Any business that sells goods or taxable services within the state of Iowa to customers located in Iowa is required to collect sales tax from that buyer. This will include all online businesses. Any seller which conducts business and has a major presence within the state must collect sales tax in Iowa must pay taxes to the state. Therefore, these sellers required to file for a Sales tax certificate. By not doing so the business may face sanctions or other types of penalties. Additionally, depending on the businesses location and tax jurisdiction, localities such as counties, cities, and other districts can also add additional sales and use taxes.
Do you need to get a Sales Tax certificate in Iowa?
You may need a Sales Tax Certificate if any of the following apply your business:
- You rent or lease property (other than real property) to an end user within the state of Iowa
- Your business delivers merchandise in the state of Iowa using its own trucks
- You have a distribution location such as a storage area or warehouse space
- You have employees physically present in Iowa (including independent contractors, Sales persons, representatives, or agents in or out of state)
- Your business has economic presence (businesses who make over $100,000 in sales annually or more than 200 transactions)
- Your business installs property it sells in Iowa
- Your business has taxable services in the state of Iowa
What constitutes taxable services in Iowa?
- Aircraft lease or rental, 60 days or less
- Aircraft repair, remodeling, or maintenance, except when used in a scheduled or nonscheduled interstate FAA certified air carrier operation
- Alteration and garment repair
- Armored car services
- Bank and financial institution service charges
- Barber and beauty services
- Battery, tire, and allied services
- Boat repair
- Cable/pay television fees
- Camera repair
- Campgrounds
- Carpentry
- Carpet and upholstery cleaning and repair
- Communication services; excluding Internet access fees
- Dance school and dance studio
- Dating services
- Demolition
- Drain cleaning; unplugging toilets, sinks, and sewers
- Dry cleaning, pressing, dyeing, and laundering. Beginning 7-1-15, the use of self-pay washers and dryers is exempt from tax.
- Electrical and electronic repair and installation
- Employment and executive search agencies
- Excavating and grading
- Exterminators
- Farm implement repair of all kinds
- Flying service and instruction
- Furniture repair and cleaning
- Fur storage and repair
- Garbage collection and disposal, nonresidential commercial only
- Golf and country clubs and all commercial recreation fees, dues, and charges
- Gun repair
- House/building moving
- Household appliance, television, and radio repair
- Investment counseling
- Janitorial and building maintenance or cleaning; non-residential only
- Jewelry and watch repair
- Landscaping, lawn care, and tree trimming and removal
- Limousine, including driver
- Machine operator fees
- Machine repair of all kinds
- Massage; unless performed by a licensed massage therapist
- Mini-storage
- Motor repair
- Motor vehicle, recreational vehicle, and recreational boat rental; when rented without a driver or operator
- Motorcycle, scooter, and bicycle repair
- Oilers and lubricators on vehicles and machines
- Office and business machine repair
- Painting, papering, and interior decorating
- Parking facilities
- Pet grooming
- Photography
- Pipe fitting
- Plumbing, including drain cleaning and unplugging toilets, sinks, and sewers
- Reflexology
- Retouching photographs
- Roof, shingle, and glass repair
- Security and detective services
- Sewage services, nonresidential commercial only
- Sewing and stitching
- Shoe repair and shoeshine
- Sign construction and installation
- Storage warehouse or lockers of raw agricultural products
- Storage of household goods
- Swimming pool cleaning and maintenance
- Tanning beds or tanning salons
- Taxidermy
- Telecommunication services; excluding Internet access fees
- Telephone answering service and telephone services
- Test laboratories, except tests on humans and animals. Beginning 7-1-15, environmental testing is not taxable.
- Tin and sheet metal repair
- Tree trimming and removal
- Turkish baths and reducing salons
- Vehicle repair
- Vehicle wash and wax
- Water conditioning and softening
- Weighing
- Welding
- Well drilling; repair only
- Wood preparation (for example, stripping, cleaning, sealing)
- Wrapping, packing, and packaging of merchandise other than processed meat, fish, fowl, and vegetables
- Wrecker and towing
The following are considered sales of tangible personal property and are taxable:
- Engraving
- Equipment and tangible personal property rental
- Optional warranty contracts
- Printing and Binding
- Recapping and retreading tires
- Vulcanizing
Why do I need a Sales Tax Certificate to purchase wholesale items for Resale in the State of Iowa?
As a wholesale company conducting business in the state of Iowa, you are required to have a sales tax certificate when purchasing items at wholesale prices, Therefore, suppliers must request a copy of your resale certificate before selling you items at wholesale prices.
Do you have to collect Sales Taxes for shipping charges?
If you list shipping charges separately then you do not have to collect sales tax, but if you lump them in with the price of the merchandise sold then you would have to.
Is there sales tax on drop shipments in the state of Iowa?
A drop shipment is where a seller (most times out of state) sells a product which is then delivered to a consumer by a third-party shipper. In most instances, drop shipments in Iowa may or may not be required to have sales tax added
Are there any exemptions to taxable items sold?
Groceries, raw materials and machinery, certain items used in agriculture or manufacturing, medical devices, newspapers, and custom downloadable software are tax exempt
Register for an Iowa sales/use tax number
Iowa state, county, city, & municipal tax rate table