CHAPTER 270
LOCAL OPTION SALES AND SERVICES TAX
[Prior to 12/17/86, Revenue Department [730]]
[Prior to 9/7/22, see Revenue Department[701] Ch 107]
701—270.1(423B) Definitions.
	270.1(1) Incorporation of definitions. To the extent it is consistent with Iowa Code chapter 423B and this chapter, all other words and phrases used in this chapter shall mean the same as defined in Iowa Code chapter 423B, Iowa Code section 423.1, and rule 701—200.1(423).
	270.1(2) Chapter-specific definitions. For purposes of this chapter, unless the context otherwise requires:
“City” means a municipal corporation and includes towns in Iowa which were incorporated prior to July 1, 1975, but a city does not mean a county, township, school district, or any special purpose district or authority.
“Local option tax” or “local option taxes” means the taxes imposed by Iowa Code chapter 423B.
“Most recent certified federal census” means the final count from the most recent decennial census conducted by the United States Department of Commerce, Bureau of the Census, as modified by subsequent certifications from the Bureau of the Census. If a subsequent certified census occurs which modifies the “most recent certified federal census” for a participating jurisdiction, then the formula set forth in this rule for computations for distribution of the tax shall reflect any population adjustments reported by the subsequent certified census.
“Unincorporated area of the county” means all areas of a county which are outside the corporate limits of all cities which are located within the geographical area of the county.
[ARC 4323C, IAB 2/27/19, effective 4/3/19; ARC 6508C, IAB 9/7/22, effective 10/12/22]
701—270.2(423B) Imposition of local option taxes and notification to the department. This rule describes notification and other requirements as related to the department. For information on the election forms and instructions, see 721—Chapter 21.
	270.2(1) Notice to the department. Within ten days of the election at which a majority of those voting on the question of imposition, repeal, or change in the rate of tax vote in favor, the county auditor must give notice of the election results to the director by sending a copy of the abstract of votes and a copy of the sample ballot from the election.
	270.2(2) Avoiding a lapse in tax due to expiration of a former local option tax. A jurisdiction that has a local option tax that is set to expire may vote to impose another local option tax. However, due to the required imposition dates previously set forth, there may be a lapse in the tax because of an expiration of the former local option tax and the required imposition dates for imposition of a local option tax. Effective July 1, 2001, a local option jurisdiction may avoid a lapse in local option tax. To avoid a lapse in the tax, a jurisdiction may place on the ballot that the new local option tax will continue without repeal of the prior tax. If the required vote is in favor of imposition of the local option tax, the continued local option tax can be imposed so there is no lapse in the tax.
This rule is intended to implement Iowa Code section 423B.1.
[ARC 4323C, IAB 2/27/19, effective 4/3/19; ARC 6508C, IAB 9/7/22, effective 10/12/22]
701—270.3(423B) Administration.
	270.3(1) Generally. The department is charged with the administration of the tax, once imposed, subject to the rules, regulations, and direction of the director. The department is required to administer the tax as nearly as possible in conjunction with the administration of the state sales tax.
	270.3(2) Incorporation of 701—Chapter 11. Except as otherwise stated in this chapter, the requirements of 701—Chapter 11 shall apply to retailers required to collect local option taxes in the same manner that those requirements apply to all sellers and retailers making sales subject to state sales tax.
This rule is intended to implement Iowa Code section 423B.6.
[ARC 4323C, IAB 2/27/19, effective 4/3/19; ARC 6508C, IAB 9/7/22, effective 10/12/22]
701—270.4(423B) Filing returns; payment of tax; penalty and interest.
	270.4(1) Incorporation of 701—Chapter 202. Except as otherwise stated in this chapter, the requirements of 701—Chapter 202 shall apply to retailers required to collect local option tax in the same manner as those requirements apply to all sellers and retailers making sales subject to state sales tax.
	270.4(2) Local tax collections not included to determine filing frequency. Local option tax collections shall not be included in computation of the total tax to determine frequency of filing under Iowa Code section 423.31.
This rule is intended to implement Iowa Code section 423B.6.
[ARC 4323C, IAB 2/27/19, effective 4/3/19; ARC 6508C, IAB 9/7/22, effective 10/12/22]
701—270.5(423B) Permits. Except as otherwise stated in this chapter, the requirements of 701—Chapter 201 shall apply to retailers required to collect local option tax in the same manner that those requirements apply to all sellers and retailers making sales subject to state sales tax.
This rule is intended to implement Iowa Code section 423B.6.
[ARC 4323C, IAB 2/27/19, effective 4/3/19; ARC 6508C, IAB 9/7/22, effective 10/12/22]
701—270.6(423B) Sales subject to local option sales and services tax. All sales subject to sales tax under Iowa Code chapter 423 are subject to local option sales and services tax. There is no local option use tax.
	270.6(1) Sourcing. The general sourcing rules described in Iowa Code section 423.15 and 701—Chapter 223 are used to determine whether a sale is subject to local option taxes and, if so, in what jurisdiction. A local sales and services tax is not applicable to transactions sourced to a place of business, as defined in Iowa Code section 423.1, of a retailer if such place of business is located in part within a city or unincorporated area of the county where the tax is not imposed.
	270.6(2) Sellers responsible for collecting local option sales and services tax. Sales sourced to Iowa and made by sellers subject to Iowa Code section 423.1(48) or 423.14A are subject to local option sales and services tax.
This rule is intended to implement Iowa Code section 423B.5(1).
[ARC 4323C, IAB 2/27/19, effective 4/3/19; ARC 6508C, IAB 9/7/22, effective 10/12/22]
701—270.7(423B,423E) Sales not subject to local option tax, including transactions subject to Iowa use tax. The local option sales and services tax is imposed upon the same basis as the Iowa state sales and services tax, with the following exceptions:
	1.	The sales price from the sale of or service of providing motor fuel or special fuel as defined under Iowa Code chapter 452A is subject to local option tax. However, the sales price from the sale or service of these types of fuels is exempt from local option tax if all of the following criteria are met:
