Iowa case law summary by Attorney Richard Clem: Property Tax-Manufacturing.

Stateline Cooperative v. Iowa Property Assessment Appeal Board, et al.. Iowa Property Tax-Manufacturing

Under Iowa Code Section 427A.1(1)(e), "machinery used in manufacturing establishments" is exempt from property taxation. The taxpayer in this Emmet County, Iowa, case owned an industrial feed mill, consisting of various structures. These included holding bins for corn, connected to the main mill by conveyor belts, as well as overhead bins which held milled corn and other ingredients until they were released into a mixer to be combined with other ingredients. At issue were whether the bins fit in the definition of "machinery used in manufacturing establishments," and the case was ultimately heard by the Iowa Supreme Court.

The court noted that some courts drew a distinction between "machinery" and "storage." It cited, for example, Barton Enterprises, Inc. v. Ramsey County, 390 N.W.2d 776, 778 (Minn. 1986), which held that oil tanks were akin to buildings, and thus taxable.

The court agreed, and held that the silos were not machinery. It noted that they held about a 22 day supply of corn, and were thus akin to storage buildings, rather than pieces of equipment. However, it held that the overhead bins were machinery. They discharged directly into the manufacturing process, and "do not appear to have any independent value as storage apart from this particular manufacturing process. The court noted that even though they were structurally part of the building, this did not alter the situation.

No. 19-0674 (Iowa Apr. 30, 2021).

Please see the original opinion for the court's exact language.

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Richard P. Clem is an attorney and continuing legal education (CLE) provider in Minnesota. He has been in private practice in the Twin Cities for 25 years. He has a J.D., cum laude, from Hamline University School of Law in St. Paul and a B.A. in History from the University of Minnesota. His reported cases include: Asociacion Nacional de Pescadores a Pequena Escala o Artesanales de Colombia v. Dow Quimica de Colombia, 988 F.2d 559, rehearing denied, 5 F.3d 530 (5th Cir. 1993), cert. denied, 510 U.S. 1041 (1994); LaMott v. Apple Valley Health Care Center, 465 N.W.2d 585 (Minn. Ct. App. 1991); Abo el Ela v. State, 468 N.W.2d 580 (Minn. Ct. App. 1991).

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