You have likely heard about the recent debate regarding collecting state sales tax for online sales.
What's the big deal? Typically, online retailers collect sales tax only
from sales in a state where they have a physical presence. As a result,
many online sales do not get taxed. The argument is this makes it hard
for small businesses (who have to charge sales tax) to compete with the
out-of-state online retailers.
If this bill passes, what happens? The idea is that states would
require the online retailers to charge sales tax based on your address,
meaning, if the retailer sells to an Iowa address, it would charge Iowa
sales tax. At least one tax attorney sees constitutional issues here and does not expect the bill to move quickly.
Speaking of online sales, weren't you meaning to sell that old
furniture and all of those toys the kids have outgrown? Selling things
online seems easier than a garage sale, but should you be charging sales
tax on those old "treasures"? Most likely not, regardless of the
outcome of this bill, thanks to the casual sales exception.
Iowa has a 6% tax on retail sales (and any additional local option
taxes) unless the sale fits a stated exception. Looking deep enough into
the statute, there is an exception for "casual sales." So, just what
is a casual sale? In Iowa, it is a sale which is (1) "nonrecurring"
and (2) by someone who is not in the business of selling that property
for profit. So, selling the items collecting dust in your basement is
likely a casual sale. But, if you are selling a certain type of product
consistently, that seems recurring and starts to look like a business,
and you should look into the sales tax issue a little further.