Temporary Labor Service Transactions Used in Processing

Topics:

Sales, Use & Excise Tax

Certain enumerated temporary labor services may qualify as tax-exempt services used in processing under Iowa Code section 423.3(50) and Iowa Administrative Code rule 701-215.3.

In order to facilitate the review of filed refund claims and to expedite the correct determination of the tax-exempt status of temporary labor service transactions, please include the following information when submitting requests for refunds of the tax paid on temporary labor services (IA 843 Refund Return (22-009):

  1. Copies of the signed contract executed by the taxpayer and the temporary labor agency contracted during the refund claim period.
  2. Copies of the job descriptions, type of work requested, specific duties to be performed, skills required, and any other requirements provided to the temporary labor agency at the initial contract execution stage and every time temporary labor services are ordered by the taxpayer.
  3. Verifiable proof of each temporary laborer’s actual title (e.g., Managed Resource With System Access [used by Wells Fargo Home Mortgage]); the equivalent job title for a direct employee, if different (e.g., Loan Servicing Specialist); and evidence that temps and employees perform comparable duties on a comparable scope for a particular job title, (e.g., a supervisor’s affidavit under penalty of perjury).

At any time during its review of the refund claim, the Department may also request the following items in order to correctly determine the tax-exempt status of temporary labor services:

  1. Description of taxpayer’s process flow, including charts, diagrams or any visual aids.
  2. Identification of where along its process flow system taxpayer uses the temporary labor services.
  3. Written copies of each order placed with the temporary labor agencies.
  4. Listing and contact information for the immediate supervisor of the temporary laborers, department managers, and any other taxpayer employee responsible for controlling the day-to-day activities of the temporary laborers.
  5. Copies of time cards, time sheets, or any other attendance records for each temporary laborer.
  6. Copies of the general ledger accounts where each temporary labor service invoice is costed.
  7. Copies of performance evaluations or other performance-measurement records maintained by taxpayer for the temporary laborers it orders.