December 19, 2012

Sent via e-mail

Des Moines International Airport

Re: Motor Fuel Tax—Airport Authority.

The Department received your inquiry regarding whether the Des Moines International Airport Authority (“Authority”) is qualified for the Motor Fuel Tax refund. After reviewing the facts you provided and the relevant law, it appears the Authority does not qualify for the Motor Fuel Tax refund.

An aviation authority may be established by one or more municipalities under the provisions of Iowa Code section 330A. In your inquiry you explained that in November 2011, pursuant to Chapter 330A, the City of Des Moines (“City”) made the Des Moines International Airport an independent aviation authority and separated its governance and financial operations from the City of Des Moines (“City”). You explained that pursuant to Iowa Code chapter 330A, this was done by ordinance and the Authority’s governing board was appointed by the elected council members of the City.

The Authority purchases vehicles and fuel in its own name. When the Authority was established, it was required to obtain its own Federal ID#, which led City and Authority staff to the decision that fuel tax refunds for Authority-related use should no longer be included on the City’s Motor Fuel Tax refund permit. Now you seek a Motor fuel Tax refund permit for the Authority.

Iowa Code section 452A.17 describes the types of entities that qualify for the Motor Fuel Tax refund. The statute states in relevant part:

The refund is allowable for motor fuel or undyed special fuel sold directly to and used for the following:

…

(3) A regional transit system. the state, any of its agencies, any political subdivision of the state, or any benefited fire district which is used for a purpose specified in section 452A.57, subsection 11, or for public purposes, including fuel sold for the transportation of pupils of approved public and nonpublic schools by a carrier who contracts with the public school under section 285.5.

Iowa Code § 452A.17(a) (emphasis added). At issue is whether the Authority meets the definition of a “political subdivision”.

The Department rules further explain the requirements for a refund. Department rule 701 IAC 68.8(3) states in relevant part:

The refund is not available to agencies or instrumentalities of a political subdivision, but rather only to the state of Iowa, agencies of the state of Iowa, and political subdivisions of the state of Iowa. The general attributes and factors in determining if an entity is a political subdivision of the state of Iowa are: (a) the entity has a specific geographic area, (b) the entity has public officials elected at public elections, (c) the entity has taxing power, (d) the entity has a general public purpose or benefit, and (e) the foregoing attributes, factors or powers were delegated to the entity by the state of Iowa. (1976 Iowa Op. Att’y Gen. 823)

(Emphasis added).

Therefore, to qualify for the exemption, the Authority must be a political subdivision; it is not sufficient to be an agency or instrumentality of a political subdivision. The Department has held that all of the attributes stated in Department rule 701 IAC 68.8(3) must be met in order to be considered a political subdivision. In re Area XIV Agency on Aging (1983), docket no. 81-264-4-RC. Therefore, if the Authority fails to meet any one attribute, the analysis ends. One of the required attributes is public officials elected at public elections. 701 IAC 68.8(3). Per Iowa Code chapter 330A, the Authority’s governing board was appointed by the Des Moines City Council. Therefore, the Authority does not meet the requirements of a political subdivision. The Authority likely fails to meet other required attributes, however, further analysis is not necessary to resolve this issue.

As a result, the Authority is not eligible for the Motor Fuel Tax refund.

I hope this information is of assistance to you. Please be advised that this letter is an informal opinion and is only applicable to the factual situation referenced and to the statutes in existence at the time of issuance. The Department could, in the future, take a position contrary to that stated in the letter. Any written advice or opinion rendered to members of the public by Department personnel that is not pursuant to a Petition for Declaratory Order under 701 IAC 7.24 is not binding upon the Department. If you have any additional questions regarding this matter, please do not hesitate to contact me.

Sincerely,

Alana Stamas

Policy Section

Taxpayer Services and Policy Division

Iowa Department of Revenue

(515) 725-2265

alana.stamas@iowa.gov