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The retail sale of software sold as tangible personal property is generally taxable in Iowa unless considered an exempt commercial enterprise.
Services provided to the following entities are exempt from sales and use tax: Iowa private nonprofit educational institutions, the federal government, Iowa governmental subdivisions, Iowa government agencies, certain nonprofit care facilities, nonprofit museums, and nonprofit legal aid organizations.
Sales of services are exempt from Iowa sales tax unless taxed by state law. The retailer must add the tax to the price and collect the tax from the purchaser.
The sale of a preventive maintenance contract is not subject to tax. Additional charges for parts (except qualifying replacement parts) furnished in addition to what is covered by a warranty or maintenance contract are taxable.
The gross receipts from the sale of a preventive maintenance contract is not subject to tax.
When it comes to sales tax, the general rule of thumb has always been products are taxable, while services are non-taxable. Under that scenario, if your business sells coffee mugs, you should charge sales tax for those products.
Taxable ServicesAircraft lease or rental, 60 days or less.Aircraft repair, remodeling, or maintenance, except when used in a scheduled or nonscheduled interstate FAA certified air carrier operation.Alteration and garment repair.Armored car services.Bank and financial institution service charges.More items...
The sale of a preventive maintenance contract is not subject to tax. Additional charges for parts (except qualifying replacement parts) furnished in addition to what is covered by a warranty or maintenance contract are taxable.
Some additional cloud-based services may include web hosting, but those services are generally considered infrastructure as a service (IaaS). Iowa law only imposes tax on software as a service (SaaS).
Repairs of trucks or trailers performed in Iowa are subject to Iowa sales tax whether or not the owner has an ICC exemption number (or M.C. Docket Number). This includes both labor and parts.