Iowa Administrative Code › Agency 701 - Revenue Department › Title III - Sales, Use, and Excise Tax › Chapter 208 - Multilevel Marketer Agreements › Rule 701-208.1 - Multilevel Marketers-in General

Current through Register Vol. 47, No. 3, July 24, 2024
Multilevel marketer companies may enter into a written
				  contract with the department to collect and remit state and local option sales
				  taxes on sales of tangible personal property and specified digital products to
				  independent distributors for resale and remit the taxes directly to the
				  department. To be eligible for the multilevel marketer program, the company
				  must meet certain eligibility requirements and agree to certain terms in the
				  multilevel marketer agreement as set forth in 701-subrules 208.1(3) and
				  208.1(4). All written contacts with the department should be sent to Nonfiler
				  Unit, Compliance Division, Iowa Department of Revenue, P.O. Box 10456, Des
				  Moines, Iowa 50306-0456.
(1)
Definitions.
The following definitions of terms are applicable
				to this chapter:
"Independent distributor"
means a seller who
				  purchases products for resale to an Iowa consumer based on a price suggested by
				  a multilevel marketer.
"Multilevel marketer"
means a wholesaler
				  that sells tangible personal property or specified digital products for resale
				  via a network of independent distributors who then sell the property to the
				  ultimate consumers located in Iowa at a retail price suggested by the
				  multilevel marketer.
"Sales tax"
or
"sales
				  taxes"
for the purpose of this rule means Iowa state sales tax,
				  including local option sales and service taxes, and state use tax. To determine
				  whether local option sales and service taxes are due, see rules
				  701-270.2 (423B) and
				  701-270.3
				  (423B).
(2)
Collection of tax.
Iowa state sales tax is to be collected on
				the wholesale or retail selling price if delivery of the multilevel marketer's
				tangible personal property or specified digital product occurs in Iowa or the
				property is used in Iowa (more information is contained in subparagraph
				208.1(4)
"a"
(1)). In addition, local option sales tax is due on
				the sale if delivery of the tangible personal property or specified digital
				product to the consumer occurs within a local option tax jurisdiction. More
				information and examples illustrating delivery and taxation can be found in
				rules 701-270.2(423B) and
				701-270.3 (423B).
(3)
Eligibility
				requirements.
For a multilevel marketer to be eligible for a
				multilevel marketer agreement, the following criteria must be met:
a. Tangible personal property or specified
				digital products are sold by the multilevel marketer to an independent
				distributor for resale to an Iowa end user or for a distributor's personal
				use.
b. Unless authorized by the
				department, the multilevel marketer must not have been previously required to
				be registered to remit sales tax.
c. The multilevel marketer must have
				contacted the department with a request to collect and remit sales taxes
				directly to the department on sales made by an independent
				distributor.
d. The multilevel
				marketer must not be under audit or examination by the department on the
				effective date of the agreement.
The department has full discretion to determine if a
				  multilevel marketer meets the eligibility requirements for a multilevel
				  marketer agreement. The department has full discretion to decide whether to
				  enter a multilevel marketer agreement. The department can request any and all
				  information and documentation necessary to determine whether eligibility
				  requirements are met. Failure to timely submit information and documents
				  requested by the department will result in the department's refusal to enter
				  into an agreement with the multilevel marketer.