Greater Dallas County Development Alliance March 26, 2014

1. Greater Dallas County Development AllianceMarch 26, 2014 Greg Stokke Taxpayer Services Section

2. Sales Tax Use Tax Just what is the Difference?

3. Sales Tax • Sale is made from an Iowa location and • Delivery of product occurs in Iowa or • Service is performed in Iowa

4. Sales Tax COLLECTED by the RETAILER PAID by the FINAL CONSUMER REMITTED to the State by RETAILER

5. Use Tax Requires Out of State Vendor and Iowa Purchaser

6. Use Tax May be Collected by the Retailer or Paid to the State by the Purchaser

7. QUIZ QUESTION #1:SALES TAX OR USE TAX? • A resident of Omaha, Nebraska visits a store in Council Bluffs, Iowa. • This individual purchases an item at the Council Bluffs store, takes it to his car, and returns to Omaha. • Sales Tax

8. What is Taxable? All tangible personal property unless a specific exemption has been written into Iowa Law.

9. Taxation is the Rule for Tangible Personal Property

10. Exemption is the Rule for Services Unless listed in Iowa law.

11. What’s the Tax Rate? • 6% State Sales/Use Tax • 1% Local Option Sales Tax (LOST)

12. Local Option Sales Tax What does it mean to me? 18

13. What is Local Option Sales Tax (LOST)? An additional 1% sales tax that can be imposed by Iowa counties and cities.

14. Is LOST Calculated “On Top” of the State Sales Tax? NO. It is imposed in addition to, but not on top of, the 6% state sales tax.

15. Do I Need a Special Permit to Collect LOST? No. Your State of Iowa sales/retailer’s use tax permit is the only permit required.

16. How Do I Know if a Jurisdiction Has LOST? See our Web site for LOST jurisdictions www.iowa.gov/tax

17. LOST List and LOOK UP App Look up by zip code or address.

18. QUIZ QUESTION #2:TRUE OR FALSE? • An Iowa retailer needs a local option tax permit from each jurisdiction that imposes LOST. • False

19. On What Types of Sales Does LOST Apply? LOST generally applies to the same sales that are subject to state sales tax.

20. On What Types of Sales Doesn’t LOST Apply? Exceptions: • Room rentals, in a hotel, motel, or other similar facility • Vehicles subject to registration • Sales of equipment by the State Department of Transportation • Sales of natural gas or electric energy subject to a city- or county-imposed franchise fee or users fee • The sale of direct-to-home satellite pay television service • Self-propelled building equipment, pile drivers, motorized scaffolding, or attachments customarily drawn or attached to them, including auxiliary attachments which improve their performance, safety, operation, or efficiency and including replacement parts used by contractors, subcontractors and builders for new construction, reconstruction, alterations, expansion or remodeling of real property or structures

21. When Do I Need to Collect LOST on Sales of Tangible Goods? LOST applies when taxable goods are delivered in a jurisdiction imposing the tax.

22. When Do I Need to Collect LOST on Sales of Taxable Services? LOST applies when the first use of taxable services occurs, or potentially could occur, in a jurisdiction imposing the tax.

23. What’s an Example of the First Use of a Taxable Service? • A person hires a limousine to drive them and several friends to a concert at Wells-Fargo Arena in Des Moines. • The limo picks them up in Perry, drives to Des Moines, and returns them to Perry after the concert. • The first use occurred in Perry and the sale is subject to LOST.

24. QUIZ QUESTION #3:IS LOST DUE? • Des Moines does not have LOST. • Adel does have LOST. • An Adel resident buys a refrigerator at a Des Moines store and asks the store to deliver it to her home. • LOST is due.

25. Can LOST be Imposed When State Sales Tax Isn’t? • No. • There is one exception: LOST can be imposed on residential energy where the state sales tax has been phased out, but where LOST still applies. Sales Tax

26. What About Utilities? The following are subject to LOST if the billing address of the subscriber is located in a LOST jurisdiction: Gas Electricity Heat Water Communication Pay-Television

27. Does the Billing Date Matter on Utilities? YES. LOST is imposed based on the billing date, not the period in which the utility service was provided.

28. Does LOST Apply to Use Tax? No. LOST is a sales tax. There is no local option use tax.

29. Does That Mean Anything Bought from an Out-of-State Retailer is Exempt from LOST? No. An out-of-state retailer who delivers directly into a LOST jurisdiction must charge the LOST.

30. QUIZ QUESTION #4:IS LOST DUE? • LOST in a particular city began on 1-1-2014. • Water bills for usage during the month of December 2013 were sent to city residents with a billing date of 1-2-14. • LOST is due.

31. How Often and When Do I File? • Filing frequency is based on how much tax you expect to collect. • This amount is indicated on your application when you register for your permit.

32. Iowa Sales Tax filing frequency requirements Semi monthly Monthly Quarterly Annually $5,000per month Under $5,000per month Under $500per month Under $120per year

33. How Do I Report and Pay LOST? • LOST is reported and paid to the State of Iowa along with the state sales tax. • Retailers make no payment directly to a locality. • Retailers show a breakdown of local option taxable sales and tax by county on quarterly and annual returns.

34. How Do I File? Tax returns are filed electronically through the Department’s online service eFile & Pay www.iowa.gov/tax

35. You will always need: BEN, User ID, Password

36. www.iowa.gov/tax

37. www.iowa.gov/tax

39. For Breaking News eLists General Business (sales/use) Individual Income (tax professionals) Withholding Motor Vehicle Fuel Cigarette/Tobacco Construction Contractors Government Entities Economic, Fiscal & Statistical Research Iowa Tax Research Library Updates

40. Follow Us on Twitter @IDRBusinessTax @IDRIncomeTax @IDRTaxPros

41. Like Us on Facebook www.facebook.com/iowadepartmentofrevenue

42. Need More Information? • More details can be found on our Web site: Iowa Local Option Tax Information • Call us: 8 a.m. - 4:15 p.m. CT 515-281-3114 / 800-367-3388 • E-mail us at idr@iowa.gov

43. Protect Yourself from Identity Theft • IDR will always identify itself. • We will NEVER ask you to provide your full Social Security Number by e-mail or regular mail. • We do not send e-mails asking for personal or financial information. This includes any type of electronic communication, such as text messages and social media channels.

44. Protect Yourself from Identity Theft If you are unsure the communication you received is official: • Do not provide any personal or confidential information. • Contact us. We will confirm whether the communication you received was from the Iowa Department of Revenue.

45. Purpose of this Presentation This presentation is intended for general educational purposes only. Anyone involved in an audit or protest must contact the Department representative they are working with on that issue.

46. Questions?

47. Greater Dallas County Development AllianceMarch 26, 2014 Adventures with LOST (Local Option Sales Tax) (Statistical Reports – State wide) Department of Revenue, Property Tax Division – Local Government Services Joel Gabrielson

48. Local Government Services Distribution of Local Option Tax funds to Local Governing Jurisdictions Iowa Department of Revenue, Property Tax Division, Local Government ServicesJoel Gabrielson -- joel.gabrielson@iowa.gov

49. Local Option Tax Information • Local Option Sales and Services Tax (LOST) • Sales Tax TIFs – Local option estimated effects • Franchise Fee – Local option estimated affects • Hotel-Motel Tax

50. Iowa Department of Revenue