Transition Period for Sales Tax Changes Announced

DES MOINES –In a letter mailed to retailers this week, Michael Ralston, director of the Iowa Department of Revenue informed retailers of the transition period for complying with the recent sales tax changes.

“ The tax changes went into effect on July 1,” Ralston said, “but realistically, it may be several months before retailers are able to become fully compliant.”

The implementation phase is between July 1 and the end of 2004.

“ During this time, auditors and tax examiners will not penalize anyone for errors relating to the July 1 changes,” Ralston said, “as long as businesses demonstrate a good-faith effort to comply. Our focus will be on service, not sanctions.”

Of particular concern to the department are those businesses that need help learning how to apply local option sales taxes to their sales. Although a large percentage of Iowa retailers have been handling these taxes for several years, it will be new to those who send product to Iowa customers by mail or common carrier. The director wants to minimize concerns by those retailers who are not used to taxing in this manner.

“ Many Iowa businesses sell and deliver strictly by mail or common carrier,” Ralston said. “They are used to charging the local option tax for their own jurisdiction.” That changed July 1. Businesses must now collect the appropriate local option tax at the destination of the product.

“ We are working right now to provide tools to assist businesses, including online software to help retailers determine which rate to charge,” Ralston said. “We know that businesses will collect the right tax if they have what they need to do it.”

Businesses can learn more about local option taxes on the department’s Web site. In addition, tax specialists can be reached at (800) 367-3388 or by e-mail.

As more information becomes available, the department will notify businesses through its free e-mail service. To receive these e-mails, sign up for the Business Taxes “e-list” from the home page of the department’s Web site.

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