Greater Dallas County Development Alliance

March 26, 2014Greg Stokke

Taxpayer Services Section

Sales TaxUse Tax

Just what is the Difference?

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Sales Tax

• Sale is made from an Iowa location

and

• Delivery of product occurs in Iowa

or

• Service is performed in Iowa

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Sales Tax

COLLECTED by the RETAILER

PAID by the FINAL CONSUMER

REMITTED to the State by RETAILER

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Out of State Vendor

Iowa Purchaser

and

Use Tax Requires

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May be Collected by the Retailer

or

Paid to the State by the Purchaser

Use Tax

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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

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What is Taxable? All tangible

personal property

a specific exemption has been written into Iowa Law.

unless

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Taxation is the Rule

for Tangible Personal Property

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Exemption is the Rule for

Services

Unless listed in Iowa law.

What’s the Tax Rate?

• 6% State Sales/Use Tax

• 1% Local Option Sales Tax (LOST)

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Local Option

Sales Tax What does it mean to me?

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What is Local Option Sales Tax (LOST)?

An additional 1% sales tax

that can be imposed

by Iowa counties and cities.

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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.

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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.

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www.iowa.gov/tax

How Do I Know if a Jurisdiction Has LOST?See our Web site for LOST jurisdictions

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LOST List and LOOK UP App

17Look up by zip code or address.

QUIZ QUESTION #2:TRUE OR FALSE?

• An Iowa retailer needs a local option tax permit from each jurisdiction that imposes LOST.

False

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On What Types of Sales Does LOST Apply?

LOST generally applies to the same sales that are subject to state sales tax.

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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

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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.

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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.

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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.

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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.

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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.

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Sales Tax

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

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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.

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Does LOST Apply to Use Tax?

No.

LOST is a sales tax.

There is no local option use tax.

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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.

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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.

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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.

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Semi monthly

Monthly

Quarterly

Annually

$5,000 per month

Under $5,000 per month

Under $500 per month

Under $120 per year

Iowa Sales Taxfiling frequency requirements

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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.

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How Do I File?Tax returns are filed electronically through the

Department’s online service eFile & Pay

www.iowa.gov/tax

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You will always need: BEN, User ID, Password

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www.iowa.gov/tax

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www.iowa.gov/tax

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For Breaking NewseLists• 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

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Follow Us on Twitter

@IDRBusinessTax

@IDRIncomeTax

@IDRTaxPros

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Like Us on Facebook

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www.facebook.com/iowadepartmentofrevenue

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

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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.

 

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.

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.

Questions?

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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

ServicesJoel Gabrielson

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

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

Iowa Department of Revenue 50

Distribution Timeline for LOST/SAVE Estimates• August - Tax Research develops an estimate of LOST and SAVE distributions by

County.

• August 15 – Local Government Services notifies cities, counties, and school districts of the planned 95% monthly distributions.

• August 31 - The Department issues the first monthly estimate payments, which are released before the last day of each month.

• April - Tax Research reviews receipts, and adjusts total estimates for the Fiscal Year. Local Government Services applies distribution adjustments as needed in May, June and July, assuring 95% funding of estimated payments issued by July 31.

• July 31 - The Department issues the last scheduled estimate payment for the fiscal year.

• October 15 - Compliance Services reviews and clears filed returns, including June quarter sales tax returns from the processing system.

• November 10 - Reconcile actual revenue to estimated distributions. Funds are issued to counties that have been underpaid. Funds are recouped from counties that have been overpaid.

Local Option Tax Calculation for Estimated Payments

• LOST Distribution Formula– Jurisdiction Share (%) is based on

• (0.25 x Property Valuation) + (0.75 x Population) • (Property valuation from July 1, 1982 through June 30, 1985)

– Monthly Distribution Estimate X 95%

X Prorated Jurisdiction Share (%)

= Monthly Payment

Calculation of Estimated Payments for Local Option Tax

• Each year an estimate is calculated by Tax Research for the Local Option Sales Tax to be distributed to each county.

• The estimated amount is disbursed in monthly payments for each jurisdiction.

