Airing of Grievances—State Tax Edition

Cody Edwards, Iowa Construction Law, Iowa Taxation Law, Iowa Table SALT Law, Dickinson Law Firm, Des Moines Iowa

Posted on 12/19/2017 at 09:58 AM by Cody Edwards

Happy Festivus! Gather ‘round the Festivus pole, consistent with Festivus tradition, it is time for airing of grievances, state tax edition: 

  1. In January, 2017, the Iowa Department of Revenue issued a Declaratory Order which held that Amazon Prime video is the taxable service of “pay television.”  As I previously noted, I think the Department got this wrong for at least two reasons. First, Iowa Code § 423.3(65) exempts from sales tax “a service that provides or enables computer access by multiple users . . . to other information made available through a computer server or device.” Certainly, Amazon Prime Video provides computer access to information made available through a device. Second, Iowa Code §423.3(67) exempts from sales tax “a sale at retail of the substance of the transaction is delivered to the purchaser digitally, electronically . . . .” Amazon Prime video is delivered digitally or electronically, via the internet. Unfortunately, it appears the Iowa Department of Revenue is taking the position of other states by trying to shoehorn new technologies into taxing statutes that were written for the 20th Century. See IDOR Rules that Internet Video Streaming is Subject to Sales/Use Tax. Is it Really?


  1. Earlier this year, the Iowa Department of Revenue announced it will no longer respond to taxpayer’s policy letter requests. Historically, taxpayers could request from the Department policy letters, which would provide informal guidance on ambiguous tax issues. The Department's rationale for ceasing to provide guidance via policy letters was that taxpayers were using past policy letters as ammunition against current Department positions that were inconsistent with the past policy letters.  Rather than ceasing to issue policy letters, perhaps the Department should not take inconsistent positions. Ceasing to provide informal guidance seems to be contrary to the Department's Vison Statement, which is to make Iowa "a state where it is easy to understand and comply with tax obligations.” Now, if taxpayers want written guidance from the Department, they must go through the lengthy Declaratory Order process.   
  1. As discussed here and here, states have a long history of enacting retroactive tax legislation to fix errors in law or conform the exemption to the original intent to the legislature. This year, the United States Supreme Court passed on two opportunities to hear challenges to six- and 27-year retroactive periods. It appears that protecting the public fisc is a legitimate purpose and but we will be left guessing when a legislature acts “promptly” to correct a bad law and what is a modest period of retroactivity (is 27 years modest?). See Michigan Passes Law to Collect From 2008 – Can They Do That?; See also Death and Taxes. Maybe.    


  1. The Iowa Department of Revenue published a Letter of Findings, in which it double dipped in state sales and use taxes. As described in the Department’s Letter of Findings, a construction contractor filed, and the Department denied, a refund claim for sales tax paid on building materials, refrigeration equipment and tangible personal property used in remodeling project. The contractor also charged its customer sales tax on the marked-up price of the same items. The Department indicated the contractor’s customers could be entitled to the refund. However, if the contractor’s customer was precluded by the statute of limitations from filing a refund, which is often the case, the Department collected more than twice the amount of tax that was properly due and the Department enjoyed a windfall. See “Seinfeld” and the Iowa Department of Revenue

Stay tuned for Feats of Strength . . . .

For any questions regarding Taxation Law please contact Cody Edwards

The material in this blog is not intended, nor should it be construed or relied upon, as legal advice. Please consult with an attorney if specific legal information is needed. 

- Cody Edwards


Questions, Contact us today.

Contact Us


The material, whether written or oral (including videos) that is posted on the various blogs of Dickinson Bradshaw is not intended, nor should it be construed or relied upon, as legal advice. The opinions expressed in the various blog posting are those of the individual author, they may not reflect the opinions of the firm.  Your use of the Dickinson Bradshaw blog postings does NOT create an attorney-client relationship between you and Dickinson, Bradshaw, Fowler & Hagen, P.C. or any of its attorneys.  If specific legal information is needed, please retain and consult with an attorney of your own selection.

There are no comments yet.
Add Comment

* Indicates a required field