Iowa Tax

graphic for Iowa Department of Revenue Tax eNews electronic newsletter
June 2002
Electronic Newsletter of the
Iowa Department of Revenue & Finance

Iowa Sales Tax Holiday 2002
*On Select Clothing and Footwear*

Friday and Saturday - August 2-3, 2002

This yearly holiday is held the first Friday and Saturday of August. The same guidelines and exemptions apply from year to year unless changed by the Iowa Legislature.

Please be aware that...

  • This is an annual event on the first Friday and Saturday of August.
  • The holiday does not include Sunday.
  • Businesses that are open on these days are required to participate.
  • Retailers should not indicate in any way that they will pay or absorb the sales tax on anything sold.
  • When completing the tax return, list qualifying Sales Tax Holiday sales on the "exemptions" line.

If you sell clothing or footwear in the State of Iowa, this law may impact your business.

  • Exemption period: from 12:01 a.m., August 2, 2002, through midnight, August 3, 2002.
  • No sales tax, including school and local option sales taxes, will be collected on sales of an article of clothing or footwear having a selling price less than $100.00.
  • The exemption does not apply in any way to the price of an item selling for $100.00 or more.
  • The exemption applies to each article priced under $100.00 regardless of how many items are sold on the same invoice to a customer.

"Clothing" means any article of wearing apparel and typical footwear intended to be worn on or about the human body. "Clothing" does not include watches, watchbands, jewelry, umbrellas, handkerchiefs, sporting equipment, skis, swim fins, roller blades, skates, and any special clothing or footwear designed primarily for athletic activity or protective use and not usually considered appropriate for everyday wear.

A representative list of items is available on our Web site.

In addition to taxable and exempt lists, you will find information on:

  • Articles normally sold as a unit
  • Sets containing both exempt and taxable items
  • Buy one, get one free or for a reduced price
  • Exchanging a tax-exempt purchase after August 3
  • Returning an eligible item
  • Coupons, rebates and discounts
  • Gift certificates
  • Rain checks
  • Layaway sales
  • Rentals
  • Mail order sales
  • Repairs and alterations
  • Refunds
  • Records and reporting

New Iowa Local Option Tax Jurisdictions

Effective July 1, 2002

School Infrastructure Local Option Sales Tax (SILO)

Voters in the following four Iowa counties have adopted the 1 percent school local option sales tax effective July 1, 2002.
  • Allamakee County (03): 1%
  • Jackson County (49): 1%
  • Pottawattamie County (78): 1%
  • Union County (88): 1%

Note: This tax applies countywide. The tax is remitted to the Iowa Department of Revenue and Finance with sales tax returns. Our department then distributes it back to the school districts within the county.

As of July 1, 2002, 23 counties with 191 school districts will have passed the SILO.

Regular Local Option Sales Tax (LOST)

Voters in the following jurisdictions have adopted the regular local option sales tax effective July 1, 2002. The counties, county codes, and rates are listed in bold. The bulleted items are incorporated cities in the county and/or the unincorporated area.

Appanoose County (04): 1%

  • Cincinnati
  • Exline
  • Moulton
  • Unionville

Hamilton County (40): 1%

  • Blairsburg
  • Ellsworth
  • Jewell
  • Kamrar
  • Randall
  • Stanhope
  • Stratford
  • Webster City
  • Williams
  • Unincorporated Areas

Humboldt County (46): 1%

  • Dakota City
  • Humboldt

Lyon County (60): 1%

  • Larchwood

Taylor County (87): 1%

  • Blockton: Repealed Effective June 30, 2002

Washington County (92): 1%

  • Ainsworth
  • Brighton
  • Coppock
  • Crawfordsville
  • Kalona
  • Riverside
  • Wellman
  • West Chester
  • Unincorporated Areas

The most comprehensive file we have on regular and school local option taxes is an Excel file. If you do not have Microsoft Excel, you can download the free Excel viewer.

Sales Tax Return Mailings

This year the department changed its mailing process. Instead of mailing quarterly returns and monthly deposits four times each year, we are mailing them only twice each year. This means that permit holders receive two quarters of returns and/or deposits in one envelope.

These forms are preprinted with your permit information. Please be sure to use the correct form.

For more information, check out our March 2002 eTax News .

New permit holders

Your sales tax permit will arrive as a postcard. The information printed on it is not confidential. Please keep it with your records.

If the information is incorrect, please update it on our online service .

Do you suspect Iowa tax fraud?

You can contact our department confidentially online to report fraud.

We investigate all leads to determine whether or not a person or business should be contacted.

How are cars and trucks taxed?

Vehicles that are subject to registration at a county courthouse are subject to the motor vehicle use tax of 5 percent. This is not a sales tax, and, therefore, local option taxes do not apply.

In addition, implements customarily drawn by or attached to a registered vehicle are subject to the motor vehicle use tax. This includes camping, boat, and livestock trailers.

Grain bins and tanks

Grain bins that are permanently installed are subject to sales tax. The buyer of the building materials is responsible for paying sales tax or use tax on those materials. The buyer is the person who pays the vendor.

Landscaping and lawn care

These services are taxable, depending on several factors. Find out what it's all about (pdf).

Filing on time saves money!

Didn't make any sales? Your return is still due! Fill in the lines with zeroes, sign and send it. Our department contacts businesses when returns aren't received. You'll save time and tax dollars by sending in your zero returns.

The department mails returns to permit holders; however, not receiving one is not a valid reason for not filing. If the return due date nears and you have not received a return from the department, obtain one online. You may also photocopy a prior return, white out the old information, and write in the new information. We also accept a sheet of paper with all the relevant information.

Penalty and/or interest may apply if you fail to file a return on time (or if you fail to pay the tax). Failure to file a timely return: 10 percent penalty. Failure to pay the tax: 5 percent penalty if less than 90 percent of the tax was paid. Willful failure to file a return: 75 percent of the tax due.

In addition, interest accrues from the due date until paid. The interest accrues every calendar month, including a fraction of the month.

Delinquent filers may be required to post a bond under the following conditions:

1. Quarterly: two or more delinquencies in a 24-month period
2. Monthly: four or more delinquencies in a 24-month period
3. Semi-monthly: eight or more delinquencies in a 24-month period
4. If the filer has made recurring tax payments with unhonored checks