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You Shop, You Pay in Iowa

  • Dec 27, 2012 | Gail Cole

The Iowa Department of Revenue reminds Iowa taxpayers of their obligation to pay the state's 6% consumer use tax on items purchased outside Iowa or remotely through mail-order catalogs, internet retailers, television shopping programs, or toll-free 800 numbers. Consumer use tax can apply to both individuals and businesses.

Shopping Out-of-State
If your holiday shopping included a trip out of state and your purchases were charged less than Iowa's 6% tax rate, you may owe consumer use tax on those purchases. For example, neighboring Missouri has a general state sales tax rate of 4.225%. Local taxes can significantly raise that rate, but it all depends on where you shop.

Remote Sellers
Purchases made via catalog or through online retailers may not have been charged sales tax. Amazon.com, for example, does not collect sales tax on most sales made in Iowa. You may owe Iowa's consumer use tax on those purchases.

Use tax exists in order to maintain fair competition with out-of-state businesses. It was enacted in Iowa in 1937, just three years after the enactment of the state's sales tax, in large part so that Iowa taxpayers would not drive out of state to shop. The advent of mail-order and internet shopping has made avoiding sales tax easier.

The Iowa DOR reminds that "[u]se tax protects Iowa businesses from unfair competition by ensuring tax will be paid even if an out-of-state seller is not required to collect it from the purchaser."

Iowa taxpayers are advised to complete an Iowa Consumer's Use Tax Worksheet. Use tax may be paid and filed electronically through the DOR website.

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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.
Gail Cole
Avalara Author
Gail Cole
Gail Cole
Avalara Author Gail Cole
Gail began researching and writing about sales tax in 2012 and has been fascinated with it ever since. She has a penchant for uncovering unusual tax facts, and endeavors to make complex sales tax laws more digestible for both experts and laypeople.