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Can I use third-party payment processors on my website in Iowa? What are the requirements?

Third-Party Payment Processors in Iowa

If you are using third-party payment processors on your website in Iowa, you may have sales tax collection obligations. The requirements depend on whether you have a physical presence in Iowa or not.

Physical Presence in Iowa

If you have a physical presence in Iowa, you must collect and remit Iowa sales tax and any applicable local option sales tax on all taxable sales, including those made through third-party payment processors, regardless of whether the sales threshold is met [1.1].

No Physical Presence in Iowa

If you do not have a physical presence in Iowa, you must determine whether you meet the sales threshold based on the total of your Iowa sales through marketplaces combined with your nonmarketplace Iowa sales [1.2]. If you meet the sales threshold, you must obtain an Iowa sales tax permit, collect Iowa sales tax and any applicable local option sales tax, and file Iowa sales tax returns for sales made on that marketplace [1.2].

If all the marketplace facilitators used by you to make taxable Iowa sales collect Iowa sales tax and applicable local option sales tax, you do not have to collect the tax. The marketplace facilitator will report and pay Iowa sales tax and applicable local option sales tax on a sales tax return filed by the marketplace facilitator [1.2].

Other Requirements

If you are a Medicaid provider, payments made directly to the provider of care by the recipient, relatives, or any source shall be deducted from the established cost standard for the service provided to establish the amount of payment to be made by Iowa Medicaid [2.1].

A marketplace facilitator is not obligated to collect tax on a product sold through a marketplace it operates that is not subject to Iowa sales and use tax [1.3].

Except as otherwise stated in this chapter, the permit requirements of 701—Chapter 201 shall apply to all retailers, including remote sellers and marketplace facilitators, required to collect and remit Iowa sales tax and applicable local option sales tax under this chapter [1.4].

Conclusion

If you have a physical presence in Iowa, you must collect and remit Iowa sales tax and any applicable local option sales tax on all taxable sales, including those made through third-party payment processors. If you do not have a physical presence in Iowa, you must determine whether you meet the sales threshold and follow the requirements outlined in [1.2]. Additionally, if you are a Medicaid provider, payments made directly to the provider of care by the recipient, relatives, or any source shall be deducted from the established cost standard for the service provided to establish the amount of payment to be made by Iowa Medicaid [2.1].

Source(s):
Jurisdiction

Iowa