Must the City of Ames collect Iowa sales tax on mandatory residential recycling collection?

Plain-English summary

Ames did not have to collect sales tax on the residential recycling collection described in its petition.

The city planned to begin a mandatory recycling program for residential properties with fewer than five units. Aspen Waste would collect the recyclables, while the city handled billing.

Iowa generally taxes solid-waste collection and disposal. But Iowa Code § 423.2(7)(b) exempts the cost of collecting and managing recyclable materials when the waste generator has separated them from solid waste. Because Ames residents would separate the recyclables before Aspen Waste collected them, the Department found the program exempt.

What this means for you

Cities and waste-service providers

Document whether residents or other waste generators separate recyclable material before collection. That fact drove the exemption here.

Property owners and residents

The order addressed the city's described mandatory program; it did not declare every recycling or waste charge exempt.

Tax professionals

Separate charges and facts involving ordinary solid-waste collection from charges limited to collecting and managing generator-separated recyclables.

Common questions

Q: Is solid-waste collection generally taxable in Iowa?
A: Yes. The order cites Iowa Code § 423.2(7)(a) and Iowa Administrative Code rule 701—211.29(1).

Q: Why was this recycling program exempt?
A: Residents generated the waste and separated the recyclable material before Aspen Waste collected it.

Q: Did it matter that Ames handled the billing?
A: The order described the city as handling billing, but the stated exemption rested on the separated-recyclables rule.

Citations and references

• Iowa Code § 423.2(7)(a) — tax on solid-waste collection and disposal service
• Iowa Code § 423.2(7)(b) — exemption for collecting and managing generator-separated recyclables
• Iowa Administrative Code rule 701—211.29(1) — solid-waste collection and disposal service

Source

• Landing page: https://revenue.iowa.gov/resources/law-policy-information/administrative-orders
• Archive document link: https://revenue.iowa.gov/media/4520/download?inline
• Original PDF: https://documents.iowa.gov/home/PreviewDocument/10586297

Original ruling text

BEFORE THE IOWA DEPARTMENT OF REVENUE
HOOVER STATE OFFICE BUILDING
DES MOINES, IOWA
IN THE MATTER OF
CITY OF AMES
515 CLARK AVE
AMES IA 50010-6135
SALES/USE/EXCISE

DECLARATORY ORDER
DOCKET NO. 1335179

Pursuant to a Petition for Declaratory Order (“Petition”) filed with the Iowa Department of
Revenue (“Department”) by the CITY OF AMES (hereinafter referred to as “the City” or
“Petitioner”) on May 12, 2026, and in accordance with Iowa Code section 17A.9 (2026) and
Iowa Administrative Code rule 701—4.7(17A), “Declaratory order-in general,” the Director
issues the following order.
I.

FACTS
The City of Ames (“Petitioner”) is implementing a mandatory recycling program

beginning July 1, 2026. This program will apply to all residential properties with less than five
units. The City of Ames has contracted with a third party, Aspen Waste, to collect recyclables
from the residential properties. Petitioner stated that the City is going to handle all billing
related to the program.
II.

QUESTION PRESENTED
Is the City of Ames required to collect sales tax for the collection of recyclables?

III.

STANDARD OF REVIEW
A.

Declaratory Orders under the Iowa Administrative Procedure Act

Iowa’s Administrative Procedure Act (“IAPA”) was enacted “to provide a minimum
procedural code for the operation of all state agencies when they take action affecting the

