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[2012; R-2013 | Keywords: Iowa Legislation, Sales Tax, Transportation]

ICA Ch 15, p.1

701—15.13(422,423) Freight, other transportation charges, and exclusions from the exemption applicable to these services.

The determination of whether freight and other transportation charges shall be subject to sales or use tax is dependent upon the terms of the sale agreement.

When tangible personal property or a taxable service is sold at retail in Iowa or purchased for use in Iowa and under the terms of the sale agreement the seller is to deliver the property to the buyer or the purchaser is responsible for delivery and such delivery charges are stated and agreed to in the sale agreement or the charges are separate from the sale agreement, the gross receipts derived from the freight or transportation charges shall not be subject to tax.

When freight and other transportation charges are not separately stated in the sale agreement or are not separately sold, the gross receipts from the freight or transportation charges become a part of the gross receipts from the sale of tangible personal property or a taxable service and are subject to tax.

Where a sales agreement exists, the freight and other transportation charges are subject to tax unless the freight and other transportation charges are separately contracted. If the written contract contains no provisions separately itemizing such charge, tax is due on the full contract price with no deduction for transportation charge, regardless of whether or not such transportation charges are itemized separately on the invoice. Clarion Ready Mixed Concrete Company v. Iowa State Tax Commission, 252 Iowa 500, 107 N.W.2d 553(1961); Schemmer v. Iowa State Tax Commission, 254 Iowa 315, 117 N.W.2d 420(1962); City of Ames v. Iowa State Tax Commission, 246 Iowa 1016, 71 N.W.2d 15(1959); Dain Mfg. Company v. Iowa State Tax Commission, 237 Iowa 531, 22 N.W.2d 786(1946).

Freight and transportation charges include, but are not limited to, the following charges or fees: freight; transportation; shipping; delivery; or trip charges (must be tied to distance).
https://www.legis.iowa.gov/DOCS/ACO/IAC/LINC/10-31-2012.Rule.701.15.13.pdf