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Iowa Amazon Bill On Its Way

  • Mar 28, 2012 | Susan McLain

The Iowa State Legislation is on their way to passing their version of an “Amazon” law to require internet retailers to collect sales tax on purchases made by Iowa residents. The bill, however, includes stipulations that provide for mail-order companies and other unrelated companies that do business across the state line to also collect.

According to the Des Moines Register, “the move in Iowa was largely preemptive and partly designed in response to a situation in Texas” where Texas billed Amazon $269 million for back sales taxes not remitted.

Iowa’s version of an internet retailer bill, Iowa Senate File 2309 (SF2309), states that “Retailer” means:

“…having or maintaining within this state, directly or by a subsidiary, an office, distribution house, sales house, warehouse, or other place of business, or any representative operating within this state under the authority of the retailer or its subsidiary, irrespective of whether that place of business or representative is located here permanently or temporarily, or whether the retailer or subsidiary is admitted to do business within this state….”

In addition, if someone is selling a “…similar line of products as the retailer and does so under the same or similar business name;  maintains an office, distribution facility, warehouse, storage place, or similar place of business in this state to facilitate the delivery of property or services sold by the retailer to the retailer’s customers; [or] uses trademarks, service marks, or trade names…that are the same or substantially similar to those used by the retailer…” the seller is considered as having nexus, or physical presence, in the state for sales tax collection purposes.

The bill states that “…a retailer will be presumed to be maintaining a place of business in this state if any person that has substantial nexus in this state, other than a common carrier, engages in any of the six activities specified in the bill.” One of those six not already mentioned includes third party service providers for installation, repairs and other services for a retailer’s customers as well as deliveries.

Senator Pam Jochum, D-Dubuque, feels that not having this legislation “…does put Iowa retailers at a disadvantage when people are buying online and escaping our taxes. That’s not to mention that the sales tax is something that helps support all of our services, including schools at the local level and cities.” The bill is also receiving support from the Iowa Retail Federation and the Iowa Grocery Industry Association.

This bill isn’t the only one on Iowa residents’ minds. Senator Bill Dotzler, D-Waterloo, says he has received hundreds of signatures on a petition asking “…state officials to push Congress for overall fixes to make the tax fair on all levels.” Senator Dotzler states, “…we need to continue to try to let the federal government know that this needs to be solved on a nationwide basis.”

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SF2309 has passed the three-member Senate Ways and Means subcommittee with no one speaking against the bill. The bill will head to the full committee for further review.

Sales tax rates, rules, and regulations change frequently. Although we hope you'll find this information helpful, this blog is for informational purposes only and does not provide legal or tax advice.
Avalara Author
Susan McLain
Avalara Author Susan McLain
Susan McLain began her career as a technical writer in technology industries such as satellite networking and medical devices. Her skills encompass technical and marketing writing, usability engineering, verification and validation testing and protocol writing, requirements development, business analysis, technical illustration/graphic design and marketing. She has owned her own business providing service to small to medium sized business and in other positions, she has been in project management, documentation and marketing. She is currently the content specialist for Avalara helping to “make sales tax less taxing.”