Iowa sales tax filing update December 2018

What's changing in Iowa?

Iowa passed a law requiring marketplaces to collect and remit sales tax on sales facilitated through the marketplace effective January 1, 2019.

How does this affect me?

If you sell through a Marketplace that has agreed to begin collection in this state, you'll see sales tax collected in Iowa for sales on and after 1/1/19 on your TaxJar Dashboard and on your Iowa Transactions page.

  • If you have never set up a filing frequency for Iowa in your account's State Settings, our system will default the state to a monthly frequency and due date on your Dashboard after we see tax collected there. (We default to a monthly frequency and due date if you haven't yet adjusted any frequencies on your end, but the state itself would ultimately determine your exact filing frequency.) 
  • If you are currently opted in to receive email reminders for your sales tax due dates, you'll also see Iowa listed as a state where you have an upcoming monthly return due in those emails.

I've never registered for an Iowa license. Do I need to register for a sales tax license in Iowa now?

If you are a retailer with a physical presence in Iowa or you are a remote seller who has crossed the economic nexus/small seller threshold for Iowa ($100,000/year in gross revenue in the previous or current calendar year*), then you will need to register for an Iowa sales tax license.
 *Effective July 1, 2019, HF 779 eliminated the 200 separate transaction threshold for remote sellers and marketplace facilitators. 

If you have never registered for a sales tax license in Iowa and your only sales in Iowa are through a Marketplace and your Marketplace Facilitator collects both Iowa sales tax and applicable local option sales tax, you will NOT need to register for an Iowa sales tax permit or file Iowa sales tax returns.
  • If you've imported your sales across all platforms into your TaxJar account, you can determine if you have economic nexus in the state by running the Sales & Transactions Checker.
  • If you do not meet any of the criteria that creates nexus in Iowa, you won't need to register for a sales tax license in this state.

I have already registered for a license in Iowa but and all of my sales are Marketplace-only sales. Should I cancel my existing registration?

No. If you are a marketplace seller who has already registered due to physical presence (such as inventory stored in your Marketplace's warehouse) or you have voluntarily registered, you should remain registered, according to the DOR.

Do I need to collect taxes on my Iowa sales on other platforms?

Yes--if you have nexus in the state (physical or economic) and you make sales to customers in Iowas on platforms outside of the marketplace that is automatically collecting and remitting, you will also need to collect tax on your end on the Iowa orders that are processed on the other platforms.

Do I still need to file returns in Iowa?

Yes--once you register for a license, you will be required to file a return based on the frequency the state has assigned you.
  • If you've previously registered, the state expects you to remain registered and continue to file returns.

I still need to file returns in Iowa. How do I do this without paying double tax on the sales that were collected and remitted by my Marketplace?

When you file, you'll need to take an exemption for “Sales Tax Collected by a Marketplace.” This exemption may be taken under Line 4.h. in the “Other” category on the sales tax return worksheet.
  • If all of your sales are Marketplace sales, once you deduct the marketplace sales, you will need to file a $0 return.
  • If you make sales on other platforms in addition to the Marketplace, you'll need to make sure you remit the tax you collected for those sales when you file.
  • If you're enrolled in AutoFile for Iowa, our system will handle the Marketplace sales deduction process automatically.

How does this affect my TaxJar report for Iowa?

Your TaxJar report for Iowa has been updated to reflect the sales that had tax collected and remitted by Amazon and Walmart.

  • You'll see this change in Iowa sales tax reports for periods starting in January 2019 and moving forward.
  • The marketplace sales totals in this report are now called out in the marketplace sales row of the report.