Get Your Iowa Sales Tax Permit Faster: A Step-by-Step Guide Explained

In Iowa, you need a Sales Tax Permit to collect and remit sales tax. This guide explains how to get your permit FAST by outlining the step-by-step application process online.

Does Iowa Have a Sales Tax and How Does It Work

Yes, Iowa has a sales tax. It’s a destination-based tax, meaning the rate depends on the customer’s location, not the seller’s. The state rate is 6%, but most localities add a 1% local option sales tax (LOST) for a combined rate of 6% to 8%. Online sellers need to determine if they have a sales tax nexus in Iowa (physical presence or economic thresholds) to collect and remit the appropriate rate.

What is the Sales Tax in Iowa

Iowa’s state sales tax rate is 6%. However, some localities add an additional local option tax, bringing the total sales tax to a range of 6% to 8%. To determine the exact rate for your area, check our sales tax calculator and lookup tool

What is a Iowa Sales Taxs Permit

A Iowa sales tax permit, also commonly called a sales and use tax permit is a license that allows you to legally charge sales tax to your Iowa customers and then report that tax to the state. Simply put, a sales tax permit in Iowa authorizes businesses to collect sales tax on taxable goods they sell in the state. This permit is required by businesses with a physical presence in Iowa or those that exceed sales tax nexus thresholds for remote sales.

Is Iowa Sales Tax Permit the Same as Iowa Use Tax Permit

No, an Iowa sales tax permit and an Iowa use tax permit are not the same, although they are both handled under the same registration process. A sales tax permit allows you to collect sales tax from customers in Iowa, while a use tax permit applies to businesses that buy taxable goods without paying sales tax upfront, and then need to remit the use tax directly to the state.

Is a Iowa Sales Tax Permit the Same as a Resale Certificate in Iowa

No, an Iowa sales tax permit and a resale certificate are different. A sales tax permit allows you to collect and remit sales tax on your sales, while a resale certificate lets you buy goods tax-free for resale. In short, one helps you collect tax (permit), the other helps you avoid paying tax on purchases (resale certificate).

Is Iowa Sales Tax an Origin or Destination Based 

Iowa sales tax is destination-based. This means sellers need to charge the sales tax rate applicable to the customer’s shipping address, not the seller’s location.

Collecting Sales Tax in Iowa

This section covers everything you need to know about collecting Iowa sales tax, including:

1. Registration requirements (Who needs to register for a sales tax permit in Iowa?)
2. Sales tax rates (Statewide rate and potential local variations)
3. Nexus rules (Determining if you have a sales tax obligation in Iowa)
4. Filing and remittance procedures (How and when to file sales tax returns)
5. Understanding taxable goods and services (What’s subject to sales tax in Iowa?)

Who Needs to Register for a Sales Tax Permit in Iowa

In Iowa, you generally need a sales tax permit if you sell taxable goods and have a physical presence in the state or meet economic nexus requirements. This means exceeding $100,000 in annual sales to Iowa customers or using a marketplace facilitator that does.

Does Iowa Charge Sales Tax on Services

Iowa generally doesn’t charge sales tax on services unless specifically listed as taxable.  This means most services are exempt, but some common taxable items include car repairs, barbershops, and cleaning services..

What Triggers Iowa Sales Tax Nexus (how to determine if you have a sales tax nexus in Iowa)

Having a physical presence or exceeding a sales threshold in Iowa can trigger a sales tax nexus.

A physical presence includes a store, warehouse, or employees in the state. The sales threshold is exceeding $100,000 of sales into Iowa within a 12-month period. If you meet either of these criteria, you’re required to register for a sales tax permit and collect Iowa sales tax from your customers.

What Do I Need to Collect Sales Tax in Iowa

To collect sales tax in Iowa, you’ll need two things: a sales tax nexus and a sales tax permit.

Sales tax nexus means having a connection to the state, like storing inventory or exceeding sales thresholds. Get a permit from the Iowa Department of Revenue or www.tax.iowa.gov, to officially collect and remit sales tax.

Does Etsy Collect Sales Tax for Iowa 

Yes, Etsy collects and remits sales tax for orders shipped to Iowa. They’ve been doing this since February 1, 2019. This means Iowa sales tax will automatically be added to your Etsy purchases at checkout.

Does Iowa Require Internet Sales Tax Collection

Iowa generally requires online retailers to collect sales tax for in-state purchases if they have a sales tax nexus in Iowa. As earlier stated this nexus can be established by having a physical presence in the state or exceeding $100,000 in annual sales to Iowa customers.

