Estate Planning For Fido?

March 8, 2012 by

Estate planning for pets hit the news in 2007 when Leona Helmsley, a hotel operator and real estate developer, left most of her $12 million fortune to her dog, Trouble, leaving little to her children or grandchildren.  Trouble (the dog) died in 2011, but was pampered until death with $100,000 spent annually for her care. Also, after receiving death and kidnapping threats, the dog had her own security guard.

While it is interesting, and at least slightly entertaining, for many, ensuring a pet is provided for after the owner dies is a priority.  Many states, including Iowa, allow a trust for the benefit of a pet or pets. As a general rule, trusts must have an ascertainable beneficiary or beneficiaries, most commonly meaning a person.  The first exception years ago was to allow a charity to be a beneficiary. Legally, a dog is considered property, not a person, and therefore is not an ascertainable beneficiary. However, in Iowa, as in other states, by statute an owner can create a trust for a pet or pets which will run until the pet dies.  There is one caveat – in Iowa, a court has discretion to determine whether the value in trust “substantially exceeds the amount required” and direct such funds to another purpose. (Iowa Code Section 633A.2105)  Though I am unaware of any cases in Iowa discussing this provision, it seems an Iowa court wouldn’t allow a $12 million trust for a pet. Then again, maybe a security guard is a required expense…

Estate planning for your pets may be something to discuss with your estate planner. If nothing else, you can talk with family members who would take care of the pet. If you decide to create a trust to support the pet, you will need to appoint a trustee to handle all the financial decisions. While the caregiver and trustee can be the same person, it is not required.

Is the day coming when estate planners will ask about pets in the initial consultation with a client just like we often ask about children?

 

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Education Tax Credits

February 28, 2012 by

As you work on your tax returns for last year, here is some helpful information from the IRS on the education tax credits available. The American Opportunity Credit can be up to $2,500 per student for the first four years of college, and up to $1,000 of that is refundable (meaning, even if you don’t owe any tax, you can receive up to $1,000 in a refund).  The other credit is the Lifetime Learning Credit, which can be up to $2,000 per student per year, and as the name implies, is for an unlimited number of years os postsecondary education. The Lifetime Learning credit is not refundable.  

These credits are available to most people paying postsecondary tuition and fees for yourself, your spouse, or your dependent. Alternatively, a taxpayer can take a deduction for tuition and fees paid.

Remember as you go through tax season, the IRS website has helpful tips and tools for taxpayers, and a decent search feature if you are looking for specific information.

Good Work at the University of Iowa

February 24, 2012 by

There is some good work being done at the University of Iowa. No, I am not talking about the Hawkeye’s basketball victory over the Badgers on Thursday night, although I was happy to see it.  I am talking about the 13-week Elder Law Colloquium, “The Aging Population, Alzheimer’s and Other Dementias: Law & Public Policy,” sponsored by Professor Josephine Gittler and the National Health Law and Policy Resource Center at the University of  Iowa College of Law.

Professor Gittler is a national expert on many areas of health law and has for years been an advocate for children and health.  She has now lent her considerable scholarship and expertise to organizing this series. The colloquium will include the following topics:

  • Health Care and End of Life Surrogate Decision-Making
  • Legal Needs of the Aging Population and the Practice of Elder Law
  •  Legal and Clinical Approaches to Determination of Diminished Capacity
  • Elder Abuse and Neglect and Financial Exploitation of the Elderly
  • Long Term Care Financing and Family Caregiving
  • Governmental Regulation of Nursing Homes and Assisted Living Facilities

I was lucky enough to attend yesterday’s session on Financial Powers of Attorney.  The speaker was Linda S. Whitton, JD, Professor of Law at Valparaiso University School of Law.  Professor Whitton has been very instrumental in drafting a Uniform State Law governing financial powers of attorney.

That Uniform Act is a guide that states can use when looking to implement legislation to protects individuals from financial abuse, theft and fraud.  Iowa’s statute needs to be updated to provide more financial protection for individuals with diminished capacity.

Current Iowa law on powers of attorney, Iowa Code Chapter 633B, has a very limited scope.  It specifies that powers of attorney can continue to be effective after the principal’s disability (which was not the case before the statute was passed), provides protection for banks, other financial institutions and purchasers if they rely on the presence of a power of attorney to complete a transaction, and provides for notice of revocation of a power of attorney.  It does not specify authority an agent should or may be given, does not authorize any sort of mechanism to authorize an interested party to receive an accounting, or provide other protections to the principal and the principal’s estate of the power once the grantor is incapacitated.

