What Changed in the Iowa Economic Nexus?

Sovos
December 4, 2020

After the South Dakota v. Wayfair, Inc. decision, numerous states made adjustments to their economic nexus law. Iowa’s governor signed a state tax reform bill on May 30, 2018, which expanded on the definition of businesses that must collect Iowa sales tax and local option tax to include certain remote sellers. We have highlighted the key points of Iowa’s current economic nexus standard below.

Enforcement date:
January 1, 2019.

Sales/transactions threshold:
$100,000.

Measurement period:
Threshold applies to the previous or current calendar year.

Included transactions/sales:
Gross revenue from Iowa sales.

When You Need to Register Once You Exceed the Threshold:
Next transaction.

Summary: Remote sellers must collect Iowa sales and applicable local option taxes if their gross revenue from Iowa sales in the current or previous calendar year is $100,000 or more. Marketplace facilitators are also required to collect Iowa sales tax and applicable local option taxes if the facilitator made or facilitated $100,000 or more in Iowa sales in the current or previous calendar year.

If a remote seller is not already registered to collect Iowa sales tax and they exceeded the threshold after January 1, 2019, they “must collect Iowa sales tax and applicable local option sales tax starting on the first day of the next calendar month that starts at least 30 days from the day the remote seller first exceeded the small remote seller exception,” according to the Iowa Department of Revenue.

While Iowa’s economic nexus standard may seem fairly straightforward, remote sellers must still ensure that they remain compliant as rules and regulations evolve.

Iowa Sales Tax Resources: For more information on Iowa’s economic nexus standard, reach out to our team. Additionally, check real-time updates on each state when you visit our interactive sales tax nexus map.

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Author

Sovos

Sovos is a leading global provider of software that safeguards businesses from the burden and risk of modern transactional taxes. As VAT and sales and use tax go digital, businesses face increased risks, costs and complexity. The Sovos Intelligent Compliance Cloud is the first complete solution for modern tax, giving businesses a global solution for tax determination, e-invoicing compliance and tax reporting. Sovos supports more than 7,000 customers, including half of the Fortune 500, and integrates with a wide variety of business applications. The company has offices throughout North America, Latin America and Europe. Sovos is owned by London-based Hg. For more information visit www.sovos.com and follow us on LinkedIn and Twitter.
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