• The Code specifies that 95% of the total estimated payment must be sent to each jurisdiction during the fiscal year.

• Funds are held during accruals to reconcile the remaining 5% which is paid by Nov. 10 of the following fiscal year.

FY14 Estimated Distributions

POLK COUNTY Annual FY14 Esti  Dist %  

77-10 POLK CITY2,414,272.

00 95.66% 77-15 SHELDAHL (MULTIPLE CO 08 85) 109,537.00 4.34% 

77-24 TOTAL2,523,809,

00 100.00% 

DALLAS COUNTY Annual FY14 Esti

  Dist %  

25-01Perry 858,063.00 63.76% 

25-02Adel 377,985.00 28.09% 

25-03Dallas Center 0.00 0.00% 

25-04Dexter 0.00 0.00% 

25-05Redfield 83,410.00 6.20% 

25-06Waukee 0.00 0.00% 

25-07Woodward 0.00 0.00% 

25-08Bouton 12,367.00 0.92% 

25-09 Dawson 13,883.00 1.03%

25-10De Soto 0.00 0.00% 

25-11Granger 0.00 0.00% 

25-12Linden 0.00 0.00% 

25-13Minburn 0.00 0.00% 

25-14Van Meter 0.00 0.00% 

25-15Clive 0.00 0.00% 

25-16Grimes 0.00 0.00% 

25-17Urbandale 0.00 0.00% 

25-18West Des Moines 0.00 0.00% 

25-22Unincorporated 0.00 0.00% 

25-24TOTAL 1,345,708.00 100.00

% 

WARRREN COUNTY Annual FY14 Esti

  Dist %

91-01 Indianola 0.00 0.00%

91-02 Carlisle 0.00 0.00%

91-03 Norwalk 0.00 0.00%

91-04 Milo 0.00 0.00%

91-05 Ackworth 0.00 0.00%

91-06 Bevington 120,131.00 100.00%

91-07 Cuming 0.00 0.00%

91-08 Hartford 0.00 0.00%

91-09 Lacona 0.00 0.00%

91-10 Martensdale 0.00 0.00%

91-11 New Virginia 0.00 0.00%

91-12 Sandyville 0.00 0.00%

91-13 Spring Hill 0.00 0.00%

91-14 Staint Marys 0.00 0.00%

91-22 Unincorporated 0.00 0.00%

91-24 TOTAL 120,131.00 100.00%

IOWA LOCAL OPTION SALES TAX TIF

– A city may, by ordinance of the city council, create a tax increment financing (TIF) district for the purpose of funding projects located within the city’s urban renewal area.

– If located within a county that imposes a Local Option sales and services tax (LOST)

– If it has an Urban Renewal Area.

IOWA LOCAL OPTION SALES TAX TIF• The city creates a LOST TIF District by ordinance,

after county board of supervisors, which will have funds diverted to the TIF, approve:– The city’s plan for collection– The use of county LOST revenues to fund the

city’s urban renewal projects

• Local Option Distributions for the county are reduced by the increment of growth, which is based on Sales Tax TIF area permit holders.

IOWA LOCAL OPTION SALES TAX TIF

• The Department of Revenue assists the city after an ordinance has passed, by establishing: – “Base year” sales made in the urban renewal area.

– “Increment” which is the growth determined by comparing the base year with following year(s). The increase in LOST revenues from sales in the urban renewal area in subsequent years goes directly to a special city fund to be used on the city’s urban renewal projects.

• In the absence of the LOST TIF, all LOST revenues are returned to the county where they are distributed according to the existing population and property tax levy-based formula.

Franchise Fees Increment Effects

• The following slide reflects procedures used to apply the

Franchise Fees increment effects to active jurisdictions

within your county.

• Local Option distributions for active participants in the

county are reduced by the removal of the Utility Sales

Tax collections from permit holders, that submit utility

sales tax within a franchise fee area.

