Iowa’s new sales taxes: Don’t pay if you’re exempt!

This year, Iowa’s Sales Tax Code has been dramatically reformed. Among the changes are significant additions to “enumerated taxable services,” which now include:

• Software as a Service (SaaS);
• Storage of electronic files, documents or other records;
• Information services; and
• Services for installing, maintaining, servicing, repairing, operating, upgrading or enhancing specific digital products.

Many cloud application and software providers have updated their billing systems to show these as taxable services for Iowa. As a result, they’re now charging sales tax.

But!

The reformed Sales Tax Code also provides an exemption for commercial enterprises, professions and occupations on these new enumerated services, as well as specific digital products and prewritten software. In other words, you may not have to pay the sales tax..

We encourage you to review your digital services invoices to ensure that your business is not paying unnecessary sales taxes.

If you’d like to discuss your eligibility for this exemption and its impact on your business, please contact us.