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How to Use an Iowa Resale Certificate

by TaxJar April 4, 2018

If you buy products to resale in the state of Iowa, you can avoid paying sales tax on your purchase by presenting a resale certificate to your vendor. You should always keep in mind that you should only use your resale certificate to buy items you intend to resale–any other use of the resale certificate by an individual is usually considered unlawful.

This post will explain how to use and accept Iowa resale certificates.

If You Wish to Use an Iowa Resale Certificate

Iowa is one of a handful of states that is relatively lenient about how can use a resale certificate to buy items tax free. Basically, as a reseller, if you claim that you have the right to buy items tax free and then resell them, then you can present your vendor with the Iowa Sales Tax Exemption Certificate. You don’t even need to have a sales tax permit number!

However, if this turns out not to be the case, or if you end up using the items you purchased tax free in any way aside from reselling them, then you are responsible for paying the sales tax that would have been due when you purchased the item.

Also keep in mind that if you do have a sales tax permit (sometime’s called a reseller’s permit) then you are required to enter it when presenting your vendor with the resale certificate in order for the certificate to be considered completely filled out.

If Your Buyer Wishes to Use an Iowa Resale Certificate

As a vendor based in Iowa, your customer may present you with an Iowa resale certificate. As a vendor, your responsibilities when receiving a resale certificate are to:

  • Ensure the resale certificate is completely filled out – This is required by the Iowa Department of Revenue.
  • Verify the validity of the resale certificate – If your buyer gave you an Iowa resale certificate, you can call in and verify it’s validity. If the resale certificate is from another state, you can find a list of how to verify resale certificates in all U.S. states here.
  • Retain a copy of the resale certificate for your records – This is also a requirement of the Iowa Department of Revenue.

In most states, the onus is on the vendor to ensure that the buyer truly has the authority to buy products from your store tax free. But fortunately, in Iowa, if your buyer ends up unable to buy items tax free, it is him or her on the hook to pay the uncollected sales tax. This makes your life as an Iowa vendor just a little bit easier!

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