• No County Franchise Fees: Gabrielson County - Utilities LOST collections Phipps city Kendall city UninCo

$559,404 60.35% 7.35% 26.37%Distributions without any Franchise fees --> $337,600 $41,116 $147,515

• City of Phipps implements a Franchise Fee: Gabrielson Co – remaining LOST Utilitiy Coll Phipps city Kendall city UninCo

$221,804 $337,600 $16,303 $58,490Reduction $0 ($24,814) ($89,025)

• Total effect of applied Franchise Fee: Gabrielson Co - remaining LOST Utilitiy Coll Phipps city Kendall city UninCo

$221,804 $484,611 $16,303 $58,490Reduction $0 ($24,814) ($89,025)

If a Utility Franchise Fee is implemented effects on LOST distributions follow:

Hotel/Motel Tax

• State imposed hotel motel tax rate = 5%

• Locally imposed hotel motel tax can be imposed in full percentage points from 1% to 7%. The tax is filed and remitted with quarterly sales tax returns, and distributed quarterly

• Each city or county receives 100% of the locally imposed revenues collected by permit holders within the jurisdiction.

• History of total of funds distributed to cities and counties FY2013-$45,665,767 FY2010 -$36,773,000

FY2012-$43,264,029 FY2009 -$39,119,000 FY2011-$40,083,868 FY2008 -$38,018,962

Sales and Use Tax Reports• The Department publishes five reports each fiscal year

– Four Quarterly Reports

– One Annual Report

The quarterly reports contain the following information

• Statewide retail sales tax information by business group

• Retail, Consumer and Motor Vehicle Use Tax information

• Retail sales tax information by county and by each city within the county

• Retail sales tax information by business group within each county

The annual report compiles the quarterly reports and includes much more tax information on a fiscal year basis.

• The report is available as a pdf document and the tables are also presented as a spreadsheet

• These reports can be accessed on the Department of Revenue Website

Changes to Sales and Use Tax Reports• Beginning with the March 2013 quarterly report, changes

were made to the spreadsheet

• County tables were adjusted to allow for sorting and filtering• Taxable sales and tax by County and City • Taxable sales and tax by County and Business Group

• Goal was to allow the reader to more easily work with the data

• Sort highest to lowest within and across counties• Filter to one business group and compare across

counties

• Similar changes planned for the FY 2013 annual report spreadsheet

County and City Table

County CityNumber of Returns Taxable Sales Computed Tax Percent of Tax

Adair Adair 54 $1,977,753 $117,933 0.03%Adair Bridgewater 11 $317,042 $19,023 0.00%Adair Fontanelle 37 $779,108 $46,746 0.01%Adair Greenfield 107 $5,436,620 $325,847 0.07%Adair Orient 18 $225,595 $13,536 0.00%Adair Stuart 35 $2,127,062 $124,708 0.03%Adair Other 11 $575,626 $34,538 0.01%Adair County Totals 273 $11,438,806 $682,331 0.15%Adams Corning 126 $7,038,323 $421,782 0.09%Adams Other 29 $269,420 $16,165 0.00%Adams County Totals 155 $7,307,743 $437,948 0.09%Allamakee Harpers Ferry 33 $335,841 $20,094 0.00%Allamakee Lansing 81 $2,225,049 $133,287 0.03%Allamakee New Albin 30 $468,732 $28,124 0.01%Allamakee Postville 78 $3,746,294 $224,768 0.05%Allamakee Waterville 11 $112,934 $6,776 0.00%Allamakee Waukon 227 $12,760,892 $763,787 0.17%Allamakee Other 34 $265,998 $15,960 0.00%Allamakee County Totals 494 $19,915,740 $1,192,796 0.26%

Iowa Retail Sales TaxBy County and City

Quarter Ending March 31, 2013

County and Business Group Table

Sales and Use Tax Questions?

• We are very interested in knowing if you find these changes beneficial.

• If you have any questions or any suggestions on how The Department of Revenue may improve the sales and use tax reports or provide other sales and use tax information please contact.

Name: Joel Phipps

Phone Number: 515-242-6224

E-Mail: joel.phipps@iowa.gov

QUESTIONS ??? the End