Can Counties in Iowa Collect a Sales Tax

In Iowa, counties themselves cannot directly collect a sales tax. However, most Iowa localities have an additional 1% local option sales tax (LOST) on top of the 6% state sales tax. This LOST is collected by the state and then distributed to the approving jurisdictions within the county.

How to Collect Sales Tax in Iowa

Here’s how to collect sales tax:

1. Get a Sales and Use Tax Permit: Register with the Iowa Department of Revenue to obtain a permit for collecting sales tax.
2. Determine Sales Tax Rate: Iowa uses a destination-based system, so charge the combined state and local rate based on your customer’s shipping address.
3. Collect Sales Tax at Checkout: Add the appropriate sales tax to your customer’s online order total.
4. File & Pay Sales Tax: File sales tax returns and submit collected tax to the Iowa Department of Revenue on time (monthly or annually, depending on your sales volume).

Does a Nonprofit Have to Collect Sales Tax in Iowa

In Iowa, nonprofits generally must pay sales tax on purchases unless they qualify for a specific exemption. They also need to collect and remit sales tax if they sell taxable goods.

Does Sales Tax  Apply to Used Equipment in Iowa

In Iowa, generally yes, sales tax applies to used equipment. There are some exceptions, though, particularly for contractors and builders purchasing specific equipment for construction projects

Iowa Sales Tax Registration & Application

Registering for an Iowa Sales Tax Permit is quick and easy! You can apply online through the Iowa Department of Revenue’s website or by mail using Form 78-005. You’ll need your Federal Employer Identification Number (FEIN) and basic business information to get started. Once approved, you’ll receive your permit number and instructions on filing and paying sales tax.

What Information Do You Need to Register for a Sales Tax License in Iowa 

To register for a sales tax permit in Iowa, you’ll need:

1. Federal Employer Identification Number (EIN)
2. Business information: Name, address, entity type (sole prop, LLC, etc.)
3. Start date of sales in Iowa
4. Estimated annual sales tax liability

Tip: Gather this information before applying online at the Iowa Department of Revenue’s website.

How to Register a Sales Tax’s Permit in Iowa

To register for an Iowa Sales Tax Permit, simply:

1. Visit the Iowa Department of Revenue’s GovConnectIowa website.
2. Create an account or log in if you already have one.
3. Follow the prompts to register your business and apply for a sales tax permit.
4. You’ll need basic business info, your SSN or EIN, and the date you started selling in Iowa.

This process typically takes just a few minutes, and you’ll receive your permit number electronically within a business day.

How Much Does it Cost to Apply for a Sales Tax Permit in Iowa

Applying for a sales tax permit in Iowa is free of charge. You won’t need to pay any fees to register for your permit online or by mail. This applies to both the initial registration and any renewals (Iowa doesn’t require permit renewals).

How Long Does it Take to Receive Your Iowa Sales Tax Permit 

Expect your Iowa sales tax permit in about 4-6 weeks by mail. You can still collect sales tax right away; your application submission serves as temporary proof until the official permit arrives.

What is a Sales Tax ID Number in Iowa

In Iowa, your Sales Tax ID Number is the 9-digit permit number you receive after registering for a sales tax license with the Iowa Department of Revenue (IDR). This number allows you to collect sales tax on taxable goods and services and report it to the state.Think of it like a business social security number for sales tax purposes.

How to Get a Sales Tax ID Number in Iowa

Iowa doesn’t issue separate Sales Tax ID numbers. You’ll get your ID number (permit number) after registering for a sales tax permit with the Iowa Department of Revenue. It’s free and can be done online. 

How to Register a Business in Iowa

Registering your business in Iowa depends on your business structure (whether you’re a sole proprietorship or an LLC or Corporation. If you’re a sole proprietorship, you will need to first file a trade name with your county recorder’s office. But if you’re an LLC or Corporation, you will need to first file online with the Iowa Secretary of State’s office. Next, is to register for a sales tax permit if you sell taxable goods or services. You can do this online through GovConnectIowa.

Do I Need to Renew My Sales Tax Permit in Iowa

No, you don’t need to renew your Iowa sales tax permit. It’s valid indefinitely as long as your business operates in the same location and ownership structure remains unchanged.

How to Cancel Your Sales Tax Permit in Iowa

In Iowa, you can cancel your sales tax permit online by login into GovConnectIowa and submitting the Combined Business Change Form, or by filling out and submitting the Iowa Business Tax Cancellation Form 92-034 by mail. This form requires your business name, tax ID number, and the date you want the cancellation to take effect. 

