State laws on economic nexus vary and it’s hard to keep up if you’re doing business in multiple states. We’ve done the research for you and here’s all the information you need to know about economic nexus in Iowa.
What is economic nexus in Iowa?
With the recent South Dakota v. Wayfair Supreme Court ruling in favor of South Dakota, states are now free to pursue sales tax from eCommerce businesses who have a “significant presence” in their state.
Significant presence or “nexus” was previously defined as having a physical presence (ex: brick & mortar store, employee or inventory in a fulfillment center like FBA). But with this recent ruling, this definition has been expanded to include economic activity in a state as well. This concept of triggering sales tax responsibility because of your economic activity in a state is now referred to as economic nexus.
Most importantly, what this means is that if you pass a state’s economic threshold for total revenue in that state and/or number of transactions in that state, you’re now legally required to register, collect and remit sales tax for that state.
What’s the threshold for economic nexus law in Iowa?
- State: Iowa
- Threshold: $100,000/year in gross revenue in the previous or current calendar year
- Summary: According to the state, sellers that meet the sales threshold are required to register for an Iowa sales tax permit, collect sales tax on sales that ship into Iowa, and remit sales tax to the state.
- Full text: You can read the text of Iowa economic nexus law here.
- More: You can read guidance on economic nexus from the Iowa Department of Revenue here.
When did this Iowa law go into effect or is it planned?
January 1, 2019. Iowa has also passed a marketplace facilitator law effective 1/1/2019. It is currently unclear whether the thresholds are inclusive of marketplace sales or are exclusive of those sales. Prior to July 2019, there was an additional requirement of 200 transactions in the previous or current calendar year that triggered economic nexus, but it has since been removed.
I meet the economic threshold requirement in Iowa. Now what?
Here’s a quick checklist of what to do next:
- Register for a sales tax permit in Iowa (info below)
- Choose a technology like TaxJar to help you manage multi-state compliance. Sign up for a free 30-day trial to see how we can help you save time!
- Connect TaxJar once to all of the places you sell
- Ensure all your eCommerce channels are setup correctly to collect sales tax
- Enroll in AutoFile and tell us how often you need to file
- Relax, you now handled your sales tax exposure. We’ll handle the rest for you.
What about Iowa’s Retailer Use Tax?
Iowa’s Retailer’s Use Tax is a voluntary program for remote sellers who have not yet reached economic nexus requirements in Iowa. This means that if you’re under those thresholds, you do not have to register with the state, collect and remit sales tax. If you’ve already registered for the Iowa Retailer’s Use Tax and are under Iowa’s economic nexus requirements, then you can cancel your registration with the state if you’d like to (it’s a voluntary program). If you have met Iowa’s economic nexus requirements, the state requires that you register for a standard sales tax license. If this applies to you and you are already registered for a Retailer’s Use Tax license, you can cancel your registration and register with the state for a new sales tax permit.
Can you help me register for a sales tax permit?
Certainly! TaxJar offers these two options:
- Read our do it yourself instructions for every state
- Visit TaxJar.com/register to have one of our expert partners do it for you (~$100 each state not including state’s fees)
Who can handle my Iowa sales tax filings for me?
At TaxJar, we help more than 10,000 sellers manage their sales tax needs every month. We help your business save on submitting your returns with our automated filing service called AutoFile. Read more about how AutoFile can handle all of your returns in as many states as you’d like.
I’ve met this threshold in Iowa, now where can I ask questions?
We recommend speaking with a vetted sales tax expert to answer specific questions for your business.
And finally…I’m close to meeting this threshold for Iowa. Will TaxJar notify me when I reach it?
Yes! With TaxJar’s Economic Nexus Insights Dashboard, you can see where your business currently has nexus, where your business is approaching nexus, and recommended next steps on how to begin complying with sales tax in all states.
Proactive notifications let you know when you’re approaching or have reached thresholds, so you can stay in front of any changes to your nexus requirements.
Schedule a time to look at your specific sales tax needs and learn about automation.Connect with TaxJar
Do you have more questions on how economic nexus works after this ruling? Join the discussion and drop us a comment.