About me:
My name is Margaret Van Houten and I practice in the areas of wills, trusts, estate planning and probate law, taxation, charitable organizations, and employee benefits.

If it’s too good to be true…

February 21, 2012 by

Joe Kristan, of the venerable Roth & Company P.C. Tax Update Blog, raises an important issue that all taxpayers should keep in mind. Joe reminds us to beware of promises of fast, dramatic tax relief. Whenever a notice of federal tax lien is filed with a county reporter, it becomes a public record. Companies such JK Harris, Integrated Debt, and First Class Tax Relief promise to reduce the tax debt that you owe. Many times these companies send official looking documents which contain threatening language unless you act immediately – by calling them, of course.

These companies promise pennies on the dollar savings for a small fee. These trade practices can be deceptive and many states are now cracking down. Joe points out two such companies that have been targets of state attorneys general. What they are promising is relief through a process known as an offer in compromise. The IRS may agree to settle your tax debt for less than the amount due if certain conditions are met. First and foremost is that your total net worth (including future earning capacity) is less than the amount owed. Thus, the vast majority of all offer in compromise claims are rejected. Even if you qualify under the net worth determinations, there are a plethora of other requirements that you will have to go through before an offer in compromise is approved. There are certain circumstances where an offer in compromise is warranted, but taxpayers should be cautioned against paying any money to an “offer in compromise mill” to handle their case.

 

 

Non-profit Organizations and Iowa Sales and Use Taxes

February 18, 2012 by


A common misconception persists among Iowa non-profits and vendors that all non-profits are exempt from sales tax on goods purchased on behalf of the non-profit. Most non-profits do, in fact, have to pay sales taxes on their purchases. Only specifically enumerated non-profits are fully exempt from sales taxes. However, nonprofit organizations typically do not have to collect tax on items that they sell so long as the proceeds go directly to the educational or non-profit purposes of the organization. It is always a good idea to review these rules if you are a non-profit operating in Iowa.

The following are the Iowa entities that are exempt from sales and use taxes:

  • American Red Cross.
  • Navy Relief Society.
  • U.S.O. (United Service Organizations).
  • Community health centers.
  • Migrant health centers.
  • Certain Residential care facilities and intermediate care facilities for the mentally ill.
  • Residential facilities for mentally retarded children.
  • Certain licensed residential facilities for child foster care.
  • Rehabilitation facilities which provide certain accredited rehabilitation services to persons with disabilities and qualified adult day care services.
  • Community mental health centers.
  • Sales of tangible personal property and services made to nonprofit hospitals and nonprofit hospices.
  • Statewide nonprofit organ procurement organizations.
  • Nonprofit legal aid organizations.
  • Nonprofit organizations organized solely for the purpose of lending property to the general public for nonprofit purposes.
  • Nonprofit private museums.
  • Governmental units, subdivisions, or instrumentalities of the federal government or of the state of Iowa.
  • Federal corporations created by the federal government which are exempt under federal law.
  • Private nonprofit educational institutions located in Iowa.
  • Private nonprofit art centers located in Iowa.
  • Habitat for Humanity in Iowa when purchasing building materials.
  • Toys for Tots when purchasing toys.
  • Community action agencies.

For non-profit organizations which are not found on the preceding list, Iowa Code § 423.3(78)(2011) exempts the sales price of sales of tangible personal property if the profits from the sale are used for educational, religious, and charitable purposes. Organizations should be aware that this is a separate test from the IRS requirements for exempt status under IRC §501(c)(3).  Iowa Administrative Rule 701-17.1 defines the terms, “educational, religious, and charitable”. Exemption as a religious organization is fairly straight-forward and most churches, synagogues, or mosques should qualify. Educational is defined as “the acquisition of knowledge tending to develop and train the individual. An activity that has as its primary purpose to educate by teaching.” Charitable is defined, “the term ‘charitable ‘may be applied to almost anything that tends to promote well-doing and well-being for public good or public welfare with no pecuniary profit to the one performing the service…”.  In short, it is a good idea to review these rules prior to claiming an exemption.

