On Monday, August 10, 2020, much of Iowa experienced a derecho, which produced, in some places, 100+ miles per hour wind.
Obviously, this storm resulted in much damage to structures throughout Iowa. Most likely, these structures will be rebuilt and repaired. Due to an exemption in Iowa law, charges for rebuilding of these structures and associated repairs made in response to damage caused by the Iowa derecho should not contain sales tax.
Under Iowa law, repairs of real property are subject to sales tax. Iowa Code § 423.2(6). “A repair contemplates an existing structure . . . which has become imperfect and constitutes the restoration to a good and sound condition.” Iowa Admin. Code r. 701—219(13)(1). Services performed on structures in response to the derecho would seem to fall within the definition of “repair.” However, Iowa Admin. Code r. 701—219.(13)(2) defines as exempt new construction the rebuilding of a structure damaged by a “flood, fire or other uncontrolled disaster or casualty,” thereby carving out such activities from the definition of a taxable repair. Moreover, any repair service performed “on or connected with” new construction is exempt from sales tax. Iowa Admin. Code r. 701—219.13(3).
Thus, assuming the Iowa derecho is classified as an uncontrolled disaster or casualty, most services used to rebuild and repair the structures damaged by the storm should be exempt from sales tax.