§ 423.51 — Administration of exemptions

Iowa § 423.51

• Jurisdiction: Iowa
• Title X: FINANCIAL RESOURCES
• Ch. 423: STREAMLINED SALES AND USE TAX ACT

Text

1. The following provisions shall apply when a purchaser claims an exemption:
a. The seller shall obtain identifying information of the purchaser and the reason for
claiming a tax exemption at the time of the purchase as determined by the member states
acting jointly.
b. A purchaser is not required to provide a signature to claim an exemption from tax
unless a paper certificate is used.
c. The seller shall use the standard form for claiming an exemption electronically as
adopted jointly by the member states.
d. The seller shall obtain the same information for proof of a claimed exemption
regardless of the medium in which the transaction occurred.
e. The department may authorize a system wherein the purchaser exempt from the
payment of the tax is issued an identification number which shall be presented to the seller
at the time of the sale.
f. The seller shall maintain proper records of exempt transactions and provide them to the
department when requested.
g. The department shall administer entity-based and use-based exemptions when
practicable through a direct pay tax permit, an exemption certificate, or another means that
does not burden sellers. For the purposes of this paragraph:
(1) An “entity-based exemption” is an exemption based on who purchases the product or
who sells the product.
(2) A “use-based exemption” is an exemption based on the purchaser’s use of the product.
2. Sellers that follow the requirements of this section are relieved from any tax otherwise
applicable if it is determined that the purchaser improperly claimed an exemption and that
the purchaser is liable for the nonpayment of tax. This relief from liability does not apply to
a seller who does any of the following:
a. Fraudulently fails to collect tax.
b. Solicits purchasers to participate in the unlawful claim of an exemption.
c. Accepts an exemption certificate when the purchaser claims an entity-based exemption
when the following conditions are met:
(1) The subject of the transaction sought to be covered by the exemption certificate is
actually received by the purchaser at a location operated by the seller.
(2) Thestateprovidesanexemptioncertificatethatclearlyandaffirmativelyindicatesthat
the claimed exemption is not available in the state.
3. a. A seller otherwise obligated to collect tax from a purchaser is relieved of that
obligation if the seller obtains a fully completed exemption certificate or secures the relevant
data elements of a fully completed exemption certificate within ninety days after the date
of sale.
b. If the seller has not obtained an exemption certificate or all relevant data elements as
provided in paragraph “a”, the seller may, within one hundred twenty days after a request for
substantiation by the department, either prove that the transaction was not subject to tax by
other means or obtain a fully completed exemption certificate from the purchaser, taken in
good faith.
c. Nothing in this subsection shall affect the ability of the state to require purchasers
to update exemption certificate information or to reapply with the state to claim certain
exemptions.
d. Notwithstanding paragraphs “a”, “b”, and “c”, a seller is relieved of its obligation to
collect tax from a purchaser if the seller obtains a blanket exemption certificate from the
purchaser, and the seller and purchaser have a recurring business relationship. For the
purposes of this paragraph, a recurring business relationship exists when a period of no
more than twelve months elapses between sales transactions. The department may not
request from the seller renewal of blanket certificates or updates of exemption certificate
information or data elements when there is a recurring business relationship between the
purchaser and seller.

4. All relief that this section provides to sellers is also provided to certified service
providers under this chapter.