Remember, you’ll need your Sales and Use Tax account or tax type ID number for either method.

How to Check the Status of Your Iowa Sales Tax Permit

You can check your permit status by contacting the Iowa Department of Revenue (IDR) at 1-800-470-1673. Alternatively, you can email them at idr@iowa.gov and inquire about your permit status using your business name and tax ID number (if available).

How to Reactivate Your Iowa Sales Tax Permit 

Reactivating an inactive Iowa sales tax permit can be done through your GovConnectIowa account. You’ll need your account ID and IDR ID to log in and request access to your permit. Once logged in, look for the option to reactivate your permit. If you don’t have a GovConnectIowa account, you’ll need to create one first.

What’s on an Iowa Sales Tax Form

Iowa sales tax forms vary depending on the type of filing, but typically include:

• Business information: Name, address, and Employer Identification Number (EIN).
• Filing period: Dates for the sales tax period being reported.
• Sales and use tax amounts: Gross sales, taxable sales, exempt sales, and total tax owed.
• Payment information: Remittance method (check, electronic funds transfer) and account number (if applicable).

Iowa Sales Tax Rates by County & Zip Code and Look-Up Tool

Iowa sales tax rates vary by location. The state rate is 6%, but some counties and cities add local option taxes. To find the exact rate for your area, use the Iowa Department of Revenue’s Sales Tax Look-Up Tool: Iowa Sales Tax Look-Up Tool. This tool lets you search by address to get the combined state and local sales tax rate.

Iowa Business Gateway County and Municipal Rates List

Examples of Specific County Sales Tax Rates in Iowa

Iowa Sales Tax Exemptions and Resale Certificates

Iowa sales tax applies to most purchases, but there are exemptions for certain items and situations. Resale certificates are a key tool for businesses that buy goods to resell, allowing them to avoid paying sales tax upfront.

What is Iowa Sales and Use Tax Blanket Exemption Certificate

An Iowa Sales and Use Tax Blanket Exemption Certificate is a document used by businesses to claim exemption from sales tax on purchases they will resell or use for exempt purposes.

This certificate, valid for up to three years, simplifies the process by eliminating the need to provide a new certificate for each qualifying purchase

What Items are Exempt from Sales Tax in Iowa

Common items exempt from Iowa sales tax include:

• Groceries (excluding prepared foods): This covers most food items intended for home preparation, like fruits, vegetables, and grains.
• Prescription drugs and medical supplies: Essential medical equipment and medications are generally exempt.
• Farm machinery and equipment: Used directly in agricultural production.
• Clothing and footwear: Most apparel and shoes are exempt, with some exceptions.

How to Apply for Tax Exemption in Iowa

To apply for Iowa tax exemption, for common sales tax exemptions, like those for non-profits or farm equipment, you’ll need to file an Iowa Sales/Use/Excise Tax Exemption Certificate (Form 31-014) with your supplier while for property tax exemptions, such as those for historic properties, you’ll typically apply with your local assessor by February 1st of the assessment year.

Documents Required to Apply for Iowa Tax Exemption 

You don’t typically apply for tax exemption in Iowa. Instead, qualifying businesses and organizations can claim exemptions by providing a completed Iowa Sales/Use/Excise Tax Exemption Certificate (Form 31-014) to the seller at the time of purchase. This form includes your business information, reason for exemption, and signature..

What Information are Required in Iowa Sales Tax Exemption Form

An Iowa Sales Tax Exemption Form (Form 31-014) requires:

• Purchaser information: Name, address, and business type (e.g., retailer, manufacturer, nonprofit)
• Reason for exemption: Checkbox for exemption category (e.g., resale, qualifying machinery, farm equipment)
• Seller information: Business name and address
• Description of purchase: Brief explanation of items being purchased
• Signature and title of authorized purchaser under penalty of perjury

What is an Iowa Resale Certificate

An Iowa resale certificate is a document that allows businesses to buy products tax-free for resale. This certificate verifies that the purchaser intends to resell the items, not use them personally. By presenting a valid resale certificate to sellers, businesses can avoid paying sales tax on their wholesale purchases.

How to Get a Resale Certificate in Iowa

• To obtain an Iowa resale certificate, simply fill out Iowa Department of Revenue’s Sales/Use/Excise Tax Exemption Certificate (Form 31-014). This form can be downloaded from their website and requires your business information and signature. No registration is needed – just complete the form and present it to sellers when making tax-exempt purchases for resale

How do I Claim Sales Tax Exempt in Iowa

To claim sales tax exempt in Iowa, you’ll need to provide a completed Iowa Sales Tax Exemption Certificate to the seller. This certificate verifies your eligibility for tax exemption based on reasons like resale, manufacturing, or being a nonprofit. The seller keeps the certificate for their records. You can find the certificate and instructions on the Iowa Department of Revenue website: Iowa Department of Revenue.

