Generally, a remote seller is someone that makes retail sales of tangible personal property, services, or specified digital products into Iowa, but does not have a physical presence in Iowa. A remote seller may make sales into Iowa through a variety of ways including by phone, catalog, or website.

Iowa law includes an economic nexus threshold. Remote sellers must collect Iowa sales tax only if the remote seller has $100,000 or more in gross revenue from Iowa sales.

Sellers that make Iowa sales on a marketplace, such as a consignment store, auction, or online marketplace should see the Department's marketplace facilitators guidance. Sellers that only sell products on a marketplace may not need to collect and remit Iowa sales tax.

How is the Economic Nexus Threshold Computed?

The economic nexus threshold is based on gross revenue from sales into Iowa. This means all revenue from Iowa sales, including but not limited to exempt sales, wholesale sales, sales for resale, and sales for which a marketplace facilitator collected sales tax.

When does a remote seller need to start collecting sales tax?

A remote seller that did not exceed the sales threshold for the prior year is not required to collect sales tax in the current year. However, if the remote seller exceeds the sales threshold in the current year, the remote seller 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 sales threshold. The remote seller must collect tax through the end of the calendar year in which the sales threshold was met or exceeded as well as the entire next calendar year.

EXAMPLE: Company S, a remote seller, did not exceed the sales threshold in 2022. On September 15, 2023, S exceeds the sales threshold for the first time. S must register to collect Iowa sales tax and must begin collecting Iowa sales tax and applicable local option sales tax on November 1, 2023. S must continue to collect through at least December 31, 2024. S’s sales volume in 2024 and later years will determine whether S must collect Iowa sales tax and applicable local option sales tax after December 31, 2024.

Iowa is one of over 20 states that belong to the Streamlined Sales and Use Tax Agreement. Retailers can register for a sales tax permit in any or all participating states by completing the online application through the Streamlined Sales Tax Registration System. Retailers may choose to register for an Iowa sales tax permit directly with the Iowa Department of Revenue through GovConnectIowa.

Iowa law requires marketplace facilitators to collect Iowa sales tax and applicable local option sales tax on behalf of sellers using their marketplace. Marketplace sellers should review the Department’s marketplace facilitators guidance. Marketplace sellers may not need to register or collect on their own. Or, marketplace sellers may only need to collect Iowa sales tax and applicable local option sales tax on sales they make directly, rather than through a marketplace. Marketplace sellers should review the Department's guidance and contact their marketplace to determine whether the marketplace seller needs to register for an Iowa sales tax permit and collect Iowa sales tax on sales made through the marketplace.

If a remote seller has multiple locations and all are outside of Iowa, the seller should determine whether it meets or exceeds the $100,000 threshold based on its total sales into Iowa from all locations. If the seller does need a sales tax permit, the seller only needs one for its business rather than one for each location.

Gross revenue: The total revenue a retailer generates from Iowa sales.

Iowa sales: All retail sales (whether taxable or exempt) and other sales (i.e., wholesale, sale for resale, etc.) of tangible personal property, services, or specified digital products sold into Iowa or for delivery into Iowa. Iowa sales includes all sales made by a remote seller by any means, including sales made through a marketplace.