Iowa Enacts Affiliate Nexus Provisions

Iowa has enacted affiliate nexus provisions for sales and use tax purposes. Per the legislation, a retailer is presumed to be maintaining a place of business in Iowa if any person with substantial nexus in the state, other than a person acting as a common carrier, does any of the following: sells a similar line of products as the retailer and does so under the same or similar business name; maintains an office, distribution facility, warehouse, storage place, or similar place of business in Iowa to facilitate the delivery of property or services sold by the retailer to the retailer’s customers; uses trademarks, service marks, or trade names in the state that are the same or substantially similar to those used by the retailer; delivers, installs, assembles, or performs maintenance services for the retailer’s customers; facilitates the retailer’s delivery of property to customers in Iowa by allowing the retailer’s customers to take delivery of property sold by the retailer at an office, distribution facility, warehouse, storage place, or similar place of business maintained by the person in the state; or conducts any other activities in Iowa that are significantly associated with the retailer’s ability to establish and maintain a market in the state for the retailer’s sales. The presumption may be rebutted if the retailer shows proof that the person’s activities in Iowa are not significantly associated with the retailer’s ability to establish or maintain a market in the state for the retailer’s sales.

Additionally, any ruling, agreement, or contract entered into between a retailer and a state agency which provides that the retailer is not required to collect sales and use tax in Iowa despite the presence in the state of a warehouse, distribution center, or fulfillment center that is owned and operated by the retailer or an affiliate of the retailer is null and void unless the ruling, agreement, or contract is approved, by resolution, by a majority vote of each house of the General Assembly.

The legislation also contains provisions related to making sales to state agencies. Any person making taxable sales of tangible personal property or furnishing services to any state agency must have a permit to collect sales or use tax prior to the sale. A state agency cannot purchase tangible personal property or services from any person unless that person has a valid, unexpired permit and is in compliance with all other requirements imposed upon retailers, including, but not limited to, collection, remittance, and filing requirements.(H.F. 625, Laws 2013, effective June 11, 2013)

Posted on June 25, 2013