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Amazon to collect Iowa sales tax, January 2017


 The days of tax-free Amazon shopping in Iowa are numbered.

Iowa residents who love to shop at Amazon.com because it doesn’t charge them sales tax should take the coming days to shop until they drop. Amazon will start collecting tax on Iowa sales beginning January 1, 2017.

A spokesperson from the online retail giant reportedly told KCCI, “Amazon will be required to collect sales tax in Iowa beginning on January 1, 2017.” Just why the company would be required to collect tax has yet to be revealed. As of this writing, Amazon has no physical presence in the state of Iowa, which would give the company nexus, or an obligation to collect tax.

The ecommerce giant could be choosing to voluntarily collect tax in Iowa, as it has done in several other parts of the country. Earlier this month, Utah Governor Gary Hubert announced the establishment of a voluntary collection agreement with Amazon, which will start collecting Utah tax on January 1, 2017. Amazon also opted to comply with Alabama’s Simplified Seller Use Tax Remittance Act beginning November 1, 2016. And it now collects tax in Washington D.C., where it has no physical presence (there are rumors that it may open a retail store in the capitol). Another possibility is that Amazon intends to build a fulfillment or distribution center in The Hawkeye State.

The Iowa Department of Revenue estimates that taxing Amazon sales could bring in between $18 million and $24 million in additional annual sales tax revenue. However, it should be noted that Iowa residents are supposed to remit use tax whenever sales tax isn't collected at the time of sale. The fact that very few people actually do remit (or even know about) use tax is one reason states are eager for non-collecting remote retailers like Amazon to collect tax.

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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.