Many businesses in Iowa qualify for a property tax exemption for machinery that is used in the process of manufacturing products. The local county or city assessor is required to exempt manufacturing machinery from taxation. However, the assessor often fails to properly exempt the equipment. Therefore, it is important for manufacturers to review their property tax statement. A tax statement should itemize each piece of equipment and show if the assessor is taxing any machinery that may qualify for the exemption.
Iowa Code Sections 427B.17 and 427A.1 state that machinery used in manufacturing establishments shall be exempt from taxation. The terms “manufacturer,” “manufacturing establishment” and “machinery” are all separately defined in the Iowa Code and Iowa Administrative Code.
“Manufacturer” is defined in Iowa Code Section 428.20 as follows:
A person who purchases, receives, or holds personal property of any description for the purpose of adding to its value by a process of manufacturing, refining, purifying, combining of different materials, or by the packing of meats, with a view to selling the property for gain or profit, is a “manufacturer” for the purposes of this title.
If your business qualifies as a “manufacturer”, then the machinery used in the manufacturing process is exempt from taxation. In order to receive the exemption, you will need to file a tax protest to the local board of review on or after April 2, to and including April 30, of the year of assessment. You may also request an informal review by the assessor of your property tax assessment. A request for informal review must be submitted on or after April 2, to and including April 25, of the year of assessment.
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