Sales Tax

Yes, if you had no sales for your filing period, you must still file your return showing $0 sales.

Sponsors need to be aware that charges to the public for admission to the event are taxable. Entry fees at a place of amusement, fair, or athletic event are also taxable, even if the fee is used for prizes. However, entry fees are not taxable when admission is charged.

Nonprofit entities, churches, and religious organizations are not automatically exempt from paying state sales taxes on taxable goods and services. This is true even if these entities are exempt from the payment of state and federal income taxes. State sales tax must be paid unless some other general sales tax exemption applies. Local option sales tax must also be paid on purchases made in jurisdictions which impose the tax.

Purchases made for resale are exempt from all sales tax.

In other words, a nonprofit corporation, church, or other religious organization is treated the same as any other private citizen for sales and use tax purposes when purchasing goods and taxable services at retail.

However, sales of items to any Iowa private nonprofit educational institution used for educational purposes are exempt. Sales from fund-raising activities are exempt from sales tax to the extent that the proceeds are used for educational, religious, or charitable purposes. However, the gross receipts from games of skill, games of chance, raffles, and bingo are always subject to sales tax.

More information is available in our publication for nonprofit entities.

No. Vehicles subject to registration are subject to a 5 percent one-time registration fee rather than a state sales tax. However, the receipts from the rental of cars and trucks can be subject to local option tax. Also, sales of parts and repair services are subject to tax.

Yes, unless a specific exemption has been written into the law.

No. A local option sales tax cannot be imposed on any property or service not subject to state sales tax. Importantly, however, in any jurisdiction that imposes a local option sales tax, there is also a 1% local excise tax on certain residential energy services that are not subject to state sales tax.

A contractor is considered to be the consumer of building materials and supplies purchased for use in a construction contract, and is, therefore, responsible for paying sales tax at the time the purchases are made, or use tax if the purchases were made tax free.

See the Iowa Contractors Guide for more details.

Certain purchases by farmers may be exempt from the Iowa sales and use tax. If you claim exemption on any purchase, you must be able to show that you are entitled to it by providing a valid exemption certificate to the seller of the property. A separately completed exemption certificate is not necessary for each similar exempt purchase; if the retailer chooses, a "blanket exemption certificate" on file with a given retailer is sufficient. The exemption certificate may be obtained on this site.

Machinery and equipment

Generally, self-propelled implements, implements customarily drawn or attached to a self-propelled implement, or grain dryers used directly and primarily in agricultural production and not subject to registration as a vehicle are exempt.

Also exempt are auxiliary attachments which improve the performance, safety, operation, or efficiency of the farm machinery or equipment.

Certain purchases of non-self-propelled machinery or equipment are exempt from the Iowa sales tax if they are used directly and primarily in dairy or livestock production.

Vehicles

A 5% one-time registration fee is imposed on the purchase prices of vehicles subject to registration and on any implement customarily drawn by or attached to a registered vehicle. This includes camping trailers and livestock trailers.

Farm tractors, combines, and other such vehicles are exempt because they meet all three of the following requirements: they are used directly and primarily in agricultural production, they are self-propelled, and they are not subject to registration.

Real property

The purchase of machinery and equipment which will become real property after installation (that is, a substantially permanent part of the farm property) is usually taxable. In general, machinery or equipment is real property if its removal after installation is difficult or if removal substantially lessens the value of the machinery or the location where it was placed.

Exceptions to this general rule exist for certain items. For example, drainage tile is exempt from tax.

Also exempt for livestock or dairy production, aquaculture production, or the production of flowering, ornamental, or vegetable plants are:

• Auger systems
• Curtains and curtain systems
• Drip systems
• Fans and fan systems
• Shutters
• Inlets and shutter or inlet systems
• Refrigerators

Parts and supplies

Replacement parts used in the operation of eligible farm machinery or equipment are exempt from sales tax.

Oil filters, spark plugs, gas filters, and tires are examples of exempt replacement parts.

