423.51 Administration of exemptions.
1. The following provisions shall apply when a purchaser claims an exemption:
a. The seller shall obtain identifying information of the purchaser and the reason for claiming a tax exemption at the time of the purchase as determined by the member states acting jointly.
b. A purchaser is not required to provide a signature to claim an exemption from tax unless a paper certificate is used.
c. The seller shall use the standard form for claiming an exemption electronically as adopted jointly by the member states.
d. The seller shall obtain the same information for proof of a claimed exemption regardless of the medium in which the transaction occurred.
e. The department may authorize a system wherein the purchaser exempt from the payment of the tax is issued an identification number which shall be presented to the seller at the time of the sale.
f. The seller shall maintain proper records of exempt transactions and provide them to the department when requested.
g. The department shall administer entity-based and use-based exemptions when practicable through a direct pay tax permit, an exemption certificate, or another means that does not burden sellers. For the purposes of this paragraph:
(1) An “entity-based exemption” is an exemption based on who purchases the product or who sells the product.
(2) A “use-based exemption” is an exemption based on the purchaser’s use of the product.
2. Sellers that follow the requirements of this section are relieved from any tax otherwise applicable if it is determined that the purchaser improperly claimed an exemption and that the purchaser is liable for the nonpayment of tax. This relief from liability does not apply to a seller who does any of the following:
a. Fraudulently fails to collect tax.
b. Solicits purchasers to participate in the unlawful claim of an exemption.
c. Accepts an exemption certificate when the purchaser claims an entity-based exemption when the following conditions are met:
(1) The subject of the transaction sought to be covered by the exemption certificate is actually received by the purchaser at a location operated by the seller.
(2) The state provides an exemption certificate that clearly and affirmatively indicates that the claimed exemption is not available in the state.
3. a. A seller otherwise obligated to collect tax from a purchaser is relieved of that obligation if the seller obtains a fully completed exemption certificate or secures the relevant data elements of a fully completed exemption certificate within ninety days after the date of sale.
b. If the seller has not obtained an exemption certificate or all relevant data elements as provided in paragraph “a”, the seller may, within one hundred twenty days after a request for substantiation by the department, either prove that the transaction was not subject to tax by other means or obtain a fully completed exemption certificate from the purchaser, taken in good faith.
c. Nothing in this subsection shall affect the ability of the state to require purchasers to update exemption certificate information or to reapply with the state to claim certain exemptions.
d. Notwithstanding paragraphs “a”, “b”, and “c”, a seller is relieved of its obligation to collect tax from a purchaser if the seller obtains a blanket exemption certificate from the purchaser, and the seller and purchaser have a recurring business relationship. For the purposes of this paragraph, a recurring business relationship exists when a period of no more than twelve months elapses between sales transactions. The department may not request from the seller renewal of blanket certificates or updates of exemption certificate information or data elements when there is a recurring business relationship between the purchaser and seller.
4. All relief that this section provides to sellers is also provided to certified service providers under this chapter.
2003 Acts, 1st Ex, ch 2, §144, 205; 2006 Acts, ch 1158, §77, 78, 80; 2007 Acts, ch 179, §7
Structure Iowa Code
Chapter 423 - STREAMLINED SALES AND USE TAX ACT
Section 423.2A - Deposit and transfer of revenues.
Section 423.5 - Imposition of tax.
Section 423.7A - Motor vehicle lease tax.
Section 423.8 - Legislative finding and intent.
Section 423.9 - Authority to enter agreement — representatives on governing board.
Section 423.9A - Iowa streamlined sales tax advisory council.
Section 423.10 - Relationship to state law.
Section 423.11 - Agreement requirements.
Section 423.12 - Limited binding and beneficial effect.
Section 423.13 - Purpose of this subchapter.
Section 423.13A - Administration — effectiveness of agreements with retailers.
Section 423.14 - Sales and use tax collection.
Section 423.14B - Sales and use tax reporting requirements — penalties.
Section 423.15 - General sourcing rules.
Section 423.16 - Transactions to which the general sourcing rules do not apply.
Section 423.18 - Multiple points of use exemption forms.
Section 423.19 - Direct mail sourcing.
Section 423.20 - Telecommunications service sourcing.
Section 423.21 - Bad debt deductions.
Section 423.22 - Taxation in another state.
Section 423.23 - Sellers’ agreements.
Section 423.24 - Absorbing tax prohibited.
Section 423.24A - Reimbursement for the primary road fund.
Section 423.25 - Director’s power to adopt rules.
Section 423.26A - Manufactured housing — collection of use tax — certificate of title.
Section 423.27 - Motor vehicle lease tax.
Section 423.28 - Sales tax report — deduction.
Section 423.29 - Collections by sellers.
Section 423.30 - Foreign sellers not registered under the agreement.
Section 423.31 - Filing of sales tax returns and payment of sales tax.
Section 423.32 - Filing of use tax returns and payment of use tax.
Section 423.33 - Liability of persons for payment of sales or use tax.
Section 423.34 - Liability of user.
Section 423.34A - Exclusion from liability for purchasers.
Section 423.35 - Posting of bond to secure payment.
Section 423.36 - Permits required to collect sales or use tax — applications — revocation.
Section 423.37 - Failure to file sales or use tax returns — incorrect returns — limitations period.
Section 423.38 - Judicial review.
Section 423.39 - Service of notices.
Section 423.40 - Penalties — offenses — limitation.
Section 423.41 - Books — examination.
Section 423.42 - Statutes applicable.
Section 423.43 - Deposit of revenues.
Section 423.44 - Reimbursement for primary road fund.
Section 423.45 - Refunds — exemption certificates.
Section 423.46 - Rate and base changes— liability for failure to collect.
Section 423.47 - Refunds and credits.
Section 423.48 - Responsibilities and rights of sellers registered under the agreement.
Section 423.49 - Return requirements — electronic filing.
Section 423.50 - Remittance of funds.
Section 423.51 - Administration of exemptions.
Section 423.52 - Relief from liability for sellers and certified service providers.
Section 423.53 - Bad debts and model 1 sellers.
Section 423.54 - Amnesty for registered sellers.
Section 423.56 - Confidentiality and privacy protections under model 1.
Section 423.57 - Statutes applicable.
Section 423.58 - Collection, permit, and tax return exemption for certain out-of-state businesses.