	●	The motor or special fuel must be consumed by a motor vehicle for highway use, or used in watercraft or aircraft;
	●	Fuel tax must have been paid on the transaction; and
	●	A refund has not been or will not be allowed.
	2.	The sales price from the sale of natural gas or electricity in a city or county is exempt from tax if the sales price is subject to a franchise or user fee during the period the franchise or user fee is imposed.
	3.	A local taxing jurisdiction is prohibited from taxing the sales price from a pay television service consisting of a direct-to-home satellite service. Section 602 of the federal government’s Telecommunications Act of 1996 defines a “direct-to-home satellite service” as “only programming transmitted or broadcast by satellite directly to the subscribers’ premises or in the uplink process to the satellite.” A “local taxing jurisdiction” is “any municipality, city, county, township, parish, transportation district, or assessment jurisdiction, or any other local jurisdiction in the territorial jurisdiction of the United States, with the authority to impose a tax or fee, but does not include a state.”
	4.	The sales price from sales of equipment by the Iowa state department of transportation is exempt from local option sales tax.
	5.	Sales subject to Iowa use tax. Since the local option tax is imposed only on the same basis and not on any greater basis than the Iowa sales and services tax, local option tax is not imposed on any transactions subject to Iowa use tax, including the one-time registration fee applicable to vehicles subject to registration or subject only to the issuance of a certificate of title. Also, exemptions which are applicable only to Iowa use tax cannot be claimed to exempt any transaction subject to local option sales tax.
	6.	Local excise on gas and electricity. If a transaction involves the use of natural gas, natural gas service, electricity, or electric service, a local excise tax is imposed on the same basis as Iowa use tax under Iowa Code chapter 423. This local excise tax is to be collected and administered in the same manner as local option sales and services tax. Except as otherwise provided in this chapter, all rules governing local option sales and services tax also apply to local excise tax.
This rule is intended to implement Iowa Code section 423B.5.
[ARC 4323C, IAB 2/27/19, effective 4/3/19; ARC 6508C, IAB 9/7/22, effective 10/12/22]
701—270.8(423B) Local option sales and services tax payments to local governments.
	270.8(1) County-imposed local sales and services tax; division of funds from accounts. Division of the amount from each county’s account to be distributed is done with these steps.
	a. 	The total amount in the county’s account to be distributed is first divided into two parts. One part is equal to 75 percent of the total amount to be distributed. The second part is the remainder to be distributed.
	b. 	The part comprised of 75 percent of the total receipts to be distributed is further divided into an amount for each participating city or unincorporated area. This division is based upon the most recent certified federal census population and any subsequent certified census. Population for each participating city and unincorporated area is determined separately and totaled. The population for each sales tax imposing city or unincorporated area is divided by the total population to produce a percentage for each city or the unincorporated area. The percentages are rounded to the nearest one-hundredth of a percent with the total of all percentages equal to 100 percent. Each government’s percentage is multiplied by 75 percent of the sales tax receipts to be distributed. Distributions are to be rounded to the nearest cent.
There are two types of certified federal censuses. The first is the usual decennial census which is always conducted throughout the entire area of any county imposing a local option sales tax.
The second type of certified federal census is the “interim” or “subsequent” census which is conducted between decennial censuses. An interim or subsequent census is not necessarily conducted within an entire county but may be used to count increases or decreases in only one or some of the jurisdictions within that county, for instance, one particular municipality. If an interim census is conducted within only certain participating jurisdictions of a county where a local option sales tax is imposed, the changes in population which that census reflects must be included within both the numerator and the denominator of the fraction which is used to compute the participating jurisdiction’s share of the revenue from the county’s account which is based on county population. See 1996 O.A.G. 10-22-96 (Miller to Richards). See also Example 3 of this rule for a demonstration of how an interim census can affect a population distribution formula.
	c. 	The remaining 25 percent of the amount to be distributed is further divided based upon property taxes levied. The sum of property tax dollars to be used is the amount levied for the three years from July 1, 1982, through June 30, 1985, as obtained by using data from county tax rate reports and city tax rate reports compiled by the department of management. Property taxes levied by participating cities or the board of supervisors, if the local sales tax is imposed in unincorporated areas, are to be determined separately then totaled. The property tax amount for each sales tax imposing city and the board of supervisors, if the sales tax is imposed in unincorporated areas, is divided by the totaled property tax to produce a percentage. The percentages are rounded to the nearest one-hundredth of a percent with the total of all percentages equal to 100 percent. Each percentage is multiplied by 25 percent of the sales tax receipts to be distributed. Distributions are to be rounded to the nearest cent.
	d. 	For each participating city, or the board of supervisors if unincorporated areas of the county participate, the amount determined in paragraph 107.8(1)“c” is added to the amount found in paragraph 107.8(1)“b.” This amount is then to be remitted to the appropriate local government.
In order to illustrate the division of local option sales and services tax receipts, the following examples are provided. The numbers are shown in an attempt to reflect reality but are hypothetical.
Example 1:  If a local option sales tax is approved for all of Pottawattamie County, the distribution of $100,000 in countywide receipts would be made in this manner:
Step 1:

Distribution Basis	Amount	
Population	$ 75,000.00	
Property Taxes Levied	25,000.00	
Total	$100,000.00	
 	 	
Step 2:

 	 	Certified Population	Receipts to be	 	
 	Jurisdiction	Number	Percentage	Distributed	 	
 	Avoca	1,650	1.91%	$ 1,432.50	 	
 	Carson	716	0.83%	622.50	 	
 	Carter Lake	3,438	3.98%	2,985.00	 	
 	Council Bluffs	56,449	65.30%	48,975.00	 	
 	Crescent	547	0.63%	472.50	 	
 	Hancock	254	0.29%	217.50	 	
 	Macedonia	279	0.32%	240.00	 	
 	McClelland	177	0.20%	150.00	 	
 	Minden	419	0.49%	367.50	 	
 	Neola	839	0.97%	727.50	 	
 	Oakland	1,552	1.80%	1,350.00	 	
 	Treynor	981	1.13%	847.50	 	
 	Underwood	448	0.52%	390.00	 	
 	Walnut	897	1.04%	780.00	 	
 	Unincorporated	17,796	20.59%	15,442.50	 	
 	Total	86,442	100.00%	$75,000.00	 	
Note:  The portion of the city of Shelby in Pottawattamie County is excluded.
Step 3:

 	 	Three-Year Total Taxes Levied	Receipts to be	 	
 	Jurisdiction	Amount	Percentage	Distributed	 	
 	Avoca	$				454,556	0.82%	$					205.00	 	
 	Carson	202,882	0.37%	92.50	 	
 	Carter Lake	946,026	1.71%	427.50	 	
 	Council Bluffs	30,290,732	54.81%	13,702.50	 	
 	Crescent	7,732	0.01%	2.50	 	
 	Hancock	56,705	0.10%	25.00	 	
 	Macedonia	64,504	0.12%	30.00	 	
 	McClelland	24,300	0.04%	10.00	 	
 	Minden	155,112	0.28%	70.00	 	
 	Neola	206,560	0.38%	95.00	 	
 	Oakland	319,153	0.58%	145.00	 	
 	Treynor	346,849	0.63%	157.50	 	
 	Underwood	139,571	0.25%	62.50	 	
 	Walnut	264,145	0.48%	120.00	 	
 	Unincorporated	21,782,457	39.42%	9,855.00	 	
 	Total	$55,262,284	100.00%	$25,000.00	 	
Step 4:

 	 	Amount to be Distributed	Total	 	
 	Jurisdiction	By Population	By Taxes	Distribution	 	
 	Avoca	$ 1,432.50	$		205.00	$		 1,637.50	 	
 	Carson	622.50	92.50	715.00	 	
 	Carter Lake	2,985.00	427.50	3,412.50	 	
 	Council Bluffs	48,975.00	13,702.50	62,677.50	 	
 	Crescent	472.50	2.50	475.00	 	
 	Hancock	217.50	25.00	242.50	 	
 	Macedonia	240.00	30.00	270.00	 	
 	McClelland	150.00	10.00	160.00	 	
 	Minden	367.50	70.00	437.50	 	
 	Neola	727.50	95.00	822.50	 	
 	Oakland	1,350.00	145.00	1,495.00	 	
 	Treynor	847.50	157.50	1,005.00	 	
 	Underwood	390.00	62.50	452.50	 	
 	Walnut	780.00	120.00	900.00	 	
 	Unincorporated	15,442.50	9,855.00	25,297.50	 	
 	Total	$75,000.00	$25,000.00	$100,000.00	 	
Example 2:  If a local option sales tax is approved for Avoca, Oakland and Treynor in Pottawattamie County and $10,000 is to be distributed, the distribution would be made in this manner:
Step 1:

Distribution Basis	Amount	
Population	$ 7,500.00	
Property Taxes Levied	2,500.00	
Total	$10,000.00	
 	 	
Step 2:

 	Certified Population	Receipts to be	
Jurisdiction	Number	Percentage	Distributed	
Avoca	1,650	39.45%	$2,958.75	
Oakland	1,552	37.10%	2,782.50	
Treynor	981	23.45%	1,758.75	
Total	4,183	100.00%	$7,500.00	
Step 3:

 	Three-Year Total Taxes Levied	Receipts to be	
Jurisdiction	Amount	Percentage	Distributed	
Avoca	$ 454,556	40.56%	$1,014.00	
Oakland	319,153	28.48%	712.00	
Treynor	346,849	30.96%	774.50	
Total	$1,120,558	100.00%	$2,500.00	
Step 4:

 	Amount to be Distributed	Total	
Jurisdiction	By Population	By Taxes	Distribution	
Avoca	$2,958.75	$1,014.00	$ 3,972.75	
Oakland	2,782.50	712.00	3,494.50	
Treynor	1,758.75	774.00	2,532.75	
Total	$7,500.00	$2,500.00	$10,000.00	
Example 3:  For the purposes of understanding this example, assume that the numbers for “certified population” from Step 2 of Example 2 immediately above are derived from the 1990 decennial census. Assume further that in 1993 an interim census is conducted by the Bureau of the Census in Avoca and Oakland only, and nowhere else in Pottawattamie County. As a result of that interim census, the Bureau of the Census certifies the population of Avoca to be 1,752 and the population of Oakland to be 1,493. The towns’ percentages of receipts to be distributed are recomputed in the following manner:

Avoca’s Percentage Equals	1752	=	41.45%	
	1752 + 1493 + 981			

Oakland’s Percentage Equals	1493	=	35.32%	
	1493 + 1752 + 981			
Amounts in Step 2 are then revised as follows:

 	Certified Population	Receipts to be	
Jurisdiction	Number	Percentage	Distributed	
Avoca	1,752	41.46%	$3,109.50	
Oakland	1,493	35.33%	2,649.75	
Treynor	981	23.21%	1,740.75	
Total	4,226	100.00%	$7,500.00	
The “amount to be distributed by population” found in Step 4 of Example 2 would then be recomputed based on the new figures.
	270.8(2) City-imposed local option sales and services tax. For information on the distribution of city-imposed local sales and services tax, see Iowa Code section 423B.7(1).
This rule is intended to implement Iowa Code section 423B.7.
[ARC 4323C, IAB 2/27/19, effective 4/3/19; ARC 6508C, IAB 9/7/22, effective 10/12/22]
701—270.9(423B) Allocation procedure when sourcing of local option sales tax remitted to the department is unknown. If the director is unable to determine from which county local option sales tax was collected, that local option sales tax shall be allocated among the various counties in which local option sales and services tax is imposed according to the following procedure:
	1.	The calculations performed under this procedure shall be performed at least quarterly, but in no event less often than the treasurer of the state is obligated to distribute shares of each county’s account in the local sales and services tax fund.
	2.	The total amount of receipts for which the director is unable to determine a county of collection which have accumulated since the last allocation of these receipts shall be added together to form one lump sum.
	3.	The amount of population (according to the most recent certified federal census) within the areas of each individual county in which a local option sales and services tax is imposed shall be determined.
	4.	The amount of population so determined in “3” above for each county shall be added to the amount for every other county in Iowa in which the local option sales and services tax is imposed, until the figure for the amount of population of all areas of Iowa in which the local option sales and services tax is imposed is determined.
	5.	The sum determined to exist in “2” above shall be multiplied by a fraction, the numerator of which is the population of any one county determined in “3” above and the denominator of which is the number calculated by the method described in “4.” The procedure described herein in “5” shall be used until the amount of tax due to every county imposing local option sales and services tax is calculated. After calculations are complete, the treasurer of the state must distribute shares of each county’s account in the local sales and services tax fund. See rule 701—107.1(423B) for characterization of the term “most recent certified federal census” and rule 701—107.8(423B) for methods of rounding off percentages and monetary sums.
This rule is intended to implement Iowa Code section 423B.7(1).
[ARC 4323C, IAB 2/27/19, effective 4/3/19; ARC 6508C, IAB 9/7/22, effective 10/12/22]
701—270.10(423B) Application of payments. Since a combined state sales and local option return is utilized by the department, all payments received will be applied to satisfy state sales tax and local option sales and services tax, which include tax, penalty and interest. Application of payments received with the tax return and any subsequent payments received will be applied based on a ratio formula, unless properly designated by the taxpayer as provided in Iowa Code section 421.60(2)“d.” The ratio for applying all payments received with the return and all subsequent payments for the given tax period will be based upon the calculated total of state sales and local option sales and services tax due for the given tax period in relation to combined total payment of sales and local option sales and services tax actually received for that tax period.
This rule is intended to implement Iowa Code section 423B.7.
[ARC 4323C, IAB 2/27/19, effective 4/3/19; ARC 6508C, IAB 9/7/22, effective 10/12/22]
701—270.11(423B) Motor vehicle, recreational vehicle, and recreational boat rental subject to local option sales and services tax. For information on when motor vehicles, recreational vehicles, and recreational boat rentals are subject to local option sales and services tax, see rule 701—26.68(422).
This rule is intended to implement Iowa Code section 423B.3.
[ARC 4323C, IAB 2/27/19, effective 4/3/19; ARC 6508C, IAB 9/7/22, effective 10/12/22]
