Iowa Issues Notice About New Water Service Excise Tax

The Iowa Department of Revenue (DOR) has provided guidance regarding the state’s new Water Service Excise Tax (WET) that takes effect on July 1, 2018. The legislation creating WET results in changes for entities piping water to consumers for compensation. Prior to July 1, 2018, the sale of water piped to consumers for compensation was subject to state sales tax of 6% and may have been subject to local option sales tax. This state sales tax was replaced with the new WET of 6% and will require a new permit number. There will be no local option sales tax collected on WET. If sales of piped water service are combined with other taxable sales, the provider will need to separately remit the portion of taxes collected for the sale of piped water service. This includes separately listing the sales of piped water service on receipts and bills. Some providers that sell water service and other taxable products or services will still collect and remit Iowa sales tax. These providers will file a sales tax return under their existing sales tax permit for non-water service sales and file a separate return under the new WET. Registration for new permits began on June 1, 2018 through the Iowa DOR website. For additional information on WET, visit the Iowa DOR website. (Notice, Iowa Department of Revenue, May 7, 2018)

Posted on June 11, 2018