Elimination of Exemption for Insurance Companies, Financial Institutions, and Commercial Enterprises
Previously, Iowa Code section 423.3(47)(a)(4) provided an exemption from sales and use tax on “[c]omputers used in processing or storage of data or information by an insurance company, financial institution, commercial enterprise.” See also Iowa Administrative Code rule 701—215.18 (2023). These entities are defined in Iowa Code section 423.3(47)(d).
The 2022 legislature struck this exemption (see Section 41 of 2022 Iowa Acts, Senate File 2367) effective January 1, 2024.
Certain entities may be eligible for other exemptions on certain purchases.
Expanded Exemption for Central Office Equipment and Transmission Equipment
The sales and use tax exemption for the sale of certain central office equipment or transmission equipment has been amended effective July 1, 2026. See 2026 Iowa Acts, House File 960.
Previously, Iowa Code section 423.3(47A)(a) provided an exemption from sales and use tax on central office equipment and transmission equipment primarily used by certain entities engaged in furnishing telecommunications services on a commercial basis.
Effective July 1, 2026, “primary” use is no longer required. Beginning July 1, 2026, central office equipment and transmission equipment is exempt from sales and use tax when used in the in the furnishing of telecommunications services, internet access services, or a combination of these, on a commercial basis by any of the following entities:
- Local exchange carriers and competitive local exchange service providers;
- Franchised cable television operators, mutual companies, municipal utilities, cooperatives, and companies furnishing communications services that are not subject to rate regulation as provided in Iowa Code chapter 476;
- Long distance companies as defined in Iowa Code section 477.10; or
- Providers of commercial mobile radio service as defined in 47 C.F.R. section 20.3
“Central office equipment” means equipment utilized in the initiating, processing, amplifying, switching, or monitoring of telecommunications services. “Central office equipment” also includes ancillary equipment and apparatus which support, regulate, control, repair, test, or enable such equipment to accomplish its function.