Iowa has enacted legislation that expands the state’s tax base to include additional specified services. Effective January 1, 2019 (unless otherwise specified), the following services are subject to Iowa sales and use tax:
Modifications to exemption provisions for sales to organizations qualifying for exemptions have been made as necessary to address these additions. There is also an exemption for the sales price of specified digital products and of prewritten computer software sold, and of enumerated services described in section 423.2, subsection 6, paragraphs “bq” (storage of tangible or electronic files, documents or other records), “br” (information services), “bs” (services related to installing, maintaining, servicing, repairing, operating, upgrading, or enhancing specified digital products), and “bu” (software as a service) furnished, to a commercial enterprise for use exclusively by the commercial enterprise. The use of prewritten computer software, a specified digital product, or service fails to qualify as a use exclusively by the commercial enterprise if its use for noncommercial purposes is more than de minimis. Also exempt are sales of specified digital products sold to a non-end users. “Non-end user” means a person who receives by contract a specified digital product for further commercial broadcast, rebroadcast, transmission, retransmission, licensing, relicensing, distribution, redistribution, or exhibition of the product, in whole or in part, to another person. (S.F. 2417, Laws 2018, effective January 1, 2019)