The Iowa Department of Revenue adopted new rules on bundled transactions and specified digital products to fully implement the language and definitions part of legislation enacted in 2018. The new rules fully incorporate the definition of “bundled transaction” to be used by members of the Streamlined Sales and Use Tax Agreement. The new rules also add the definition of “specified digital products” into the bundled transaction provision of Iowa Code. The entire sales price of a bundled transaction is generally subject to sales tax. However, when a specified digital product is one of the components of a mixed transaction along with a service, is essential to the use of that service, and is provided exclusively in connection with that service (the service is the true object), the transaction is not taxable as a bundled transaction. Finally, the new rules alter existing rules on the sale of candy to adjust for new language pertaining to bundled transactions. The new rules are effective June 9, 2021. (ARC 5605C, New Rule 701 – Chapter 216, Iowa Department of Revenue, effective June 9, 2021)