Iowa – IDR State Tax Reform Updated Guidance: Food Delivery Services

IDR State Tax Reform Updated Guidance: Food Delivery Services

In 2018, the Iowa legislature enacted Senate File 2417, a state tax reform bill that includes extensive changes to the state’s tax structure. The Department has released updated guidance to explain the following tax change: 

  • Food Delivery Services as Marketplace Facilitators – Effective January 1, 2019, Iowa law began requiring marketplace facilitators to collect and remit Iowa sales tax and applicable local option sales tax for sales made or facilitated on the business’s marketplace. Generally, a marketplace facilitator is a business that provides infrastructure or support for retail sales to occur and collects the sales price, processes payments, or receives compensation from the retail sale. One type of business that may qualify as a marketplace facilitator is a food delivery service company. If a business allows customers to order food and handles the payment for the customer, the business likely qualifies as a marketplace facilitator. This new guidance discusses this new aspect of the law and provides examples for a handful of situations.

The Department maintains a tax reform page to provide taxpayers with guidance on tax reform topics. Additional guidance is added as it becomes available.