certificate. I am now also exempt from paying WET. Can I use this certificate?If you are exempt from WET, then an exemption certificate must be on file with the seller. An existing, valid Iowa Sales Tax Exemption Certificate which is currently on file is acceptable. However, if the reason for exemption has changed, you will need to complete a new exemption certificate. The current Iowa Sales Tax Exemption Certificate can be found on our website.,  Is WET an additional tax on top of sales and use tax for water service?No. WET replaces the sales and use tax for sales of water service only.,  Is WET subject to the Local Option Sales Tax (LOST)?No. There is no LOST on the WET.,  I should have been collecting tax on the sale of water piped for compensation previously but I didn't. What should I do?You should apply for a Sales Tax Permit and file past returns with your sales information and the amount of tax due. You should also pay any tax, penalty, and interest that is due. You may be a candidate to utilize our voluntary disclosure program.  View more information about the Voluntary Disclosure Program.,  My sales of water service were previously exempt from sales tax. Are my sales of water service still exempt from WET?All of the sales tax exemptions found in Iowa Code section 423.3 that applied to the sale of water service apply to WET.

Water Service Excise Tax

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Water Service Excise Tax

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I charge a minimum cost for water service, regardless of use. Is that cost subject to WET?

I currently sell water service to my customers, not as a separate item. Am I required to collect and remit WET?

I do not currently collect sales tax for the sale of water service. Must I now collect WET?

I have a sales tax exemption certificate. I am now also exempt from paying WET. Can I use this certificate?

Is WET an additional tax on top of sales and use tax for water service?

Is WET subject to the Local Option Sales Tax (LOST)?

I should have been collecting tax on the sale of water piped for compensation previously but I didn't. What should I do?

My sales of water service were previously exempt from sales tax. Are my sales of water service still exempt from WET?