Taxes / State tax rules / Iowa
Selling on eBay, Poshmark or Etsy from Iowa: sales tax and 1099-K rules
Under Iowa Code § 423.14A, a marketplace facilitator that makes or facilitates $100,000 or more in Iowa sales collects Iowa sales tax and any local option sales tax on all taxable sales through its marketplace, and the Iowa Department of Revenue says a seller whose Iowa sales all go through such a marketplace does not need an Iowa sales tax permit or returns. Iowa has no 1099-K threshold of its own: the department requires only Forms W-2 and 1099 that list Iowa withholding, so the federal test (over $20,000 in more than 200 transactions) decides whether a platform sends a 1099-K.
General information, not tax advice. Check with a tax professional about your own situation.
Checked against the official pages listed below on .
Iowa in short
- General sales tax:
- Yes, 6% state rate
- Marketplace facilitator law:
- Yes: Iowa Code § 423.14A (Senate File 2417, 2018), since Jan 1, 2019
- When a marketplace must collect:
- Iowa sales made or facilitated on its own behalf or for marketplace sellers of $100,000 or more in the immediately preceding or current calendar year
- Form 1099-K:
- No separate state threshold
Who collects the tax on a marketplace sale
A marketplace facilitator over the threshold collects Iowa sales tax and local option sales tax on the entire sales price of each taxable Iowa sale it makes or facilitates, regardless of the seller's location, sales volume or permit status (§ 423.14A). The department says Iowa law doesn't let a facilitator and seller agree to have the seller collect instead. Its page describes facilitators collecting from January 1, 2019, with the current revenue-only $100,000 level effective July 1, 2019.
If you sell only through marketplaces
If a marketplace seller only makes retail sales in Iowa through a marketplace and the facilitator collects Iowa sales tax and local option tax, the seller doesn't need an Iowa sales tax permit or to file Iowa sales tax returns; the tax is reported on the facilitator's return. The department's example: a seller with $200,000 of Iowa sales, all through a collecting facilitator, doesn't register.
Registration, resale certificates and what changes when you also sell direct have their own page: Iowa: seller's permit and resale certificate rules.
The law: Iowa Code § 423.14A (Senate File 2417, 2018), effective .
"the marketplace seller does not need to obtain an Iowa sales tax permit or file Iowa sales tax returns."
"Iowa law does not allow for this arrangement."
Sources: Remote Sellers & Marketplace Facilitators; Iowa Code § 423.14A.
Iowa's sales tax
Iowa's sales tax and use tax rate is 6%, and an additional 1% applies to most sales because many jurisdictions impose a local option sales tax; there is no local option use tax, the department's sales and use tax guide says.
"The rate for both is 6%, though an additional 1% applies to most sales subject to sales tax, as many jurisdictions impose a local option sales tax."
Sources: Sales & Use Tax Guide.
Form 1099-K: Iowa and the federal test
The department's File a W-2 or 1099 page says only forms listing Iowa withholding are required to be filed with it, and its W-2/1099 FAQ says the filing requirement isn't based on Iowa-source income. It sets no separate 1099-K threshold, so the federal test decides whether a platform issues a 1099-K.
"Only forms listing IA withholding are required to be filed."
The federal test, for comparison: the IRS says a payment app or online marketplace must send a Form 1099-K when payments for goods or services total over $20,000 in more than 200 transactions, and adds: "However, they may send you a Form 1099-K with lower amounts and/or transactions." (Understanding your Form 1099-K, reviewed ). The Instructions for Form 1099-K count both parts for the calendar year, through each platform separately, and say the box 1a gross amount is figured without adjustments for credits, discounts, fees, refunds or shipping, so a 1099-K figure is not the same as profit. More on the federal rule in Form 1099-K for resellers.
Sources: File a W-2 or 1099; W-2 / 1099 Common Questions.
Worked examples
A $40 sale to a buyer in an Iowa city with local option tax
The marketplace collects 6% state tax plus the 1% local option tax: $40 x 7% = $2.80. Where no local option tax applies, it's $40 x 6% = $2.40. A seller with all Iowa sales on collecting marketplaces doesn't register or file for any of it.
Marketplace sales plus your own website
The department's example: Seller B has $400,000 of Iowa sales, $325,000 through a collecting facilitator and $75,000 through its own website. It collects Iowa and local option tax on the $75,000 of website sales, and on its Iowa return reports $400,000 of gross sales with a $325,000 deduction for the marketplace sales.
Edge cases and details
- The $100,000 threshold counts all revenue from Iowa sales, including exempt sales, wholesale sales, sales for resale and sales a marketplace facilitator collected tax on, the department says.
- The threshold doesn't apply to a seller with a physical presence in Iowa: such a seller collects on its non-marketplace Iowa sales regardless of volume.
- Consignment stores, auctions and other sponsors of special events can be marketplace facilitators, the department says, and then need a permit to remit tax collected at their events.
- If a facilitator didn't meet the threshold in 2018 and so wasn't collecting from January 1, 2019, the department said sellers over the threshold had to collect on their marketplace sales until it did.
What to do
- Keep each marketplace's sales report showing the Iowa tax it collected on your sales.
- If you also sell directly to Iowa buyers, read the department's Remote Sellers & Marketplace Facilitators page on combining sales for the $100,000 threshold.
- Check with a tax professional about Iowa income tax and the federal 1099-K.
Common questions
Do I need an Iowa sales tax permit to sell on eBay or Etsy?
Not if all your Iowa retail sales go through marketplaces that collect Iowa sales tax and local option tax, according to the Iowa Department of Revenue; the tax is reported on the facilitator's return.
Can a marketplace and I agree that I collect Iowa tax myself?
No. The department says some states allow that kind of agreement but Iowa law does not.
Related
- Every state on one table: sales tax, marketplace facilitator laws and 1099-K rules
- Iowa: seller's permit and resale certificate rules
- Indiana: sales tax and 1099-K rules
- Kansas: sales tax and 1099-K rules
- Form 1099-K for resellers: the federal test
- Do eBay's fees apply to the sales tax a buyer pays?
- Where each selling app keeps its sales report
General information, not tax advice
This page summarizes Iowa's own published pages and statutes as read on , and the IRS's 1099-K pages. It doesn't say what you should file, register for or pay. Rules depend on your situation and change: check with a tax professional, or with the state's revenue department.
Sources
Official pages this page is built from, with the day each was read.
- Iowa Department of Revenue: Remote Sellers & Marketplace Facilitators; read . SF 2417, $100,000 threshold, marketplace-only sellers need no permit, no seller-collects agreements, examples, event sponsors.
- Iowa Legislature: Iowa Code § 423.14A; read . Facilitator threshold and duty to collect on the entire sales price regardless of the seller's permit; 2018 Acts ch 1161.
- Iowa Department of Revenue: Sales & Use Tax Guide; read . 6% rate; 1% local option sales tax; no local option use tax.
- Iowa Department of Revenue: File a W-2 or 1099; read . Only forms listing Iowa withholding are required.
- Iowa Department of Revenue: W-2 / 1099 Common Questions; read . Filing requirement based on Iowa withholding, not Iowa-source income.
- IRS: Understanding your Form 1099-K, reviewed . The federal 1099-K test.
- IRS: Instructions for Form 1099-K, reviewed . Both parts of the federal test counted for the calendar year.
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