Iowa Admin. Code r. 701—215.10(423) — Exclusive web search portal business and its exemption

A business that qualifies as a web search portal business that has a physical location in Iowa and that meets specific criteria may obtain an exemption from sales and use tax on specific purchases that are used in the operation and maintenance of the web search portal business. This exemption from sales and use tax also applies to the affiliates of a qualifying web search portal business. 215.10(1) Definitions. For the purpose of this exemption, “affiliate,” “control,” and “web search portal business” mean the same as defined in Iowa Code section 423.3(92)“e.” 215.10(2) Claiming the exemption. Iowa Code section 423.3(92)“b” provides the criteria to claim this exemption. If a business fails to meet the investment qualification found in Iowa Code section 423.3(92) “d,” the web search portal business loses the right to claim the exemption and the business is required to pay all sales or use taxes that would have been due on the purchase or rental of all purchases previously claimed exempt from sales and use tax, plus any and all applicable statutory penalty and interest due on the tax. 215.10(3) Exempt purchases. Sales and leases of the following are exempt from sales and use tax when sold or leased to a qualifying web search portal business: a. Computers and equipment that are necessary for the maintenance and operation of the web search portal business; b. All equipment used for the operation and maintenance of the cooling system for the computers and equipment used in the operation of the web search portal; c. All equipment used for the operation and maintenance of the cooling towers for the cooling system referenced in paragraph 215.10(3)“b”; d. All equipment used for the operation and maintenance of the temperature control infrastructure for the computers and equipment used in the operation of the web search portal; e. All equipment used for the operation and maintenance of the power infrastructure that is used for the transformation, distribution, or management of electricity used for the operation and maintenance of the web search portal. This equipment includes, but is not limited to, exterior dedicated business-owned power substations, backup power generation systems, battery systems, and related infrastructure; f. All equipment used in the racking system, including cabling and trays; g. Fuel purchased by the web search portal business that is used in the backup power generation system and in all items listed in paragraphs 215.10(3)“a” through “f.” This provision includes the fuel used in backup generators that may be located outside of the building that are used if power is interrupted to ensure the web search portal continues operation; and h. Electricity purchased for use in operating the web search portal. Revenue 215.10(4) Limitation of exemption. The purchases or leases of the items listed in subrule 215.10(3) are only exempt if the items being purchased or leased are being used in the operation or maintenance of the web search portal business. Such purchases or leases will not be exempt from sales or use tax if the item is to be used in the business for another purpose not related to operations or maintenance. Examples of items included in this limitation include but are not limited to: a. Electricity not used for operation or maintenance, such as in the office or employee break room; b. Tangible personal property used in areas of the web search portal facility that is not used for operation or maintenance, such as cleaning equipment and supplies; c. Building materials that become part of real property, such as concrete, steel or roofing; and d. Tangible personal property that becomes part of real property, such as a dishwasher. 215.10(5) Initial date of exemption. The exemption from sales and use tax begins on and after the date of the initial investment in or the initiation of site preparation activities for the facility that will contain the qualifying web search portal business.