The IDR has a good website for non-profits that covers these issues in some depth. The exemption for non-profit sales requires that the net proceeds go towards the charitable activity. However, if not all of the proceeds go towards charitable activities, then the exemption is prorated, not denied. The website referred to above, gives the following illustration:

A local organization (not a 501(c)(3)) has a fundraiser and collects $10,000 in net proceeds. The organization gives $9,000 to a local nonprofit homeless shelter and uses $1,000 to pay guest speakers at its meetings. The organization does not pay sales tax on the $9,000 given for a charitable activity, but must pay sales tax on the $1,000 it retained for its own use.

The term net proceeds means the gross revenue less the costs of operating and holding the event. Unfortunately, non-profit sales tax issues can get complicated in a hurry. Notice in the above example, the organization was likely not a qualifying non-profit for sales tax purposes. However, it qualified for the exemption because the organization expended the proceeds for charitable purposes. If the organization were exempt under Iowa sales tax law, the speaker fees could also be considered exempt net proceeds because the speakers would be furthering the charitable or educational purposes. It is important to look at who the entity is that is claiming the exemption.

Other examples given include a food vendor at a little league game where the proceeds of the vendor go back into the little league for uniforms. That example is determined to be an exempt activity for sales tax purposes so long as the little league organization is a IRC § 501(c)(3) charity. Certain local theaters, civic centers, and similar entities can also claim an exemption for the sales prices of the ticket sales to their events, provided that the entity sponsoring the event is an exempt organization and the event furthers the charitable or educational purposes.

Operationally, it is important to keep track of the proceeds that are gathered from exempt events. If the organization provides any benefits (other than reasonable compensation) to its volunteers and members, the Department has taken the position that the organization must remit sales tax on the amount spent for these benefits. The Department provides a simple example of a charity that raised $10,000.00 but spent $1,000.00 on a pizza party for those that helped with the event and its members. The Department takes the position that those proceeds are not spent in furtherance of the exempt purposes and the organization must pay sales tax on the $1,000.00. Thus, it is a good idea to segregate unrestricted donations from proceeds raised through fundraising and event activities. If a pizza party is desired, then the donated funds can be used for those purposes from a separate account without triggering a sales tax liability.

To summarize, only a select few non-profits in Iowa can claim an exemption for purchases for their organization. Most, however, can claim a sales tax exemption for their fundraising and event activities – keeping in mind that the proceeds must be spent in furtherance of the exempt purpose.

Developing Issues for Tax Professionals – A question that is being considered by tax professionals and the Department at the moment is just how the “net proceeds” concept is to be applied in practice. As we know, the vendor is responsible for the collection of sales taxes from the consumer at the time the sale is completed. Thus, the following question is necessarily raised – if the exemption is applied on the back-end of the transaction (determining the net proceeds requires analysis after the sale takes place), then how is the tax to be collected on the front end of the transaction? In practice, most non-profit organizations simply remit the tax on the for-profit proceeds without consideration as to how it was collected. This raises a number of issues as to how you would itemize a receipt or disclose to those purchasing the item that sales taxes are being collected. The Department has yet to provide guidance on this issue, but as charities provide more and more complex services and goods, this is becoming an issue that will have to be dealt with and developed. We will post any guidance that we receive on this issue in the future.

Reasons You Need a Will

February 10, 2012 by

Wills do more than just distribute property. A will lets you decide who gets what assets, and also who should take care of your minor children.  Without a will, the state will decide who gets what without consideration of your wishes, or the needs or wishes of the family and friends you leave behind. Here are some of the top reasons to have a will:

1.  Appoint a Guardian for Minor Children

If you have minor children, a will lets you appoint a guardian to take care of your minor children. If parents don’t have a will, the court will likely choose among family members, but don’t you have a preference? By making the decision in a will, you can be assured it’s the person you want to raise your children (or make sure it isn’t someone you don’t want) and you can likely save some family arguments.

2.  Delay Distributions for Minor Children

By state law, any money transferred to a child under age 18 or 21 (depending on the state) must be held by the courts until the child reaches 18 or 21. Then, the child gets the lump sum, free and clear. Would you have wisely spent a lump sum of money at age 18 or even 21? Probably not. A will lets you delay when your children receive that distribution or divide the distribution over a few years.

3.  Appoint an Executor

An executor is in charge of winding up all of your affairs. He or she makes sure all the bills are paid, cancels your credit cards, notifies banks, and terminates any leases. Your executor will also be in charge of finding and distributing all your assets.   This is a good time to make a list of assets you own that others might not know about. Do your children know where all of your retirement accounts are held? Do your parents know where you have bank accounts? That information isn’t necessarily in the will, but can be on a list stored with the will.

