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 to independent distributors for
				  resale and remit the taxes directly to the department. To be eligible for the
				  multilevel marketer's program, the company must meet certain eligibility
				  requirements and agree to certain terms in the multilevel marketer agreement as
				  set forth in 701-subrules 4.1(3) and 4.1(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 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
				  if local option sales and service taxes are due, see
				  701-107.2(422B),
				  701-107.3(422B), and
				  701-108.3(422E).
(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 occurs in Iowa
				or the property is used in Iowa (see subparagraph 4.1(4)
"a"
(1)
				for further details). In addition, local option sales tax is due on the sale if
				delivery of the tangible personal property to the consumer occurs within a
				local option tax jurisdiction. See information and examples illustrating
				delivery and taxation in
				701-107.2(422B),
				701-107.3(422B), and
				701-108.3(422E).
(3)
Eligibility
				requirements.
To be eligible for a multilevel marketer agreement as a
				multilevel marketer, the following criteria must be met:
a. Tangible personal property is 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 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.