How is local option sales tax imposed on services?
Local option sales tax is imposed on any service subject to state sales tax when the first use of the service occurs, or potentially could occur, within a taxing jurisdiction.
Local option sales tax is imposed on any service subject to state sales tax when the first use of the service occurs, or potentially could occur, within a taxing jurisdiction.
Motor fuel and special fuel are subject to local option tax when sales tax applies if delivery occurs in a taxing jurisdiction. Fuel subject to motor fuel tax is not subject to sales tax at the time of purchase.
It makes no difference when the contract is signed or where it is signed. "Delivery" is the taxing event. If tangible personal property subject to state sales tax is delivered into a jurisdiction after the date local option sales tax has been imposed, local option sales tax is due. If a taxable service is rendered, furnished, or performed after the date local option sales tax has been imposed, local option sales tax is due.
If a retailer located in a taxing jurisdiction purchases items for resale or processing and later withdraws them from inventory for other purposes, the local option tax for the jurisdiction where the items are withdrawn from inventory is imposed. It does not matter where or when the items were first purchased.
Owners, contractors, subcontractors, or builders purchasing building materials, supplies, and equipment for use in a construction project must pay local option sales tax on these items if they take delivery in a taxing jurisdiction.
The location of each individual vending machine determines whether or not the local option sales tax applies. If it is in a local option jurisdiction, the tax applies.
If the item is brought into Iowa by the purchaser:
No. Local option sales tax can only be imposed when state sales tax is applicable. Iowa does not impose a local option use tax.
If the item is brought into Iowa by the seller in the seller’s own vehicle or common carrier:
Yes, local option sales tax is due if delivery occurs in a local option jurisdiction. See the page on remote sales to determine when retailers must register and collect local option taxes on sales delivered into Iowa.
Local option tax cannot be charged on a transaction where delivery occurs in a jurisdiction where no Iowa local option tax is imposed.
Yes. The seller will charge the local option tax applicable where the customer receives the item.
Maybe. If a resident of a taxing jurisdiction takes physical possession of the item in a non-taxing jurisdiction, no local option tax can be imposed. However, if the Iowa seller delivers it by the seller’s vehicle or through a common carrier to the purchaser who lives in a local option tax jurisdiction, then the seller must collect the local option tax applicable in the buyer’s location.
An FOB designation does not affect the sourcing of a transaction. An FOB designation also does not affect sales tax and use tax, including local option tax.