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Effective July 1, 2014, Iowa taxpayers are no longer required to report "Sales by County" information. All references to "Sales by County" on quarterly and annual sales and use tax returns will be removed for all filing methods. The Iowa Department of Revenue anticipates that the eFile and Pay system will be updated with this change by September 1, 2014. This change affects sales tax, retailer’s use tax, consumer’s use tax, and direct pay. Taxable sales subject to local option tax will continue to be reportable. (Release, Iowa Department of Revenue, June 27, 2014)


The Streamlined Sales and Use Tax (SST) Governing Board has  issued a best practices matrix which provides answers to whether the state follows the best practices set forth in the SST Agreement regarding deal-of-the-day vouchers. All SST Member states are to complete and publish their position on the best practices.  The matrix outlines if the “best practiceas approved by the Streamlined Sales Tax Governing Board (SSTGB) for each of the products, procedures, services, or transactions identified in the chartis followed by the specific state. The following best practice descriptions are listed in the matrix along with whether the state follows the best practice:


1.       The member state administers the difference between the value of a voucher allowed by the seller and the amount the purchaser paid for the voucher as a discount that is not included in the sales price (i.e., same treatment as a seller’s in-store coupon), provided the seller is not reimbursed by a third party, in money or otherwise, for some or all of that difference.

2.       The member state provides that when the discount on a voucher will be fully reimbursed by a third party the seller is to use the face value of the voucher (i.e., same as the treatment of a manufacturer's coupon) and not the price paid by the purchaser as the measure (sales price) that is subject to tax.

3.       The member state provides that costs and expenses of the seller are not deductible from the sales price and are included in the measure (sales price) that is subject to tax. Further, reductions in the amount of consideration received by the seller from the third party that issued, marketed, or distributed the vouchers, such as advertising or marketing expenses, are costs or expenses of the seller.


Unless otherwise listed below, the SST member states have published the Best Practices Matrix and follow the three best practices listed above.


The following SST member states have issued the matrix but don’t follow some or all of the best practices listed above as of April 2014: Georgia, Kansas, Nebraska, New Jersey, and Ohio.


The following SST member states have not yet issued the matrix as of April 2014: Tennessee, Utah, Vermont, and Wyoming.  Copies of the matrix can be found on each specific state information page on the SST Web page at


Iowa has amended the statutory definition of "dietary supplement" to keep the state in compliance with the Streamlined Sales Tax Agreement. "Dietary supplement" is defined as any product, other than tobacco, intended to supplement the diet that meets all of the following criteria: The product contains a vitamin, mineral, herb, other botanical, amino acid, a dietary substance for use by humans to supplement the diet by increasing the total dietary intake, or a concentrate, metabolite, constituent, extract, or combination of any of the ingredients previously listed; The product is intended for ingestion in tablet, capsule, powder, softgel, gelcap, or liquid form, or if not intended for ingestion in such a form, is not represented as conventional food and is not represented for use as a sole item of a meal or the diet; The product is required to be labeled as a dietary supplement, identifiable by the "supplement facts" box found on the label. The change was made to stipulate that all requirements must be met for the product to qualify as a dietary supplement.  (H.F. 2436, Laws 2014, effective July 1, 2014)


Representative Lamar Smith (Republican, Texas) has introduced a bill to bar multiple taxes on digital goods and services.  Smith had proposed an earlier bill which failed to pass.  This bill is a revised version of the earlier bill. The proposed bill – called the Digital Goods and Services Tax Fairness Act of 2013 – would only allow a state to tax sales of digital goods and services to customers with a tax address within that state. Additionally, states would be barred from imposing multiple taxes on digital goods. The bill defines digital goods as sounds, images, data and facts maintained in digital form. Internet access service is not included as a digital good in the bill. (H.R. 3724)


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)



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