Sales, Use and International Tax Activity Update - August 2009

Iowa Telecom Amendment Recognizes Bundles

An Iowa sales and use tax rule has been amended dealing with communications services.  Rule 701-18.20 (422, 423) has been amended by adopting new subrule 18.20(7).  The amendment provides definitions used in the taxation of communication services, telecommunications services, ancillary services and similar communication services and expands and clarifies provisions governing these services. 

The new subrule describes how telecommunications services should be sourced for sales tax purposes.  Finally, the subrule addresses how bundled transactions should be handled when a telecommunication service, ancillary service, Internet access or audio or video programming service are sold for a single non-itemized price.  The amendment is required in order to be in compliance with the Streamlined Sales and Use Tax Agreement.

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