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Iowa Department of Revenue Announces Re-Write of Water Excise Tax Rules for Manufactured Housing Community - August 15, 2018

As discussed in previous posts, Iowa’s new Water Excise Tax (WET) took effect on July 1, 2018. The Iowa Department of Revenue’s (IDoR) stated position regarding the applicability of WET has had a substantially negative impact on Iowa’s manufactured housing communities.


Accordingly, over the last few months, many of us in the industry have discussed our concerns with the IDoR and explained to the IDoR the negative impact and difficulty in complying with WET for manufactured housing communities. In particular, numerous owners of individual manufactured housing communities, those of us who represent such communities, and Joe Kelly of the Iowa Manufacturing Housing Association coordinated our communication efforts and submitted written comments and objections to the IDoR regarding the proposed rules (my own letter of objection to the IDoR).


I am pleased to report that the IDoR listened to the concerns raised, which is great news for the industry. In a meeting of the Iowa Rules Review Committee on Tuesday, August 14, the Iowa Department of Revenue announced it would be rewriting the WET rules as they apply to the manufactured housing community industry. We are cautiously optimistic as we await the publishing of the revised rules.


From the IDOR comments regarding their decision to rewrite rules, we anticipate:

  • Parks who purchase their water service from a city or other water utility/supplier, and do not submeter or otherwise charge their residents for the water distributed to them, can carry on as they did when sales tax applied. These parks will continue to pay WET (formerly sales tax) to the city /water utility for the water, but the parks themselves will not be subject to WET. Instead, the cities and water suppliers will remain responsible for collecting the new water excise tax.  The IDoR has stated, “water utilities who purchase their water service from another water utility are deemed the ‘end user’ of the water service unless they separately itemize and bill water service separately to their customers.”
  • Parks that purchase water and then itemize and charge their residents for water service will still be affected and covered by WET.

The effect of the revised rules on parks that do not fall into either of the above categories is somewhat unclear. When the revised rules are published, we will provide another update. Let me know if you have any questions.