1. Except as provided in paragraph “b”, an excise tax at the rate of six percent of the purchase price or installed purchase price is imposed on the following:

 a. The use in this state of tangible personal property as defined in section 423.1, including aircraft subject to registration under section 328.20, purchased for use in this state. For the purposes of this subchapter, the furnishing or use of the following services is also treated as the use of tangible personal property: optional service or warranty contracts, except residential service contracts regulated under chapter 523C, vulcanizing, recapping, or retreading services, engraving, printing, or binding services, and communication service when furnished or delivered to consumers or users within this state.
 b. An excise tax at the rate of five percent is imposed on the use of vehicles subject only to the issuance of a certificate of title and the use of manufactured housing, and on the use of leased vehicles, if the lease transaction does not require titling or registration of the vehicle, on the amount subject to tax as calculated pursuant to section 423.26, subsection 2.
 c. Purchases of tangible personal property or specified digital products made from the government of the United States or any of its agencies by ultimate consumers shall be subject to the tax imposed by this section. Services purchased from the same source or sources shall be subject to the service tax imposed by this subchapter and apply to the user of the services.
 d. The use in this state of services enumerated in section 423.2. This tax is applicable where the service is first used in this state.
 e. (1) The use in this state of specified digital products. The tax applies whether the purchaser obtains permanent use or less than permanent use of the specified digital product, whether the use is conditioned or not conditioned upon continued payment from the purchaser, and whether the use is on a subscription basis or is not on a subscription basis.

 (2) The use of a digital code that may be used to obtain or access a specified digital product shall be taxed in the same manner as the specified digital product. For purposes of this subparagraph, “digital code” means the same as defined in section 423.2, subsection 10.

Terms Used In Iowa Code 423.5

  • aircraft: means the same as defined in section 328. See Iowa Code 423.3
  • Certificate of title: means a certificate of title issued for a vehicle or for manufactured housing under chapter 321. See Iowa Code 423.1
  • Department: means the department of revenue. See Iowa Code 423.1
  • Evidence: Information presented in testimony or in documents that is used to persuade the fact finder (judge or jury) to decide the case for one side or the other.
  • following: when used by way of reference to a chapter or other part of a statute mean the next preceding or next following chapter or other part. See Iowa Code 4.1
  • in this state: includes but is not limited to sales sourced to this state under this chapter. See Iowa Code 423.1
  • Installed purchase price: includes but is not limited to amounts charged for installing a foundation and electrical and plumbing hookups. See Iowa Code 423.1
  • Lease: A contract transferring the use of property or occupancy of land, space, structures, or equipment in consideration of a payment (e.g., rent). Source: OCC
  • Manufactured housing: means "manufactured home" as defined in section 321. See Iowa Code 423.1
  • Person: means an individual, trust, estate, fiduciary, partnership, limited liability company, limited liability partnership, corporation, or any other legal entity. See Iowa Code 423.1
  • Personal property: All property that is not real property.
  • Personal property: includes but is not limited to tangible personal property and specified digital products. See Iowa Code 423.1
  • property: includes personal and real property. See Iowa Code 4.1
  • Purchase: means any transfer, exchange, or barter, conditional or otherwise, in any manner or by any means whatsoever, for a consideration. See Iowa Code 423.1
  • Purchaser: is a person to whom a sale of personal property is made or to whom a service is furnished. See Iowa Code 423.1
  • Retailer: includes a seller obligated to collect sales or use tax, including any person obligated to collect sales and use tax pursuant to section 423. See Iowa Code 423.1
  • Services: means all acts or services rendered, furnished, or performed, other than services used in processing of tangible personal property for use in retail sales or services, for an employer who pays the wages of an employee for a valuable consideration by any person engaged in any business or occupation specifically enumerated in section 423. See Iowa Code 423.1
  • Specified digital products: means electronically transferred digital audio-visual works, digital audio works, digital books, or other digital products. See Iowa Code 423.1
  • State: means any state of the United States, the District of Columbia, and Puerto Rico. See Iowa Code 423.1
  • Subscription: means any arrangement in which a person has the right or ability to access, receive, use, obtain, purchase, or otherwise acquire tangible personal property, specified digital products, or services on a permanent or less than permanent basis, regardless of whether the person actually accesses, receives, uses, obtains, purchases, or otherwise acquires such tangible personal property, specified digital product, or service. See Iowa Code 423.1
  • Tangible personal property: includes electricity, water, gas, steam, and prewritten computer software. See Iowa Code 423.1
  • United States: includes all the states. See Iowa Code 4.1
  • Use: means and includes the exercise by any person of any right or power over or access to tangible personal property or a specified digital product incident to the ownership of that property, or any right or power over or access to the product or result of a service. See Iowa Code 423.1
  • Use tax: means the tax levied under subchapter III of this chapter. See Iowa Code 423.1
  • User: means the immediate recipient of the personal property or services who is entitled to exercise a right or power over or access to the personal property, or the product or result of such services. See Iowa Code 423.1
 2. The excise tax is imposed upon every person using the property within this state until the tax has been paid directly to the county treasurer, the state department of transportation, a retailer, or the department. This tax is imposed on every person using the services or the product of the services in this state until the user has paid the tax either to an Iowa sales or use tax permit holder or to the department.
 3. For the purpose of the proper administration of the use tax and to prevent its evasion, evidence that tangible personal property or specified digital products were sold by any person for delivery in this state shall be prima facie evidence that such tangible personal property or specified digital products were sold for use in this state.
 4. The use tax rate of six percent is reduced to five percent on January 1, 2051.
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