Stay up to date with sales tax: Join our mailing list!

Iowa has announced a new partnership with the Dwolla payment network to provide Iowa taxpayers with an electronic payment option for tax payments.  Dwolla’s network charges a flat 25-cent fee on any payment over $10 instead of charging a floating percentage and fixed fee per transaction.  The network eliminates the need for check payments. The first integration of the network will give businesses that already pay more than $100 million in cigarette stamp taxes the option of paying via Dwolla. (Release, Iowa Gov. Terry E. Branstad, January 22, 2013)


Iowa has amended the definition of “sales price” in order to conform to the Streamlined Sales and Use Tax (SST) Agreement. Effective July 1, 2012, the following items are not included in the definition of “sales price”: any state or local tax on a retail sale that is imposed on the seller if the statute, rule, or local ordinance provides that the seller may, but is not required to, collect the tax from the purchaser and if the tax is separately stated on the invoice, bill of sale, or similar document given to the purchaser; and any tribal tax on a retail sale that is imposed on the seller if the tribal law imposing the tax provides that the seller may , but is not required to, collect the tax from the purchaser and if the tax is separately stated on the invoice, bill of sale, or similar document given to the purchaser. Also, all taxpayers required to file sales tax returns are allowed to file a simplified electronic return. Previously only taxpayers registered through the SST System qualified for the simplified electronic return. (H.F. 2166, Laws 2012, effective as noted)


The Iowa Department of Revenue has issued a policy letter addressing the taxability of hosted software and related training services. The taxpayer sells software to customers throughout the United States. The software is located on servers outside of Iowa and is accessible by customers only through the internet. The software is not downloaded by or delivered to the customer, and no transfer of title or possession takes place. The taxpayer also provides training services to customers either in-person at the customer’s location, or via web-based programming. Training is optional, and the charge is assessed separately. The Department determined that the hosted software and training services constitute cloud computing services, as defined by the U.S. Department of Commerce’s guidelines. Because Iowa tax law does not address cloud computing, the Department analyzed the services under existing code sections. The Department concluded that the hosted software is not taxable in Iowa. It did not constitute the sale of tangible personal property or prewritten computer software because it was delivered to customers via the internet and only accessible online. The taxpayer’s training services are also not subject to sales or use tax because training services are not specifically enumerated taxable services in Iowa. (Iowa Department of Revenue Policy Letter 12300002, Jan. 11, 2012)


On a November 10, 2011 conference call, the Streamlined Sales Tax (SST) Compliance Review and Interpretations Committee (CRIC) voted to find Minnesota, Utah, and Vermont out of compliance with the SST Agreement. South Dakota, Iowa, and Wisconsin were found “not out of compliance” with the Agreement. North Carolina’s compliance issues were discussed on the call, but a vote on their compliance was deferred. The call was part of a series of calls during which the CRIC is performing its annual recertification review of member states’ compliance with the Agreement. The CRIC’s findings will be submitted to the SST Governing Board in December 2011 for its evaluation. Minnesota was found out of compliance with the agreement because the state’s definition of “prepared food” deviates from the Agreement in regards to an exemption from the definition of prepared foods for deli meat. This exemption has been in place for many years and was only addressed this year. The vote for being out of compliance was really focused on the fact that there was a deviation from a standard product definition and the need to eliminate any exceptions to the requirement to follow the definitions. Minnesota was urged to submit a request to modify the definition if they desired to maintain the exemption. Utah was found out of compliance on the issue of effective dates for rate decreases for services. A representative for Utah said that there is a bill pending to correct the issue. Until the bill is passed which would align the effective dates, Utah is out of compliance. Vermont was found out of compliance with the Agreement on its treatment of specified digital products as defined in Agreement Section 332(D)(2) or (D)(3). The Department anticipates a legislative change.

Member states’ letters responding to issues identified by the SST staff and other meeting materials can be found on the SST Governing Board website here. (Conference call, Compliance Review and Interpretations Committee, November 10, 2011)


In a policy letter, the Iowa Department of Revenue determined that the free distributions of flu vaccines are subject to Iowa sales and use tax. The taxpayer was considering a campaign to provide free flu vaccinations, which do not require a prescription, to uninsured persons. The vaccine would be purchased outside of Iowa for subsequent use in Iowa. Therefore, it was determined that this flu vaccine distribution would be a use “incident to ownership” in this state and taxable in the initial instance under Iowa law. It was also noted that the vaccine is not a prescription drug and would not be exempt from Iowa sales and use tax. (Policy Letter No. 09300051, Iowa Department of Revenue, August 17, 2009)



Scroll to Top