Do not confuse replacement parts with supplies, most of which are taxable.

Oil and grease used in the routine maintenance of a tractor, for example, are not considered parts; they are considered supplies. They are taxable.

For more information, go to our farmers guide.

Tax must still be collected when used items are sold at events, even though tax may have been paid when you originally purchased them for your own use.

Delivery of gas and water occurs and the services of electricity, heat, communication, and pay television are rendered, furnished, or performed at the address of the subscriber who is billed for the purchase of this property or services. If that billing address is located in a local option taxing jurisdiction, the tax will apply.

Anyone making a retail sale in Iowa must obtain a sales or use tax permit from the Iowa Department of Revenue. Selling without a permit is a serious misdemeanor. The permit is available at no charge. You can apply for your Iowa permit online.

An FOB designation does not affect the sourcing of a transaction. An FOB designation also does not affect sales tax and use tax, including local option tax.

Iowa's state sales/use tax rate is 6%. Many cities and counties also have a 1% local option tax.

The Department determines how often sales tax returns are due based on the estimated amount of sales tax collection that the retailer entered on the permit application.

See our filing status information.

You may ask for a refund on the form IA 843 Claim for Refund (22-009).

An adjustment can be made on the tax return by entering the amount paid for the materials (not including the amount of tax) when originally purchased as an “other” exemption on line 4 of the return.

Use the resale exemption for future purchases. This exemption can be claimed by providing an Iowa Sales Tax Exemption Certificate (31-014) to your supplier.

Remember this applies only to items purchased for resale or to be incorporated into another product for resale. A credit or refund is not allowed for tax paid on items that were purchased for your own use, even though they may be sold at some time in the future. Tax must still be collected when goods are sold at events even though tax may have been paid on them when they were originally purchased.

Sponsors of flea markets, craft shows, antique shows, and other temporary events must verify that the exhibitors are licensed to collect tax. Sponsors must obtain an Iowa tax permit number or a good faith statement from each vendor. Sponsors may be responsible for tax that is not collected by the vendors, if the vendor information is not obtained.

Register online or complete the Iowa Business Tax Permit Registration, 78-005. Taxpayers only need to apply once for a permit and will remain active until the permit is canceled.

Review the information on Special Events – Sales/Use Tax Permits.

Yes. The seller will charge the local option tax applicable where the customer receives the item.

Yes, except on:

• Room rentals that are subject to hotel and motel tax
• Sales of equipment by the State Department of Transportation
• Sales of natural gas or electric energy subject to a city- or county-imposed franchise fee or users fee
• The sale of direct-to-home satellite pay television service
• Self-propelled building equipment, pile drivers, motorized scaffolding, or attachments customarily drawn or attached to them, including auxiliary attachments which improve their performance, safety, operation, or efficiency and including replacement parts used by contractors, subcontractors and builders for new construction, reconstruction, alterations, expansion or remodeling of real property or structures

Some companies collect the tax from their sales representatives and remit it to the state on their behalf. Your company will be able to provide you with the tax permit number used to remit tax to Iowa. Please provide that number to us.

Sales made by entities or organizations engaged in educational, religious, or charitable activities are exempt if they meet the following requirements:

• The profits from the sale must be used by or donated to one of the following:
• An entity that is exempt from federal income tax under Internal Revenue Code section 501(c)(3);
• A government entity; or
• A private nonprofit educational institution
• The profits must be expended on educational, religious, or charitable activities.

An exemption from tax is allowed to the extent net proceeds are expended for qualifying educational, religious, or charitable purposes.

NOTE: Most nonprofit organizations are not exempt from tax on their purchases.

For additional information, please see Iowa Tax Issues for Nonprofit Entities.

Tax Included in the Price
If tax is collected as part of or included in the selling price of the item or service, the tax needs to be backed out to arrive at the true gross receipts before the return is completed. This is allowed if the retailer makes known to the purchaser that the tax is included in the price which is charged. That can be done by posting a sign or by a notation on the receipt indicating tax is included in the price.