Is Equipment used in Manufacturing exempt from Sales Tax in Iowa

In Iowa, yes, certain equipment used in manufacturing can be exempt from sales tax. This applies to machinery, equipment, replacement parts, and even supplies directly used in:

• Processing by a manufacturer
• Maintaining a product’s integrity
• Maintaining unique environmental conditions for the product or the processing equipment.

Iowa Sales Tax Payment, Filing, and Reporting

Iowa sales tax filing and payment frequency depends on your tax liability. Businesses that collect $1,200 or more in sales tax per year file and pay monthly. Those collecting less than $1,200 annually file and pay annually. All filing is done electronically through GovConnectIowa.

How to Pay Iowa Sales Tax

Iowa sales tax can be paid online through the Iowa Department of Revenue’s EasyPay system. You’ll need your Business eFile Number (BEN) or other identifying information to file and make a payment.

How to File Iowa Sales Tax Online

To file Iowa Sales Tax Online:

1. Visit the Iowa Department of Tax website GovConnectIowa)
2. Register for a Business eFile Number (BEN) if you haven’t already.
3. Sign in using your BEN, username, and password.
4. Select “File a Return” and follow the on-screen prompts.
5. Enter your sales and tax details for the filing period.
6. Submit your return and pay any tax owed electronically.

What is the Sales Tax Filing Frequency in Iowa

In Iowa, your sales tax filing frequency depends on how much sales tax you collect annually.  Businesses that collect $1,200 or more in sales tax per year will file and pay monthly.  Those collecting less than $1,200 annually can file and pay taxes once a year.

When are the Due Dates for Iowa Sales Tax

Iowa sales tax return due dates depend on your filing frequency, which is based on your sales tax liability.

• Monthly filers: Due on the 20th or last day of the following month.
• Quarterly filers: Due on the last day of the following month after the quarter ends (April 30th, July 31st, October 31st, January 31st).
• Annual filers: Due on January 31st of the following year.

If the due date falls on a weekend or holiday, it’s extended to the next business day.

What is Iowa Sales Tax Discounts and How Does it Work

Iowa doesn’t offer general sales tax discounts for filing or paying early. However, they do have a yearly sales tax holiday where clothing and footwear under $100 are exempt from sales tax. This holiday typically happens for a weekend in August.

What is the Iowa Sales Tax Timely Filing Discount 

Iowa does not offer a sales tax discount for timely filing. However, filing your sales tax return and payment on time helps you avoid penalties and interest charges.

What is Iowa Sales Tax Holiday

Iowa Sales Tax Holiday is a two-day event held annually on the first Friday and Saturday of August. During this period, shoppers can buy qualifying clothing and footwear under $100 without paying state or local sales tax. This is a great opportunity to save on back-to-school shopping or gear up for the fall season

Is there Sales Tax on Discounts in Iowa

In Iowa, sales tax is applied to the final discounted price of a good. This means the customer only pays sales tax on the amount they actually pay, after the discount is applied.

Iowa Sales Tax Interest and Penalty

Missing Iowa sales tax deadlines can lead to penalties and interest charges. There’s a penalty for late filing or late payment, with additional penalties for intentional disregard or fraud. Interest accrues on unpaid taxes until they are settled.

What is the Penalty for Late Filing or Non-Payment of Iowa Sales Tax

Iowa imposes a 5% penalty for late filing or paying less than 90% of the tax due while for willful failure to file or pay, Iowa imposes a 75% penalty. For interest, this starts accruing on the due date of the return at a rate of 0.5% per month.

Does Iowa Refund Sales Tax to Foreigners

Iowa generally doesn’t offer sales tax refunds to individual customers. However, when sales tax is paid in error; you can file a claim for refund with Form IA 843 if you believe you were incorrectly charged sales tax.

Iowa Sales Tax Audits (What Does This Mean and How Does It Work)

An Iowa sales tax audit examines your business records to ensure you’re collecting and paying the correct amount of sales tax.  The Iowa Department of Revenue selects businesses for audits, and the process typically involves reviewing sales records, tax returns, and potentially an on-site visit

How Far Back can a Iowa Sales Tax Audit Go

In Iowa, the general rule is that the Department of Revenue can audit your sales tax returns for three years from the filing date (or the due date, whichever is later). This applies if you filed your returns correctly. However, there’s no limit on how far back they can audit if you: never filed a return, or filed a fraudulent return to avoid taxes

Iowa Sales Tax Permit FAQs

What Does Iowa Sales Tax Reciprocity Mean

Iowa sales tax reciprocity simplifies income taxes for residents who work in Illinois. This means an Iowa resident working in Illinois wouldn’t pay income tax to both states. They’d only pay income tax to Iowa.  Currently, Iowa only has sales tax reciprocity with Illinois.

