If you have a business in Iowa that sells products or services that are subject to state sales tax, you must register your business with the Iowa Department of Revenue to obtain a retail sales tax permit to collect and pay sales tax. If you have more than one location, you must obtain a sales permit for each location.
The state sales tax in Iowa is 6% and in most local jurisdictions there is also a 1% local sales tax. You can use the Sales Tax Rates Lookup tool on the Iowa Department of Revenue website to find the sales tax rate for a particular delivery location. Or you could use the Local Option Sales Tax Lists and Rates for the entire state.
The sales tax applies on sales of taxable tangible personal property and certain enumerated services. The sales of certain foods, prescription drugs, medical devices, farm and industrial machinery, equipment and computers are exempt from sales tax. In the Iowa Sales and Use Tax Guide you can find more detailed information on which products and services are taxable and which are exempt.
You can register your business online on the Iowa Department of Revenue website. This online registration is for any type of business entity including sole proprietorships, partnerships, limited liability companies, and corporations. And you can register for sales tax among various other Iowa state taxes using this online registration.
According to the Iowa Department of Revenue, about 4 to 6 weeks after registering online you will receive in the mail a Business eFile number that gives you access to file tax returns and pay electronically. You will also receive a postcard with your sales tax permit number.
You can also register your business and apply for a sales tax permit by filing a paper Iowa Business Tax Registration form.
When you apply for a sales tax permit, you estimate the amount of sales tax to be collected. That amount determines how often you have to file sales tax returns. This may be annually, quarterly, monthly, or semi-monthly. You can see Filing Frequencies and Return Due Dates for more information.
Sales returns in Iowa are filed electronically using the eFile and Pay system.
If you make sales in other states besides Iowa, you may be responsible for collecting sales tax on those sales if you have nexus in the other states. According to the Iowa Department of Revenue, you have nexus in another state if you make deliveries in your own trucks; you send representatives or repair and maintenance employees into other states to perform work for your business; you have employees, agents or contractors who solicit business in other states; you sell your products through a website or catalog but you accept returns at a brick and mortar store; or you market jointly with an affiliate that sells through a catalog or the Internet.
If you are responsible for collecting sales tax in other states, you should register to be a Streamlined retailer. If you make sales only in Iowa you do not need to register. You can register online for the streamlined sales tax system on the Streamlined Sales Tax Governing Board website.
Sources:
Business Tax Registration, Iowa Department of Revenue
Iowa Business Tax Registration, Iowa Department of Revenue
Iowa Sales and Use Tax Guide, Iowa Department of Revenue
Registration, Streamlined Sales Tax Governing Board, Inc.
Sales Tax Rates Lookup, Iowa Department of Revenue
Streamlined Sales Tax – Should You Register? Iowa Department of Revenue