Sales Tax Obligations of Purchasers in Iowa

April 13, 2006

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Iowa imposes various requirements on purchasers doing business in Iowa. We recommend that you go through the items below to help you with the most frequently asked questions concerning purchasers and sales and use tax issues.

Tax exemption certificates. An exemption certificate may be issued by a purchaser of a nontaxable item. The exemption certificate may be based on the type of transaction (such as a resale exemption) or on the item itself.

Resale exemptions. In Iowa the sale of tangible personal property or services for resale or the resale of tangible personal property in connection with the performance of taxable services, is not subject to sales and use tax.

Resale exemption certificate. In Iowa exemption certificates may be issued by the Iowa Department of Revenue and Finance or provided by the seller. If the seller provides their own exemption certificate, the following information must be included:

the seller's name
the purchaser's name and address
the purchaser's nature of business
the reason for the exempt purchase (processing or resale)
a general description of the purchase
state sales tax or I.D. registration

In addition, the buyer must sign and date the certificate.

Blanket resale certificates. Sellers may accept blanket certificates from you as a purchaser if you repeatedly purchase the same type of property or service for processing or resale. However, blanket certificates may not be used to purchase property or services not covered by a blanket certificate. Sellers must periodically inquire whether the information on a blanket certificate is accurate and complete. If a seller has not accepted a blanket certificate in good faith, liability for the tax does not shift from the seller to the purchaser.

Purchases from out-of-state vendors. In Iowa property brought into the state on which a sales or use tax has been paid in another state equal to or in excess of the Iowa tax is not subject to tax in Iowa.