Iowa participates in the Streamlined Sales Tax Project (SSTP), an initiative to encourage businesses to collect and remit sales tax in every state in which they make taxable sales. The project began in March 2000 with representatives from state and local governments and private sector businesses and organizations. They came together to address concerns that state sales tax laws are not uniform, the administration of sales tax is too complex, and retailers must file with too many jurisdiction. Businesses, including national retailers, trade associations, manufacturers, direct marketers, telecommunications companies, leasing companies, technology companies, printers, accounting firms, and others, actively participated in the SSTP by offering expertise and input, reviewing proposals, suggesting language, and testifying at public hearings.
In November 2002, representatives of 33 states and the District of Columbia approved an agreement to simplify the nation’s sales tax laws by establishing one uniform system to administer and collect sales taxes on nearly $3.5 trillion in retail transactions annually.
Legislatures began immediately to consider and pass legislation to implement the agreement. To be able to participate in the Streamlined initiative, revenue departments and legislatures needed to conform to the standards set by the agreement. At this time, 23 states have passed all conforming legislation or portions of it.
Iowa Sales Tax Law Changes
Iowa’s sales tax laws changed July 1, 2004, in several areas in order to meet Streamlined requirements:
Delivery of tangible personal property by common carrier or through the post office
The local option tax rate at the destination is now used instead of the rate where the post office is located or where the item is placed on the common carrier.
Tangible personal property for lease or rental
Any item purchased with the intent to be leased or rented is now exempt from sales tax as a purchase for resale. Sellers should obtain exemption certificates from buyers.
Receipts from the lease or rental of tangible personal property
The sales tax on leased or rented property is imposed in the jurisdiction where the property is located. If the property is moved to another jurisdiction, the source of taxation changes. (Note: This does not include vehicles subject to registration.)
If businesses sell any of the following, taxation changed:
- Bottled water: Exempt. Taxable if purchased with a restaurant meal or if the water is flavored.
- Candy: Taxable unless it contains flour (any type and any amount – soy, rice, wheat flours, etc.)
- Chewing gum: Taxable
- Soft drinks/juices: Taxable unless the product contains more than 50% vegetable or fruit juice
- Vegetable seeds and plants, fruit trees: Taxable unless produce is for resale
Do you make sales in more than one state?
Should you be registered with each of those states to collect their sales tax?
Take the guess out of your “nexus status” and register in one step to collect sales tax in multiple states. Currently, 23 states participate as members or associate members.
Which states are participating in the Streamlined Sales Tax Project?
The following states are full members:
|Georgia||North Carolina||West Virginia|
The following states are associate members: Ohio and Tennessee.
Why should you register? Amnesty!
You may be required by law to collect sales tax anyway and not even know it. When a state learns about businesses that have “nexus” and have not been collecting the tax, it takes action not only to collect the tax, but also to collect penalty and interest. When you register through the Streamlined Sales Tax Project, you obtain amnesty for sales or use taxes uncollected.
In addition, all states have the same filing requirements and due dates when you are registered through SSTP. You may also take advantage of using a certified service provider to file and remit sales tax with little or no cost to you.
Are you required to collect sales tax?
- Do you make sales into states without collecting that state’s sales taxes?
- Do you make deliveries to those states in your own trucks?
- Do you send repair or maintenance employees or representatives into various states to perform work on your behalf?
- Do you sell items through a Web site or catalog and then accept returns at a brick and mortar store?
- Do you market jointly with an affiliate that sells through catalog or Internet?
- Do you use in-state solicitors – employees, agents or independent contractors – to make sales into a state?
If you answered “yes” to any of these questions, you have nexus with the state into which you are making sales.
Who is eligible to obtain amnesty through the Streamlined system?
Sellers who are not currently registered to collect sales taxes in a Streamlined Sales Tax member state and who agree to collect or pay sales or use taxes in those states by registering in the Streamlined Sales and Use Tax Central Registration System.
Who is not eligible for amnesty?
- Sellers currently registered in the member state to collect sales or use tax, or
- Sellers that registered with the member state within 12 months of the date the state became a member of the Streamlined Project, or
- Sellers that have received notice of an audit by the member state and the audit is not yet fully resolved, including related administrative and judicial processes
Amnesty applies only to sales and use taxes. Any business that feels it has nexus in other tax areas should contact the appropriate states about their voluntary disclosure programs.
What’s the deadline for registering to obtain amnesty?
September 30, 2006, for the following full-member states: Indiana, Iowa, Kansas, Kentucky, Michigan, Minnesota, Nebraska, New Jersey, North Carolina, North Dakota, Oklahoma, South Dakota, West Virginia.
Dates vary for the following associate-member states: Ohio, Tennessee, Utah.
How long does a seller have to remain registered to retain amnesty?
Registration must be maintained for at least 36 months.
Is anything excluded from amnesty?
- Sales or use taxes owed by the seller in its capacity of buying goods for its own use.
- Sales or use taxes already paid or remitted to member states in which the seller already registered.
- Sales or use taxes collected by the seller that are unpaid to member states
- Liability for taxes other than sales or use taxes. (Information obtained through the Streamlined registration system will not be used by the member state for determining nexus for other taxes.)
What if you don’t need amnesty?
Any retailer making sales into these states may register to voluntarily collect sales taxes for another state.
What are the benefits to sellers that do not need amnesty?
These sellers are able to register with multiple states in one easy process. In addition, they may take advantage of using a certified service provider to file and remit sales tax.
How is the tax remitted to each state?
A major advantage to registering through the Streamlined Sales and Use Tax Central Registration System is that sellers may choose to remit sales tax through a certified service provider at little or no cost. A list of certified providers can be found on the National Streamlined Sales Tax Web site at http://www.streamlinedsalestax.org.
Sellers that prefer to file returns and remit tax individually to each state may still do so.
What is the filing frequency?
Most sellers registering through the Streamlined Sales and Use Tax Central Registration System will file monthly.
How do sellers register?
Qualifying sellers should go to the Streamlined Sales and Use Tax Central Registration System. Go to the National Streamlined Sales Tax Web site at http://www.streamlinedsalestax.org and click on registration.
The information provided by the seller is sent electronically to all of the full-member states and to associate member states selected by the seller.
How do sellers determine the rate of sales tax to charge?
Sellers need to know not only the state sales tax rate, but local option rates, if any. Each Streamlined state provides an online look-up system, searchable by address and Zip code.
Iowa’s sales tax rate look-up application is now online. It can be found at https://www.idr.iowa.gov/salestaxlookup/. Any business (or individual) may use it, even if they are not registered through the Streamlined process.
Will other states join the Streamlined Sales Tax Project?
At this time, other states are determining whether or not to join. (Five states do not have a state sales tax: Alaska, Delaware, Montana, New Hampshire, and Oregon.)