4.  Distribute Personal Property

A will controls more than just the house and the car, it can control who gets your Grandmother’s heirloom jewelry and your Grandfather’s stamp collection. Make sure these things go to the relatives that will treasure the items most by putting it in your will. Avoid the “mom would have wanted me to have it” arguments.

5.  Address Non-Traditional Families

State intestate laws are old and typically don’t address non-traditional family situations such as second marriages, stepchildren, children from a prior marriage, or unmarried significant others.  To make sure those people are taken care of, you need a will.

6. Provide for Certain Family Members

You may have certain family members or friends who need more of your support, or certain close relatives you want to exclude. Making a will ensures your property goes to the family and friends you want.

7.  Minimize Estate Taxes

Depending on the size of your estate, a will can be designed to minimize estate taxes. While all property passing to a spouse is tax-free, when the second spouse dies all the property (both husband’s and wife’s) could be subject to tax if over the exemption amount. In 2012, the estate tax exemption is $5.12 million.  Hard to say what the exemption amount will be in future years, but in 2013 it could drop to $1 million. Two people can quickly get to $1 million in assets with a house, cars, retirement accounts, etc.

8.  Support Charities

If you have provided support for a certain charity during your life, you may want that support to continue after your death also. Even if your family members agree to create a memorial fund in your honor, designating a charity or charities in your will ensures the funds go where you want, not where your family wants.

9.  Powers of Attorney

Technically a power of attorney is a separate document from a will, but they really go hand-in-hand, and if you are making a will, you might as well get powers of attorney too. By granting someone power of attorney, you are giving them permission to make certain decisions for you when you are incapable. (That person is your “agent.”) Who will pay your mortgage and electric bills? If you run a business by yourself, how will the bills get paid if you can’t sign the checks? The documents can be worded so your agent can only make decisions when you are medically incapable. Without powers of attorney, a court has to step in to appoint someone to make decisions. That takes time and legal fees. Plus, healthcare and financial decisions can be very personal, don’t  you prefer to pick who makes those decisions for you?

10.  Peace of Mind

Finally, having a will saves everyone a little stress. Not just you, but also the family and friends you leave behind. Having a will ensures your wishes are carried out, the family and friends who depend on you are cared for, and your family won’t have to piece together all the details after you are gone.

Drafting a will isn’t nearly as burdensome or painful as everyone makes it out to be. The sooner you do it, the easier it will be. This list likely has you thinking about some of the most important decisions. Why not do it now?

Are Frequent Flyer Miles Taxable Income?

February 2, 2012 by

Citibank is treating certain frequent flyer miles as taxable income, and they are sending IRS Form 1099 to customers who were given miles in exchange for opening bank accounts.  (1099s report income other than wages to the IRS.) Now, don’t panic, not all frequent flyer miles are taxable.  In fact, the IRS issued a policy announcement in 2002 regarding frequent flyer miles stating “[t]here are numerous technical and administrative issues relating to these benefits,” including issues of timing and valuation, and as a result of the unresolved issues, “the IRS has not pursued a tax enforcement program.” 

How is the Citibank situation different?  Frequent flyer miles and cash back on credit cards have historically been treated as rebates on spending which are not taxed as income. That is likely the type of miles the IRS announcement was referring to. Citibank takes the position that the miles they are taxing are different, the miles were given as a reward/prize for opening a bank account, not as a rebate on spending, and therefore the miles are taxable. (The IRS said earlier this year taxpayers must pay income tax on prizes greater than $600.) However, one news agency refers to a statement by IRS representatives that the 2002 announcement focused on a specific area and does not address the issue Citibank faces.  The IRS has not released an official statement on this issue.  This may be the beginning of a debate whether these particular frequent flyer miles are taxable.  United States Senator Sherrod Brown of Ohio wrote a letter earlier this week that is receiving a lot of attention, urging Citibank to stop treating the miles as income.

Bottom Line: The only certainty at this point is if you received a Form 1099 from Citibank, the IRS sees those miles as income to you.

New Online Tool for Individuals that Received the First Time Homebuyer Credit

February 2, 2012 by

The First Time Homebuyer Credit is a credit which reduced a taxpayer’s tax bill (or increased his or her refund) if he or she purchased a new home between certain time periods.  This credit was one of the incentives used by Congress to try to help the real estate market by giving an incentive to certain individuals to purchase a home.