For example: A vendor includes the 6% tax in the price of all goods sold; for purposes of this example, assume local option tax does not apply. The taxable gross receipts are $250. Divide $250 by 1.06. The result - $235.85 - is the amount to be written on line 1 of the return.

If only the state tax of 6% applies, divide the gross receipts by 1.06 as shown in the above example. If a 1% local option tax also applies, divide by 1.07.

Exemptions
Sales made that are not subject to tax are reported as exemptions. Many taxpayers confuse exemptions with the types of deductions for expenses they are able to take on their income tax returns. Expenses of the business are reported on the IRS Schedule C, Profit or Loss from a Business, for income tax purposes, but are not included as exemptions on the sales or use tax return. For example, table or registration fees cannot be shown as an exemption.

You may print your payment voucher directly from GovConnectIowa. Log in to your account and view your return submission to print a new voucher. Payment vouchers are not available on the website.

Please note that these vouchers are not returns. Returns must be filed through GovConnectIowa. 

Where tangible personal property is delivered determines whether or not a sale is taxable. If delivery occurs within a local option jurisdiction, the local option sales tax may be due. If delivery does not occur in a local option jurisdiction, local option tax is not due.

Delivery usually occurs when the seller transfers physical possession of the property to the buyer. In most instances, this transfer takes place at the seller’s place of business. If the seller transfers the property to the buyer from the seller’s own vehicle, then delivery is considered to take place at the place of transfer. Finally, if the seller transfers the property to a common carrier or the U.S. Postal Service for subsequent transport to the buyer, the “delivery” of the property occurs at the customer’s location.

Tax is not due on the sale or use of certain articles of clothing or footwear if the sales price of the article is less than $100.00 and the sale takes place during a period beginning at 12:01 a.m. on the first Friday in August and ending at 12:00 midnight of the following Saturday.

For detailed information, please go to our Sales Tax Holiday page.

The ballot must specify:

• The type of tax
• The tax rate (exactly 1 percent)
• The date it will be imposed
• The approximate amount of local option tax revenue that will be used for property tax relief, if any
• The specific purpose(s) for which local option tax revenues will be spent if for purposes other than property tax relief
• If the tax has a sunset provision that specifies the date on which the tax will be repealed, the date of future repeal

Questions about elections and ballot language should be addressed to the Secretary of State at 515-281-0145 or 1-888-SOS-Vote. A ballot language sample is available from the Iowa Secretary of State.

Iowa sales tax is filed and remitted electronically through GovConnectIowa. The Department does not mail returns.

• Services: Iowa Sales and Use Tax: Taxable Services
• Sales: Exempt Sales
• Iowa Sales and Use Tax Guide publication.
• The taxation of food can be a difficult subject to understand. See Iowa Sales Tax on Food for details.

They are contiguous when their boundaries are in actual contact or touching. Burd v. Board of Education of Audubon County, 167 N.W. 2nd 174 (IA 1969); City of Walker, et al v. Oxley, et al.

As with the state sales tax, the local option sales tax is remitted for the tax period in which the tangible personal property is delivered to the customer. Even if the customer has not paid for the merchandise, the tax is due when delivery occurred.

For taxable services, the retailer remits the local option tax for the tax period in which the first use of the service occurs, or potentially could occur.

No. It is imposed in addition to, but not on top of, the state sales tax. A taxable sale will be subject to the state sales tax and the local option tax. However, the amount of the sale for purposes of determining the amount of local option sales tax does not include any amount of state sales tax or other local option taxes if a jurisdiction imposes more than one local option tax.

You can view and export all Iowa Retail Sales and Retail Use Business Registration permits online at data.iowa.gov.

You may obtain one online or call 515-281-7239 and ask that one be mailed to you.

Many services are taxable. Persons performing these services at retail must charge Iowa sales tax.

See our list of taxable services.