New Guidance from Iowa Department of Revenue on Tax Treatment of Computers and Computer Peripherals

For over 36 years, Iowa tax law has exempted “computers used in processing or storage of data or information by an insurance company, financial institution, or commercial enterprise.” In 2020, the Iowa tax law was expanded to include computer peripherals to this exemption, which according to Iowa Code is “an ancillary device connected to the computer digitally, by cable or by other medium, used to put information into or get information out of a computer.” To help clarify what qualifies as computer peripheral, the Iowa Department of Revenue recently released guidance for taxpayers identifying which computer devices and computer peripheral are exempt from sales tax and which devices are taxable. Here is the list of exempt and taxable devices provided in the guidance:

Exempt

Desktop computers or towers

Laptops

Keyboard

Mouse

Monitors

Hard drives

Multi-functional devices

Printers

Scanners

Toughbooks

Smartphones (phones with internet capabilities)

Tablets

Docking stations

Port replicators

USB hubs

Discriminators

Flash drives

Thin clients

Zero clients

Wireless access points

Routers

Modems

Hotspots

Smart TVs

Servers

DVRs

Webcams

 

Taxable

Adapters

Firewall hardware

Digital displays or billboards

Hardware maintenance agreements

Computerized phone systems

Cell phones not including smartphones

Time clocks

Postage meters

Cables

Switches or switching equipment

Surveillance or security cameras

Uninterruptible power supplies

Power strips or surge protectors

Computer cases

Fluke meters

Testing equipment

Replacement parts

Pill counters or sorters

Satellite or cable television equipment

 

The guidance also states that the Department will accept refund claims for sales and use tax paid on exempt computers and computer peripherals if the refund claim is within the statute of limitations and has not been denied prior by the Department. If you have further questions of whether a certain device is taxable or exempt, our state and local tax team at BerganKDV can help. Contact us with your questions.

CATEGORIES: Tax & Audit
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