The Iowa Department of Revenue is in the midst of an effort to prepare businesses in the state for the change in the sales tax that takes place July 1st. Department spokesperson Renee Mulvey, says the state rate is increasing from five to six percent with a change in the school tax approved by the legislature.
Mulvey says the separate local option school tax is going away and the 1% is being added to the statewide sales tax and that money will go to schools. Mulvey says only one of the 99 counties will see a change in the actual amount they collect in sales tax.
Mulvey says Webster County had a 1.5% school tax, while all the other counties in the state had a one-percent local option school tax, so businesses in Webster County will collect 6.5% with the change. Mulvey says the be a change in the paperwork when businesses make their quarterly report in October.
Mulvey says businesses will still report the regular local option tax, and will also still have to break out the sales like they did before, so that the distribution of the one-percent sales tax can be sent to the proper districts. Mulvey says they are notifying some 150,000 businesses of the change with a letter.
She says they sent out the first batch of 40,000 last week and will continue to send them out this week and next week. Mulvey says if you haven’t gotten the letter yet at your business, you can go to the Department of Revenue website to learn more.
Mulvey says there are also some exceptions to the statewide sales tax, for example, the state rate for hotel and motel lodging will remain at five percent. Those exemptions are also explained on the website.