Is Freight Taxable in Iowa

In Iowa, generally, if the freight cost is separately stated on the invoice, it’s exempt from sales tax. However, if the freight cost is included in the sales price or not separately identified, it’s considered part of the sale and taxable.

Is Shipping Taxable in Iowa

In Iowa, generally shipping and handling costs are not taxable if they are separately stated on the invoice or bill. This means the seller lists the cost of the item and the cost of shipping separately.  If the shipping cost is included in the total price of the item, then it may be taxable.

How Does Iowa Sales Tax Out-of-State Buyer Work

Iowa sales tax applies to where you receive your purchase, not where it ships from.  So, if you buy online from an out-of-state seller and have it shipped to Iowa, you’ll likely owe sales tax at the Iowa rate (6% plus any local option taxes).  The seller is responsible for collecting this tax if they have sales tax nexus in Iowa..

Does One Iowa Sales Tax Permit Cover Multiple Businesses

No, one Iowa sales tax permit only covers one business location.  If you operate in multiple Iowa locations, you’ll need a separate permit for each. However, you can still file a consolidated sales tax return to simplify reporting for all your Iowa locations.

What Happens to My Iowa Sales Tax Permit if I Sell My Business

Selling your Iowa business doesn’t automatically cancel your sales tax permit.  The new owner will need to obtain their own permit, but you’ll still be responsible for filing final tax returns and paying any outstanding taxes before closing the permit.  It’s recommended to notify the Iowa Department of Revenue of the sale to close the account and avoid future charges 

Do Contractors Charge Sales Tax on Labor in Iowa

Generally, in Iowa, contractors don’t charge sales tax on labor for new construction, reconstruction, or remodeling of real property. They do charge sales tax on materials and may also charge sales tax on labor for repair or maintenance services. So, whether a contractor charges sales tax on labor depends on the type of work performed.  

Does the Iowa Sales Tax Permit Expire

No, an Iowa Sales Tax Permit does not expire. Once issued, it remains valid until you close your business or the Iowa Department of Revenue cancels it for non-compliance.  This means you can continue collecting and remitting sales tax throughout your business operations without needing to renew the permit itself.

What is a Wholesale License in Iowa

An Iowa wholesale license is required for businesses that sell certain goods at wholesale to other businesses within Iowa. The specific type of license depends on the product being wholesaled. Common examples include:

• Wholesale drug distributor license: Required to wholesale prescription drugs.
• Motor vehicle distributor or wholesaler license: Needed to wholesale new motor vehicles to franchised dealers.

For most wholesale licenses, you’ll need to apply through the Iowa Department of Inspections and Appeals (DIA) and pay a fee.

How Do I Look Up a Business License in Iowa

Iowa doesn’t have a general business license. Instead, licensing requirements depend on the business activity. You can search for business entities by name or number on the Iowa Secretary of State’s website: Iowa Secretary of State Business Search. This search will reveal a business’s filing history and status, but not necessarily its specific licenses.

How to Find Your Iowa Business License Number

There are two main Iowa business ID numbers you might be looking for:

• Iowa Department of Revenue (IDR) ID: This 9-digit number acts as your state tax ID and is issued when you register for a sales tax permit or other relevant permits. You can find it on your registration paperwork or by looking up your business on the Iowa Department of Revenue’s website.
• Iowa Secretary of State Business Number: This 6-digit number is used for filing documents with the state and can be found by searching the Business Entities Search on the Iowa Secretary of State’s website.

Iowa Business License Cost

There’s no fee for the general business registration with the Iowa Department of Revenue, but some licenses, like an LLC formation, cost $50.

What is Iowa Withholding Permit Number

Your Iowa Withholding Permit Number is a unique identifier used to file state income tax withholding for employees. It’s either a 9-digit or 12-digit number issued by the Iowa Department of Revenue.

Can My Iowa Sales Tax License Application Be Delayed or Rejected

Yes, your Iowa sales tax license application may be delayed or rejected. This can happen for several reasons, such as missing information, errors in the application, or not meeting Iowa’s nexus requirements (having a connection to the state that obligates sales tax collection).