701—270.12(423B) Computation of local option tax due from mixed sales on excursion boats. Particular difficulties exist in calculating the amount of local option sales tax due for sales occurring on an excursion gambling boat sailing into and out of jurisdictions imposing the local option sales tax. Ordinarily, whether local option sales tax is payable to a particular jurisdiction is based on destination sourcing. See Iowa Code section 423.15 and 701—Chapter 223. However, it can be quite difficult to determine if a moving excursion gambling boat is at any one point in time within or outside of a jurisdiction imposing the local option tax. Thus, it is difficult to determine if a delivery of property or provision of a service on the boat has occurred inside or outside of a local option tax jurisdiction. Because of this, the department will accept the use of any formula which rationally apportions the progress of an excursion gambling boat among jurisdictions which impose a local option tax and those that do not.
Below are four examples setting out two possible formulas for apportionment. Examples A and C utilize a “distance” formula for apportionment. Examples B and D utilize a “time” formula for apportionment. In Examples A and B, state sales tax is included in the sales price of the taxable items. In Examples C and D, state sales tax is added to taxable gross receipts. In all examples, local option sales tax is included in the sales price; also, for every example, it is assumed that the local option sales tax rate is 1 percent in every jurisdiction where it is imposed.
Example A:  The excursion gambling boat “Auric” is based in Clinton. Assume that during a particular cruise there occurs $10,000 worth of vending machine and nongambling game sales. State sales tax and local option tax must be included in the amounts charged for these vending machine and nongambling game sales. Assume that the Auric, on an ordinary cruise, travels round trip for 50 miles on the Mississippi River, 25 of those miles through waters which are part of a local option sales tax jurisdiction and 25 of those miles which are not. The amount of state sales tax due and the amount of local option sales tax (LOST) due using a “distance” apportionment formula are determined as follows:
	1.	(25 ÷ 50) × 0.01 = 0.005
(miles in LOST jurisdiction ÷ total miles) × LOST rate = effective LOST rate
	2.	1 + 0.06 + 0.005 = 1.065
1 + state sales tax rate + effective LOST rate = (1 + effective total tax rate)
	3.	$10,000.00 ÷ 1.065 = $9,389.67
Gross receipts ÷ (1 + effective total tax rate) = total sales
	4.	$9,389.67 × 0.06 = $563.38
Total sales × state tax rate = state tax amount
	5.	$9,389.67 × 0.005 = $46.95
Total sales × effective LOST rate = LOST amount
	6.	$563.38 + $46.95 = $610.33
State tax amount + LOST amount = total tax amount
Example B:  The excursion gambling boat “Blue Diamond” is based in Davenport. Assume that, as in Example A, during a particular cruise there occurs $10,000 worth of vending machine and nongambling game sales. Again, state sales tax and local option tax are included in the amounts charged for these vending machine and nongambling game sales. The Blue Diamond spends three hours on the water during an ordinary cruise. One hour is spent sailing in waters where no local option sales tax is imposed; two hours are spent in waters where the local option tax is imposed. In this case, the Blue Diamond’s operator can use a formula based on time spent sailing inside and outside of a local option tax-imposing jurisdiction rather than distance traveled within and without such a jurisdiction as in Example A, so long as there is a reasonable amount of evidence to indicate that the formula reflects with some accuracy the ratio of nontaxable and taxable sales. The calculation is performed as follows:
	1.	(2 ÷ 3) × 0.01 = 0.00666
(hours in LOST jurisdiction ÷ total hours) × LOST rate = effective LOST rate
	2.	1 + 0.06 + 0.00666 = 1.06666
1 + state sales tax rate + effective LOST rate = (1 + effective total tax rate)
	3.	$10,000.00 ÷ 1.06666 = $9,375.06
Gross receipts ÷ (1 + effective total tax rate) = total sales
	4.	$9,375.06 × 0.06 = $562.50
Total sales × state tax rate = state tax amount
	5.	$9,375.06 × 0.00666 = $62.44
Total sales × effective LOST rate = LOST amount
	6.	$562.50 + $62.44 = $624.94
State tax due + LOST due = total tax amount
Example C:  The excursion gambling boat “Golconda” is based in Dubuque, Iowa. On an ordinary cruise, it will travel a round trip of 50 miles on the Mississippi River. During 25 of those 50 miles the Golconda is passing through waters which are part of a local option sales tax jurisdiction. Assume that on one particular cruise, $100,000 in taxable gross receipts is collected on the boat. Local option sales tax is included in the $100,000 amount but not state sales tax. Thus, the total amount collected is $106,000; $100,000 in gross receipts, $6,000 in state sales tax. Local option tax is calculated as follows:
