Iowa Sales Tax Information
Iowa requires businesses to collect sales tax on Internet sales if revenue thresholds are met. Effective July 1, 2019, marketplace sellers exceeding revenue thresholds must charge Iowa sales tax. Physical presence retailers must collect Iowa sales tax. The Supreme Court’s Wayfair v. South Dakota decision allows Iowa to tax retailers without physical presence.
- Sales and Use Tax Online Lookup Tool available for Iowa sales tax rates.
- State, county, and city sales taxes in Iowa with rates ranging from 6% to 7%.
- Most goods are taxable, exemptions for groceries and prescription drugs.
- Sales tax holidays in Iowa for tax-exempt goods.
- Laws regarding out-of-state online sellers collecting Iowa sales tax effective January 1, 2019.
- Thresholds determine whether sellers must collect tax, causing compliance issues for multi-state sellers.
Online Sales and Local Taxes
Online sales are subject to local sales tax based on retailer’s physical presence or nexus. Remote sellers without nexus may not need to collect local taxes. Shopping online helps to level the playing field, generate revenue, support local services, and simplify tax compliance.
- Examples of instances where consumers must pay local use tax on online purchases.
- Local jurisdictions can apply sales tax even if there is no state sales tax.
- Destination-based sales tax for remote sellers, utilizing local tax rates.
Impact of Recent Laws on Online Sellers
States now require online sellers to collect internet sales tax if thresholds are exceeded. This generates more revenue but complicates compliance for multi-state sellers. Sellers must register and file returns in each state they have nexus in.
Assistance for Online Sellers
Ecommerce platforms offer sales tax automation for common calculations and tax overrides. Sellers still need to register with tax authorities and file returns. Understanding nexus laws and using available software can simplify sales tax compliance for online businesses.