Were you aware that you may have a repayment obligation for receiving the First Time Homebuyer Credit?  If you claimed the credit for a house you purchased in 2008 (applicable for homes purchased after April 8, 2008 and before January 1, 2009), the credit was really a 0% loan and was to be repaid in 15 equal annual installments beginning in 2010 as an additional “tax” on the tax return (shown on line 59b of the 1040).  The credit was extended for a few additional years and if you took the credit during 2009 or 2010 (and even for part of 2011 for military personnel) you do not have a repayment obligation unless the home you purchased is no longer considered your home (meaning that you sold it, it was destroyed or it was converted into a business or rental property) within three years from the date of purchase.

The IRS has a new tool on its website that allows individuals who received the First Time Homebuyer Credit to determine his or her repayment obligation.  In order to access the information you will need your Social Security Number, date of birth and complete address.  The website will show the original amount of the credit, the annual repayment amounts, total amount paid and the total balance left to be paid.  The IRS will no longer be mailing reminder letters to individuals that have to repay the credit and this will be the only way to access the information.

FATCA – New Filing Requirements for Foreign Assets

January 30, 2012 by

Congress and the IRS have determined that taxpayers need yet an additional form to file in order to report foreign held assets. This latest filing requirement will add to the Form TD F 90-22.1 – Report of Foreign Bank and Financial Accounts (FBAR), Form 8865 – Return of U.S. Persons With Respect to Certain Foreign Partnerships, Form 5471 – Information Return of U.S. Persons With Respect To Certain Foreign Corporations, and the plethora of other foreign asset reporting requirements. Holding foreign assets has never been more difficult and potentially very costly from a tax perspective.

As part of the Hiring Incentives to Restore Employment (HIRE) Act, The Foreign Account Tax Compliance Act (FATCA) was enacted March 18, 2010. The IRS states that “The Foreign Account Tax Compliance Act (FATCA) is an important development in U.S. efforts to improve tax compliance involving foreign financial assets and offshore accounts.” In order to implement the reporting requirements under FATCA the IRS has just recently released the final Form 8938. Although FATCA has been in effect since enactment in 2010, its implementation has been delayed until the final form was published. As such, the 2011 tax return is the first return that will require this form to be attached.

The Form 8938 increases the scope of reportable assets and persons required to report foreign assets. For instance, certain private equity assets held through hedge funds that were exempted under the FBAR rules will now have to be reported on the Form 8938. Section 511 of FATCA creates a new IRC code section, Section 6038D. This code section sets forth the threshold filing requirements. Additionally, the IRS has published guidance on their website on who will be required to file the Form 8938.

Generally, you must file a Form 8938 if you are a specified individual. A specified individual is defined as:

  • A U.S. citizen;
  • A resident alien of the United States for any part of the tax year (see Pub. 519 for more information);
  • A nonresident alien who makes an election to be treated as resident alien for purposes of filing a joint income tax return; or
  • A nonresident alien who is a bona fide resident of American Samoa or Puerto Rico (See Pub. 570 for definition of a bona fide resident) and
  • Any such person holds an interest in a specified foreign financial asset required to be reported.

A specified foreign financial asset is defined as:

  • Any financial account maintained by a foreign financial institution, (with some exceptions)
  • Other foreign financial assets held for investment that are not in an account maintained by a US or foreign financial institution, namely:
    • Stock or securities issued by someone other than a U.S. person
    • Any interest in a foreign entity, and
    • Any financial instrument or contract that has as an issuer or counterparty that is other than a U.S. person.

It should be noted that this will not encompass international equity assets held in a US-based mutual fund or issued through a US broker. Though, it ostensibly would apply to a non-US based mutual fund or foreign broker.

There are filing thresholds such that not everyone that qualifies above will have to file this form. For unmarried taxpayers living in the US, the threshold will be if the total value of all specified foreign financial assets is more than $50,000 on the last day of the tax year or more than $75,000 at any time during the tax year. For married taxpayers filing a joint income tax return and living in the US, the threshold will be if the total value of all specified foreign financial assets is more than $100,000 on the last day of the tax year or more than $150,000 at any time during the tax year. For married taxpayers filing separate income tax returns and living in the US, the threshold will be if total value of all specified foreign financial assets is more than $50,000 on the last day of the tax year or more than $75,000 at any time during the tax year.

