Iowa

Agency: Department of Revenue & Finance

Contact Person/Department: Darwin Clupper or Jerri DeVries

Tel. No.: (515) 281-3670 Darwin; (515) 281-3194 Jerri

Fax No.: (515) 281-3756

1. If your State exempts fundraising sales by certain groups from sales or use taxes, please indicate which of the following are exempt in your State.

Public Schools (K-12) - Exempt

Private Schools (K-12) - Exempt

School Groups (e.g., clubs, bands, teams) - Exempt

PTAs - Exempt

PTOs - Exempt

Other parent groups - Not Exempt

(please identify)

Church Groups - Exempt

Youth Sports League - Not Exempt

501 (c)(3) organizations - Exempt

501 (c)(6) organizations Not Exempt

Other (specify:__________________)

1a Are local sales and use taxes in your State applied to these groups in the same manner as State sales and use taxes are applied to these groups?

Proceeds from sales made by an organization is exempt from Iowa sales and use tax if the organization making the sale or the organization in which the proceeds are donated to is exempt from tax pursuant to Internal Revenue Code section 501(c)(3) and the proceeds are used for a qualifying “educational”, “religious” or “charitable” activity.

1b Please set forth any comments including a list of groups not listed above whose fundraising activities are exempt from sales and use taxation in your State.

Proceeds from sales made by an organization is exempt from Iowa sales and use tax if the organization making the sale or the organization in which the proceeds are donated to is exempt from tax pursuant to Internal Revenue Code section 501(c)(3) and the proceeds are used for a qualifying “educational”, “religious” or “charitable” activity.

 

2. If your State exempts fundraising sales of certain products from sales and use tax, please indicate which of the following products are exempt.

Candies and Confections - Exempt

Cookies and Other Baked Goods - Exempt

Cheese Products - Exempt

Meat Products - Exempt

Nuts, popcorn and other snack food - Exempt

Other edible items (please identify) - Exempt (bottled water and soft drinks)

Magazine subscriptions - Exempt

Paper products (e.g., calendars, cards - Exempt

stationery, books, gift wrap)

Decorative tins, baskets, other containers - Exempt

Decorative novelties (mugs, ornaments) - Exempt

Sundry items (please specify item below) - Exempt*

Clothing and accessories - Exempt

Jewelry - Exempt

Plant and seeds - Exempt

Other hard good items - Exempt **

*Most sales of tangible personal property are taxable in the initial instance.

** If they can be purchased with food stamps.

2a Are local sales and use taxes in your State applied to these products in the same manner as State sales and use taxes are applied to these products?

Yes. There is no Iowa local option use tax.

2b Please set forth any comments including a list of products not listed above that are exempt from sales and use taxation for fundraising purposes in your State.

3. Proceeds from sales made by an organization is exempt from Iowa sales and use tax if the organization making the sale or the organization in which the proceeds are donated to is exempt from tax pursuant to Internal Revenue Code section 501(c)(3) and the proceeds are used for a qualifying “educational”, “religious” or “charitable” activity.

 

4. If some or all fundraising groups or products qualify for exemption from sales and use tax in your State, please indicate any exceptions to or limitations on such exemptions (701 IAC 7.56). (Check all that apply and specify the limitation.)

Limits on number of fundraiser events per year

Limits on duration of fundraisers

Limits on dollar amount of each item

Limits on total amounts raised per year

Other_________________________________

Iowa law does not provide for limits of the sort described above.

 

5. If some or all fundraising groups qualify for exemption from sales and use tax in your State, please set forth the procedure through which a group may establish its qualification for the exemption. Attach relevant statutes, regulations, procedures, etc.

There is no procedure by which a group can secure a binding statement that its fund raising sales are exempt from tax except by seeking a declaratory ruling. A copy of the rules which govern this procedure 701--X.1(17A) through 701--X.7(17A) is attached.

 

6. If some or all fundraising products qualify for exemption from sales and use tax in your State, please set forth the procedure for establishing a product’s qualification for the exemption. Attach relevant statutes, regulations, procedures, etc.

See answer to question 4

 

7. In instances where a fundraising product or group is not exempt from sales or use tax, please indicate who bears the responsibility for collecting and remitting the tax.

The fundraising group (e.g., school, PTA, church); and the purchaser of the property or user of the taxable service is also responsible for payment of uncollected tax.

 

8. In instances where a fundraising product or group is not exempt from sales or use tax, what is the basis for calculating the sales/use tax?

Price paid by consumer to fundraising group.

 

9. Provide any additional information regarding the sales and use tax treatment of fundraising transactions and/or groups in your State. Also set forth any statements, disclosures, disclaimers, etc., to be provided as part of the clearinghouse regarding your state’s practices and procedures. Attach additional sheets if necessary.

See attached copy of department rule 701 IAC 17.1(422,423) which governs sales of property or services when the net proceeds to the organization are expended for charitable, educational, or religious purposes.

Last Updated: September 2005