special events – Sales/use Tax Permit FAQs
1. Am I a sponsor, vendor, or exhibitor?
- The sponsor runs the special event.
- The vendor sells products.
- An exhibitor shows or demonstrates an item, perhaps to obtain leads on other sales.
For more information, see Special Events – Sales/Use Tax Permits
2. What's taxable? Is food taxable?
- Services: Iowa Sales and Use Tax: Taxable Services
- Sales: Exempt Sales
- Iowa Sales and Use Tax Guide publication.
The taxation of food can be a difficult subject to understand. See Iowa Sales Tax on Food for details.
3. I paid tax when I bought materials to make crafts. How do I take a credit for paying this tax?
You may ask for a refund on the form IA 843 Claim for Refund (pdf).
An adjustment can be made on the tax return by entering the amount paid for the materials (not including the amount of tax) when originally purchased as an “other” exemption on line 4 of the return.
Use the resale exemption for future purchases. This exemption can be claimed by providing an Iowa Sales Tax Exemption Certificate (pdf) to your supplier.
Remember this applies only to items purchased for resale or to be incorporated into another product for resale. A credit or refund is not allowed for tax paid on items that were purchased for your own use, even though they may be sold at some time in the future. Tax must still be collected when goods are sold at events even though tax may have been paid on them when they were originally purchased.
4. My organization is nonprofit. Do we have to collect tax?
Sales made by entities or organizations engaged in educational, religious, or charitable activities are exempt if they meet the following requirements:
- The profits from the sale must be used by or donated to one of the following:
o An entity that is exempt from federal income tax under Internal Revenue Code section 501(c)(3);
o A government entity; or
o A private nonprofit educational institution
- The profits must be expended on educational, religious, or charitable activities.
An exemption from tax is allowed to the extent net proceeds are expended for qualifying educational, religious, or charitable purposes.
NOTE: Most nonprofit organizations are not exempt from tax on their purchases.
For additional information, please see Iowa Tax Issues for Nonprofit Entities.
5. Why do I have to pay tax?
All merchants or vendors are required by law to collect and remit appropriate tax, even if it is a small amount. The customer pays the tax that you collect and send to the State.
6. How much tax must I collect?
Iowa's state sales/use tax rate is 6%. Many cities and counties also have a 1% local option tax.
7. Where do I get a tax rate chart?
You may obtain one online or call 515-281-7239 and ask that one be mailed to you.
8. Am I required to mail the tax return even if I had no sales?
Yes, if you had no sales for your filing period, you must still file your return showing $0 sales.
9. I want to sponsor a craft show. What are my responsibilities and how do I accomplish them?
Sponsors of flea markets, craft shows, antique shows, and other temporary events must verify that the exhibitors are licensed to collect tax. Sponsors must obtain an Iowa tax permit number or a good faith statement from each vendor. Sponsors may be responsible for tax that is not collected by the vendors, if the vendor information is not obtained.
10. My company collects the tax from me. How do I handle this?
Some companies collect the tax from their sales representatives and remit it to the state on their behalf. Your company will be able to provide you with the tax permit number used to remit tax to Iowa. Please provide that number to us.
11. Are admission charges and entry fees taxable?
Sponsors need to be aware that charges to the public for admission to the event are taxable. Entry fees at a place of amusement, fair, or athletic event are also taxable, even if the fee is used for prizes. However, entry fees are not taxable when admission is charged.
12. What are some common questions about filing the tax return?
Tax Included in the Price
If tax is collected as part of or included in the selling price of the item or service, the tax needs to be backed out to arrive at the true gross receipts before the return is completed. This is allowed if the retailer makes known to the purchaser that the tax is included in the price which is charged. That can be done by posting a sign or by a notation on the receipt indicating tax is included in the price.
For example: A vendor includes the 6% tax in the price of all goods sold; for purposes of this example, assume local option tax does not apply. The taxable gross receipts are $250. Divide $250 by 1.06. The result - $235.85 - is the amount to be written on line 1 of the return.
If only the state tax of 6% applies, divide the gross receipts by 1.06 as shown in the above example. If a 1% local option tax also applies, divide by 1.07.
Sales made that are not subject to tax are reported as exemptions. Many taxpayers confuse exemptions with the types of deductions for expenses they are able to take on their income tax returns. Expenses of the business are reported on the IRS Schedule C, Profit or Loss from a Business, for income tax purposes, but are not included as exemptions on the sales or use tax return. For example, table or registration fees cannot be shown as an exemption.
13. Do I collect tax on used items?
Tax must still be collected when used items are sold at events, even though tax may have been paid when you originally purchased them for your own use.
14. Can vendors obtain a temporary tax permit?
As of July 1, 2016, the Department no longer issues temporary tax permits. Vendors who used temporary permits in the past should apply for a permanent Iowa tax permit. To apply for a permanent permit, complete and submit the Iowa Business Tax Registration form on our website at: https://tax.iowa.gov/please-read-you-register-your-business. A permanent tax permit allows you to conduct taxable sales or perform taxable services in Iowa at any time during the year. When you attend a temporary event, such as a craft show, you only need to provide the event sponsor with your name and address, along with your permanent tax permit number.