There are special rules if you are a US taxpayer living abroad. These rules need to be reviewed carefully as they set forth a different standard of residency than found elsewhere in the IRC and regulations. Under the FATCA rules, a person is a taxpayer living abroad if:

  • You are a U.S. citizen whose tax home is in a foreign country and you are either a bona fide resident of a foreign country or countries for an uninterrupted period that includes the entire tax year, or
  • You are a US citizen or resident, who during a period of 12 consecutive months ending in the tax year is physically present in a foreign country or countries at least 330 days.

Note the second definition for US citizens living abroad and not qualifying under the first definition –  you will have a requirement to file if you are present in the US for more than 35 days (or 36 this year). For US citizens living abroad, this could catch a few persons unexpectedly.

The thresholds are also different for a taxpayer living abroad with a filing requirement. The IRS states that you will be required to report if:

  • You are filing a return other than a joint return and the total value of your specified foreign assets is more than $200,000 on the last day of the tax year or more than $300,000 at any time during the year; or
  • You are filing a joint return and the value of your specified foreign asset is more than $400,000 on the last day of the tax year or more than $600,000 at any time during the year.

FATCA also added, as would be expected, draconian penalties similar to the FBAR penalties. IRC § 6662 allows the IRS to impose a 20% penalty on a substantial understatement of income tax for negligence and other non-fraudulent behavior. FATCA amended this section and added a potential penalty of 40% for any underpayment attributable to financial assets required to be disclosed pursuant to IRC § 6038D. Additionally, there is a stiff failure to file penalty of $10,000.00 for failing to file by the required filing date for the tax return. After being notified of the failure to file, the taxpayer will be fined an additional $10,000.00 for each 30 day period during which they fail to file the return (capped at $50,000.00).

Additionally, FATCA has extended the statute of limitations with respect to returns which contained errors in the filing of the Form 8938. Generally, if all the tax is paid and a Form 8938 filed timely, the statute of limitations will remain at the usual 3 year period. However, if a Form 8938 is not filed, the statute of limitations will not start to run on any income attributable to assets which should have been reported on the form. Even after filing the Form 8938 and paying the tax due, the statute of limitations which respect to the form and the tax liability attributable thereto will be extended to 6 years if the amount of under-reporting of income from the reportable foreign assets was greater than $5,000.00.

This tax season it is imperative to alert your tax professional if you have foreign held assets. Even if you consider them exempt from reporting, it best to let your tax preparer know about those assets. The penalties for improper reporting are quite severe and therefore foreign assets warrant increased attention.

My name is Christopher James. I practice corporate law and tax law at Davis Brown Law Firm. I focus mainly on tax controversy matters with both state and local governments and the IRS. I have a BS in accounting from the University of North Carolina-Greensboro, a J.D. from Drake University, and a LL.m in taxation from Northwestern University. My complete bio can be viewed here.

Online Sales: Should You Be Collecting Sales Tax?

January 17, 2012 by

You have likely heard about the recent debate regarding collecting state sales tax for online sales. What’s the big deal? Typically, online retailers collect sales tax only from sales in a state where they have a physical presence. As a result, many online sales do not get taxed. The argument is this makes it hard for small businesses (who have to charge sales tax) to compete with the out-of-state online retailers.

 If this bill passes, what happens? The idea is that states would require the online retailers to charge sales tax based on your address, meaning, if the retailer sells to an Iowa address, it would charge Iowa sales tax.  At least one tax attorney sees constitutional issues here and does not expect the bill to move quickly.

 Speaking of online sales, weren’t you meaning to sell that old furniture and all of those toys the kids have outgrown? Selling things online seems easier than a garage sale, but should you be charging sales tax on those old “treasures”?  Most likely not, regardless of the outcome of this bill, thanks to the casual sales exception. 

Iowa has a 6% tax on retail sales (and any additional local option taxes) unless the sale fits a stated exception. Looking deep enough into the statute, there is an exception for “casual sales.”  So, just what is a casual sale?   In Iowa, it is a sale which is (1) “nonrecurring” and (2) by someone who is not in the business of selling that property for profit.  So, selling the items collecting dust in your basement is likely a casual sale.  But, if you are selling a certain type of product consistently, that seems recurring and starts to look like a business, and you should look into the sales tax issue a little further.


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