rights and duties of the public.” Iowa Code § 17A.1(2). Under the IAPA, “[a]ny person may
petition an agency for a declaratory order as to the applicability to specified circumstances of
a statute, rule, or order within the primary jurisdiction of the agency.” Id. at § 17A.9(1)(a). The
IAPA also describes agency rights and responsibilities with respect to declaratory order
proceedings. Id. at § 17A.9(8). Pursuant to Iowa Code section 17A.9(2), the Department
adopted Iowa Administrative Code rule 701—4.7, which outlines department-specific rules
governing declaratory orders.
The purpose of a declaratory order is to provide a “generally available means for
persons to obtain reliable information about agency administered law as it applies to their
particular circumstances.” Sierra Club Iowa Chapter v. Iowa Dep’t of Transp., 832 N.W.2d
636, 647 (2013) (citing Arthur Earl Bonfield, Amendments to Iowa Administrative Procedure
Act, Report on Selected Provisions to Iowa State Bar Association and Iowa State
Government, 1–8 (1998)). Declaratory orders are not contested cases that “entitle[] parties
affected by the agency action to an adversarial hearing” in order to “adjudicate disputed facts
pertaining to particular individuals in specific circumstances.” Greenwood Manor v. Iowa Dep’t
of Pub. Health, State Health Facilities Council, 641 N.W.2d 823, 834 (Iowa 2002); see also
Iowa Code § 17A.12. Instead, the IAPA “contemplates declaratory rulings by administrative
agencies on purely hypothetical sets of facts.” City of Des Moines v. Pub. Emp’t Relations
Bd., 275 N.W.2d 753, 758 (Iowa 1979).
As such, “[t]he procedure established by section 17A.9 allows persons to seek formal
opinions on the effect of future transactions and arrange their affairs accordingly.” Bennett v.
Iowa Dep’t of Nat. Res., 573 N.W.2d 25, 26 (Iowa 1997). Declaratory orders issued by an
administrative agency do, however, have “the same status and binding effect as any final
order issued in a contested case proceeding.” Iowa Code § 17A.9(7). The Department’s rules

2

governing declaratory orders are consistent with this understanding of the role of declaratory
orders in administrative procedure. See Iowa Admin. Code r. 701—4.7.
B.

Statutory Construction and Interpretation of Tax Statutes

“When engaging in statutory interpretation,” the Department “first examine[s] the
language of the statute and determine[s] whether it is ambiguous.” Kay-Decker v. Iowa State
Bd. of Tax Review, 857 N.W.2d 216, 223 (Iowa 2014) (citing Rolfe State Bank v. Gunderson,
794 N.W.2d 561, 564 (Iowa 2011)). “‘Generally, we presume words used in a statute have
their ordinary and commonly understood meaning.’” Id. (quoting McGill v. Fish, 790 N.W.2d
113, 119 (Iowa 2010)). “[L]egislative intent is expressed by what the legislature has said, not
what it could or might have said. When a statute’s language is clear, we look no further for
meaning than its express terms. Intent may be expressed by the omission, as well as the
inclusion . . . of statutory terms . . . .” Hawkeye Land Co. v. Iowa Utils. Bd., 847 N.W.2d 199,
210 (Iowa 2014) (quoting State v. Beach, 630 N.W.2d 598, 600 (Iowa 2001)).
IV.

DISCUSSION
Iowa Code section 423.2(7)(a) imposes a tax of six percent on “the sales price from

the sales, furnishing, or service of solid waste collection and disposal service.” Additionally,
Iowa Administrative Code rule 701—211.29(1) states that “[p]ersons engaged in the business
of solid waste collection and disposal are selling a service subject to tax.” Solid waste is
defined as “garbage, refuse, sludge from a water supply treatment plant or air contaminant
treatment facility, and other discarded waste materials and sludges, in solid, semisolid, liquid,
or contained gaseous form, resulting from nonresidential commercial operations…” Iowa
Code § 423.2(7)(a)(1).
Iowa Code section 423.2(7)(b) further states that “the costs of a service or portion of
a service to collect and manage recyclable materials separated from solid waste by the waste
generator are exempt from the tax imposed by this subsection.” Iowa Code § 423.2(7)(b).

3

Aspen Waste will provide a service to residential properties in Ames to collect and manage
recyclables. The individuals who generated the waste will have separated out recyclables
from solid waste for Aspen Waste to collect. The facts presented align with the exemption in
Iowa Code section 423.2(7)(b). Since Aspen Waste is collecting and managing recyclable
materials that the waste generators, i.e., the City’s residents, have separated from solid
waste, the sales price for the collection of the recyclables is exempt from tax.
ORDER
THEREFORE, based on the facts presented, foregoing reasoning, and applicable
provisions of the law, the Director finds that the recycling program described in the Petition is
not subject to the sales tax imposed by Iowa Code section 423.2(7) because it involves
collecting and managing recyclable materials separated from solid waste by the waste
generator.
8th day of June, 2026.
Issued at Des Moines, Iowa this ____

IOWA DEPARTMENT OF REVENUE

By ______
Mary Mosiman, Director

4