Axiom Home Page Forums General Discussion The Water Cooler tax question, won't hold you liable. :)

No John, we purchased the vehicle in our local home town. I found some information on Google search on a "Iowa Sales and Use Tax Booklet" website.

Under "MOTOR VEHICLE USE TAX" section. This appears to match what you mentioned above.

The gross receipts from sales of vehicles subject to registration are exempt from sales tax but subject to motor vehicle use tax. The tax is paid upon registration to the county treasurer.


Under "Taxes and Tax Rates" section.
Use Tax

The use tax is complementary to sales tax. The general rule is when a transaction is subject to sales tax but occurs outside of Iowa for use in Iowa, (a taxable use) it is subject to use tax.

Two types of use tax are recognized by the State of Iowa: retailer’s use tax and consumer’s use tax. The difference between the two is who is initially responsible for remitting the tax.

Taxable Use

"Taxable use" is defined as the exercise of any right of ownership over tangible personal property by any person owning the property. This includes any taxable services rendered, furnished or performed for use in Iowa or if the product or result of service is used in Iowa.

Retailer’s Use Tax

Every out-of-state retailer who has "nexus" in Iowa and makes sales of tangible personal property or taxable services in Iowa must obtain a retailer’s use tax permit. The permit is free of charge.

"Nexus" includes a physical presence such as a store, warehouse, or sales staff. Contact Taxpayer Services for more information.

Consumer’s Use Tax

Persons regularly purchasing taxable goods or services for their own use in Iowa from an out-of-state source not collecting Iowa tax must register with the department to receive consumer’s use tax returns. No registration fee is charged and no permit is issued, but the returns are required in order to remit tax on those purchases.

Occasionally, a business will make a purchase for its own use and owe Iowa consumer’s use tax. The business can report the purchase and pay the tax due on its quarterly sales tax return on line 2 "goods consumed."

Others who make these kinds of purchases can pay the use tax to Iowa by sending a note listing the items purchased and their prices and explaining that the check is for use tax. Typical purchases of this type are those made from catalogs, magazines and television and radio vendors.

When sales or use tax is paid to another state on goods that are also subject to Iowa use tax, a credit may be allowed. The credit cannot exceed the Iowa use tax rate of 5 percent.

Consumers who make out-of-state purchases and pay another state’s sales tax pay only the difference of tax due to Iowa. For example: An Iowa business or resident purchases furniture from another state and pays a 4 percent sales tax to that state. Iowa’s use tax rate is 5 percent. The business or resident then owes Iowa 1 percent use tax.