Consumer’s Use Tax – Tips from the Iowa Department of Revenue

Consumer’s Use Tax – Tips from the Iowa Department of Revenue

Many taxpayers may not be aware of the Iowa consumer’s use tax.  It is a tax on the use of taxable goods or services in Iowa, when sales tax was not paid at the time of purchase.  This often occurs when purchases are made from an out-of-state seller.

Situations when consumer’s use tax may be due include purchases from:

  • Internet
  • Mail order catalogs
  • Magazines
  • 800 numbers
  • Untaxed purchases made in another state and shipped/brought to Iowa

Consumer’s use tax was established in 1937, three years after the sales tax was enacted, to create a fair playing field for Iowa businesses.  In Iowa, the rate of the consumer’s use tax is always equal to the state sales tax rate; currently 6%.

Use tax protects Iowa businesses from unfair competition by ensuring tax will be paid even if an out-of-state seller is not required to collect it from the purchaser.  When tax is not collected on taxable purchases and services used in your community, local businesses operate at a competitive disadvantage.  This in turn affects the economic health of your community and state.

The Department encourages Iowans to find out more about their consumer’s use tax responsibilities by using the following resources:

Guest blog contributed by Gregg Stokke, Iowa Department of Revenue

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