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Receipts from Self-pay Washers and Dryers No Longer Subject to Iowa Sales Tax – Effective July 1, 2015

Governor Branstad signed HF 603 on June 18, 2015, which excludes the use of self-pay washers and dryers from the taxable service of dry cleaning, pressing, dyeing, and laundering.  This change is effective July 1, 2015.  Retailers providing self-pay washers and dryers to customers are no longer required to remit Iowa sales tax on receipts from those machines on or after July 1.  Retailers must continue to collect and remit Iowa sales tax on receipts from those machines occurring prior to July 1.  

This exclusion from tax only applies to washers and dryers which customers operate themselves after making the payment necessary to activate the machine.  Receipts from dry cleaning, pressing, dyeing, and laundering services provided directly by the retailer continue to be subject to sales tax.

Retailers who will continue to provide taxable services or sell taxable products, such as detergent, fabric softener, etc., must continue to charge and remit Iowa sales tax on those sales.  For periods beginning on or after July 1, they will report all sales, including those from self-pay washers and dryers, on line 1 of their sales tax return.  The exempt receipts from self-pay washers and dryers will also be shown on line 4 as an exemption.    

Retailers whose only receipts are from self-pay washers and dryers, and who don’t make any other taxable sales, may request to cancel their sales tax permit effective July 1, 2015.  These retailers must still file returns through the period ending June 30, 2015.  Permits can be cancelled at the following link to the Department’s website:  https://tax.iowa.gov/request-change-correction-cancellation-or-reinstatement-tax-permit.