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Legal Issues


New Information RE: WET Itemization and Billing for Manufactured Housing Communities - July 26, 2018

A few weeks ago, we provided various details on Iowa’s new Water Excise Tax (WET) that became effective on July 1, 2018. Herein, we have new information to provide based upon our most recent discussions with the Iowa Department of Revenue (IDOR) regarding the itemization and billing requirement under WET.


Such discussions arose due to the concerns expressed by many of our manufactured housing community clients and association members regarding the lack of clarity in the statute regarding billing and the frequency and method by which the water service charge and 6% WET must be itemized. In particular, we discussed with the IDOR the administrative and financial burden that many communities would face if monthly water service bills had to be sent out within all communities regardless of each community’s current billing practices. Thus, the Davis Brown Law Firm engaged in follow-up conversations with the IDOR about these concerns, as well as about more practical methods for communities to satisfy the itemization/billing requirement of WET. IDOR’s position on the itemization/billing requirement after those conversations is set forth below.


For manufactured housing communities that already itemize and bill monthly for water service, those landlords must now note on their monthly invoices the dollar amount of the 6% WET charged on that water service charge.


Conversely, for manufactured housing communities that currently do not bill monthly for water service and/or do not send out any monthly bills/invoices whatsoever, the IDOR has now agreed that those communities can merely provide a one-time notification to residents notifying them of the amount of the water charge residents are paying per month and the amount of WET being collected on the water portion of the rent. This notification can also be satisfied with a provision in the lease. To satisfy the new law, the water charge and WET tax should be shown as part of, and broken out of, the total monthly rental amount the resident pays.


For example, below is an appropriate breakdown for a $400.00 lot rental amount that would satisfy the new WET law and could be set forth in the aforementioned one-time notification. The below example assumes that the landlord has reasonably determined that a $40 monthly water service charge is the appropriate charge:

Rent:

$357.60

Water:

$40.00

6% WET:

$2.40

Monthly Payment:

$400


Finally, please note that the proposed administrative rules for WET have now been published for comment. The deadline for public comment is 4:30 PM on August 7, 2018.


Landlords with questions about how to comply with WET should contact an attorney for more information. We will continue to discuss the implementation of the legislation with the Iowa Department of Revenue and provide more clarifications as they become available.