<%@LANGUAGE="JAVASCRIPT" CODEPAGE="1252"%> Iowa Department of Revenue electronic newsletter: Iowa Tax eNews
MARCH 2004
graphic for Iowa Department of Revenue Tax eNews electronic newsletter

Important Sales Tax Changes July 1, 2004

Mass mailing
Each sales tax and retailers use tax permit holder will soon receive a letter from the Iowa Department of Revenue outlining sales tax changes effective July 1. The letters will be mailed the first week in April.

Informational meetings
A list of statewide meetings addressing the changes will be included in the mailing; more than 100 will be held in April and May, conducted by field and in-house Taxpayer Service Specialists. The list will also be available on our Web site.

graphic of the letter eLists
The department is making every effort to inform businesses of these and future changes. Please help us promote the department’s Business Taxes eList to other businesses. Our department may not have the resources for future mass mailings. Future changes will be made through the media, our Web site and our eList system.

By subscribing to this free eList news service on our Web site, businesses will automatically receive Iowa tax news updates and newsletters. Anyone may sign up!

If you received the newsletter by e-mail, you are already signed up. If you are reading this on our Web site, you need to sign up! You will receive an e-mail from us asking you to confirm your subscription. Be sure and reply!

Construction Contractors Reminders

  • Contractors always pay tax on building materials for new construction, reconstruction and alteration unless they are issued an authorization letter and exemption certificate by certain exempt entities. However, these special exemption certificates cannot be issued unless the exempt entity registers its project through the department's online exempt entity/construction system and receives approval from the department. More information is available on our Web site, including an explanation of which exempt entities qualify.
  • Exception: Contractors are exempt from paying tax on wind energy conversion equipment. 701 IAC 18.56
  • An exemption from sales tax is also an exemption from local option sales tax.

Classes About Iowa Business Taxes

Are you a new business? Or just need to know more?
Our tax classes are held all year statewide.

Local Option Sales Taxes

  • Changes effective July 1 will be posted on our Web site before May 1. Many counties will be adding the school local option sales tax, with several adding regular local option tax. Check this page periodically for the latest local option changes.
  • Montgomery County (69): Red Oak and the Unincorporated Area did not sunset on March 31. Continue collecting the 1 percent regular local option tax on taxable sales in these jurisdictions.
  • Changes in local option tax may take effect twice each year: January 1 and July 1.

Freight / Transportation Charges
Shipping and Handling

Freight/transportation is exempt if...

Freight or transportation charges are exempt if they are separately invoiced or separately stated on the bill.

Freight/transportation is taxable if...

When freight or transportation charges are not separately stated in the sale agreement, they become part of the purchase price and are subject to tax.

Shipping and handling are taxable (This section regarding shipping and handling is no longer correct.  Please see the September 2005 eNews for updated information.)

If a single charge for shipping and handling is separately stated in the sale agreement, it is taxable. The additional service of "handling" makes this charge taxable.

Consumer's Use Tax

Businesses! — Individuals!

Do you purchase items from out of state or from catalogs or the Internet?
You may owe Iowa Consumer's Use Tax. Find out why and how to pay.

We Make House Calls!

Gather your employees or your organization's membership.
We will come to you and address your Iowa business tax concerns.
This service is free of charge. Just e-mail us to contact you.

Landscaping, Lawn Mowing, Lawn Care

The services of landscaping, lawn mowing, and lawn care are taxable unless performed on or in connection with new construction, reconstruction, alteration, expansion, or remodeling of a building structure.

Fruit Trees, Vegetable Seeds

The sales of these are exempt through June 30 of this year. Stay tuned for information on the change of taxation of these items effective July 1.

New Legislation Affecting Iowa Taxes

We will keep you posted via eLists about the changes in Iowa tax law. In addition, legislative summaries are posted on our Web site. We expect the summary of 2004 legislation to be available in July.