National Streamlined Sales Tax Project Information

DESTINATION SOURCING TAXATION RULES

For tax periods on and after July 1, 2004

ALL SALES ARE DELIVERED TO AN IOWA LOCATION

1. Is it a sales tax or a use tax?

Tangible personal property

1. Seller out-of-state, shipped from out-of-state by common carrier, there are no terms of delivery or F.O.B. is at seller’s place of business – USE TAX
2. Seller out-of-state, shipped from out-of-state by common carrier, terms of delivery or F.O.B. is at a destination location in Iowa – SALES TAX
3. Seller out-of-state, shipped from out-of-state, delivered by seller’s truck – SALES TAX
4. Seller out-of-state, shipped from in-state location by common carrier and there are no terms of delivery – USE TAX
5. Seller out-of-state, shipped from in-state location by common carrier, terms of delivery or F.O.B. is at a destination location in Iowa – SALES TAX
6. Seller out-of-state, shipped from in-state location, delivered by seller’s truck – SALES TAX
7. Seller in-state, shipped from out-of-state by common carrier – SALES TAX
8. Seller in-state, shipped from out-of-state, delivered by seller’s truck – SALES TAX
9. Seller in-state, shipped from in-state location by common carrier – SALES TAX
10. Seller in-state, shipped from in-state location, delivered by seller’s truck – SALES TAX

Enumerated Services

1. Seller out-of-state, service performed out-of-state, use of or result of service in Iowa – USE TAX
2. Seller out-of-state, service performed in Iowa – SALES TAX
3. Seller in Iowa , service performed out-of-state, use of or result of service in Iowa – SALES TAX
4. Seller in Iowa , service performed in Iowa – SALES TAX

There is still no local option tax on a use tax transaction.

There could be local option tax on a retailer’s use tax return if sales tax transactions are reported on that return. See above example where out-of-state seller delivers in own vehicle or F.O.B. is at purchaser’s location.

2. If it is a sales tax transaction, which jurisdiction's local option tax applies?

Tangible personal property

1. Seller out-of-state, shipped from out-of-state by seller’s truck or terms of delivery to or F.O.B. is at a destination location in Iowa – local option tax at point of destination
2. Seller out-of-state, shipped from in-state on seller’s truck or terms of delivery to or F.O.B. is at purchaser’s location in Iowa – local option at point of destination
3. Seller in-state, shipped from out-of-state by common carrier – local option tax at point of destination
4. Seller in-state, shipped from out-of-state on seller’s truck – local option at point of destination
5. Seller in-state, shipped from in-state by common carrier – local option at point of destination
6. Seller in-state, shipped from in-state on seller’s truck – local option tax at point of destination
7. Seller in-state, purchaser picks up at seller’s location – local option at seller's location
8. Contractor in-state, withdraws from inventory – local option at point of withdrawal

Enumerated Services

Seller out-of-state, service performed in Iowa – local option at point of service

Seller in Iowa , service performed out-of-state, use of or result of service in Iowa – local option at point of destination, that is, location of first use in Iowa

The above examples depend on the “sourcing” of the transaction. General sourcing rules are the same for both tangible personal property and enumerated services. The sourcing of a transaction is where the customer takes possession of tangible personal property or makes first use of a service. This could mean the location of the seller, the location of the purchaser, or a designated delivery point that is the location neither of the seller nor the purchaser.