Victoria Daniels, spokeswoman for the Iowa Department of Revenue, says Iowans who buy items for themselves will be charged that tax, but not necessarily if they’re buying a gift for someone who lives out-of-state.
“It depends on where the item is being shipped,” Daniels says. “For example, if you purchase something online but it’s being delivered to Illinois. Illinois law will then dictate what sales tax is charged, or not charged, to the person who is receiving the gift.”
Daniels says the change was not an effort by the state to make money. She says officials at Amazon approached the state first. It’s unclear how much money Iowa may rake in from the tax via Amazon purchases.
“What we do know is, a couple of years ago, we did an estimate about what would come in potentially if the federal government were to pass legislation requiring remote retailers to collect the sales tax,” Daniels says. “We estimated at that time it would be anywhere between $18- to 24-million.”
Online retailers that don’t have “brick and mortar” stores in the state typically haven’t forced customers to pay the sales tax.
“Target and Walmart and other stores that have a physical presence here, yes, they are required to collect the state sales tax from Iowa customers.”
Amazon already charges sales tax in about 30 other states. Amazon revenues in 2015 reportedly exceeded $100-billion.