News and Insights

Iowa to Tax Online Retailers

Tax Development Jun 24, 2013

On June 11, 2013, Iowa Governor Terry Branstad signed into law House File 625 (“H.F. 625”) (effective July 1, 2013), known as the “e-fairness” legislation. The law is designed to close existing loopholes that establish nexus for sales tax. While not mentioning online retail specifically, H.F. 625 effectively captures online sales by linking “establishing or maintaining a market” to statutory nexus requirements. This new language broadens existing nexus requirements that previously allowed retailers with no physical presence in Iowa to avoid paying sales tax on transactions with residents of the state. The law represents a state-level initiative mirroring the Marketplace Fairness Act currently facing scrutiny in the U.S. House of Representatives. Where some of the strictest criticism of the federal legislation revolves around inadequate exemptions for small businesses, H.F. 625 does not appear to contemplate such an exemption in any way.


Jeremiah T. Lynch