For over 50 years, Bloomberg Tax’s renowned flagship daily news service, Daily Tax Report® has helped leading practitioners and policymakers stay on the cutting edge of taxation and...
By Mark Wolski
ST. PAUL, Minn.--Iowa Gov. Terry Branstad (R) signed legislation June 11 that clarifies nexus for retailers in the state.
H.F. 625 requires retailers with offices or distribution facilities in the state that facilitate the delivery of property or services to collect sales and use taxes, as well as those that conduct activities that are significantly associated with retailers' ability to establish and maintain a market in the state for sales.
Jim McNulty, spokesman for the Iowa Department of Revenue, told BNA June 12 that the bill codifies current department practice. Victoria Daniels, also with the department, said the bill's language could strengthen the state's definition of the elements necessary for internet retailers to collect sales tax.
The department has not estimated the tax revenues that could result from the updated nexus language, McNulty said.
Under H.F. 625, retailers would have nexus if they maintain an office, distribution facility, merchandise storage place, or a similar place of business that facilitates the delivery of property or services. Retailers would also be considered to have nexus if they take actions associated with their ability to establish or maintain a market in the state.
The legislation provides that any agreements between retailers and state agencies that exempt them from collecting sales taxes would be considered null and void unless they are approved by the Iowa General Assembly.
McNulty said H.F. 625 includes language that expands the state's school tuition organization tax credit. The credit is currently limited to $8.75 million per year; the legislation provides for a $12 million tax credit, effective for tax year 2014.
He said the bill also expands the definition of those who can claim the tax credit.
According to McNulty, the STO tax credit was established several years ago. It allows individuals who contribute to STOs to claim a credit equal to 65 percent of the amount contributed, and the credits are awarded on a first-come, first-served basis.
There are 12 STOs in Iowa, each representing non-public elementary and secondary schools, McNulty said, and contributions allow the STOs to offer scholarships to students seeking to attend non-public schools in the state.
Currently, only individuals and C corporations can claim STO tax credits, McNulty said. Under H.F. 625, S corporations, partnerships, limited liability companies, and estates and trusts will also be able to claim credits, and shareholders in the different entities will be able to claim credits on a pro-rata basis, he said.
H.F. 625 will take effect July 1.
Text of the legislation is at https://www.legis.iowa.gov/index.aspx.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to firstname.lastname@example.org.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to email@example.com.
Put me on standing order
Notify me when new releases are available (no standing order will be created)