	1.	(25 ÷ 50) × 0.01 = 0.005
(miles in LOST jurisdiction ÷ total miles) × LOST rate = effective LOST rate
	2.	1 + 0.005 = 1.005
1 + effective LOST rate
	3.	$100,000.00 ÷ 1.005 = $99,502.49
Gross receipts including LOST ÷ (1+ effective LOST rate) = total sales
	4.	$99,502.49 × 0.06 = $5,970.15
Total sales × state tax rate = state tax amount
	5.	$100,000.00 – 99,502.49 = $497.51
Gross receipts including LOST – total sales = LOST amount
	6.	$5,970.15 + $497.51 = $6,467.66
State tax due + LOST due = total tax amount
	7.	$99,502.49 + $497.51 + $5,970.15 = $105,970.15
Total sales + LOST amount + state tax amount = total amount collected by vendor
Example D:  The excursion gambling boat “Black Jack” is based in Davenport. Assume that during a particular cruise there is $150,000 in taxable gross receipts collected on the Black Jack. The full amount collected is $159,000; $9,000 in state sales tax and $150,000 in gross receipts. The Black Jack spends three hours on the water during an ordinary cruise. One hour is spent sailing in waters where no local option sales tax is imposed; two hours are spent in waters where the local option tax is imposed. In this case, as in Example B, the Black Jack’s operator can use a formula based on time spent sailing inside and outside of a local option tax-imposing jurisdiction rather than distance traveled within and without such a jurisdiction so long as there is a reasonable amount of evidence to indicate that the formula reflects with some accuracy the ratio of nontaxable and taxable sales. In this example tax is computed as follows:
	1.	(2 ÷ 3) × 0.01 = 0.00666 effective LOST rate
(hours in LOST jurisdiction ÷ total hours) × LOST rate = effective LOST rate
	2.	1 + 0.00666 = 1.00666
1 + effective LOST rate
	3.	$150,000.00 ÷ 1.00666 = $149,007.61
Gross receipts including LOST but not state tax ÷ (1 + effective LOST rate) = total sales
	4.	$149,007.61 × 0.06 = $8,940.46
Total sales × state tax rate = state tax amount
	5.	$150,000.00 – 149,007.61 = $992.39
Gross receipts including LOST but not state tax - total sales = LOST amount
	6.	$8,940.46 + $992.39 = $9,932.85
State tax amount + LOST amount = total tax amount
	7.	$149,007.61 + $992.39 + $8,940.46 = $158,940.46
Total sales + LOST amount + state tax amount = total amount collected by vendor
Upon beginning operation, a licensee may choose to employ either the “distance” method of apportionment set out in Examples A and C or the “time” method set out in B and D above without informing the department in advance of filing a sales tax return of the licensee’s choice. A licensee cannot use both methods of apportionment. If a licensee commencing operation wishes to use another method of apportionment, the licensee must petition the department for permission to use this alternative method and present whatever evidence the department shall rationally require that the alternative method better reflects the ratio of taxable to nontaxable sales before using the alternative method. Any licensee wishing to change from any existing method of apportionment to another method must also petition the department and receive permission to change its method of apportionment.
This rule is intended to implement Iowa Code sections 99F.10(6) and 423B.5.
[ARC 4323C, IAB 2/27/19, effective 4/3/19; ARC 6508C, IAB 9/7/22, effective 10/12/22]
[Filed emergency 12/13/85—published 1/1/86, effective 1/1/86]
[Filed 2/7/86, Notice 1/1/86—published 2/26/86, effective 4/2/86]
[Filed 10/31/86, Notice 9/24/86—published 11/19/86, effective 12/24/86]
[Filed emergency 11/14/86—published 12/17/86, effective 11/14/86]
[Filed 9/30/88, Notice 8/24/88—published 10/19/88, effective 11/23/88]◊
[Filed 10/26/89, Notice 9/20/89—published 11/15/89, effective 12/20/89]
[Filed emergency 3/15/91—published 4/3/91, effective 3/15/91]
[Filed 5/10/91, Notice 4/3/91—published 5/29/91, effective 7/3/91]
[Filed 5/23/91, Notice 4/17/91—published 6/12/91, effective 7/17/91]
[Filed 3/26/92, Notice 2/19/92—published 4/15/92, effective 5/20/92]
[Filed 10/6/95, Notice 8/30/95—published 10/25/95, effective 11/29/95]
[Filed 5/2/97, Notice 3/26/97—published 5/21/97, effective 6/25/97]
[Filed 8/6/97, Notice 7/2/97—published 8/27/97, effective 10/1/97]
[Filed 11/14/97, Notice 10/8/97—published 12/3/97, effective 1/7/98]
[Filed 1/7/00, Notice 12/1/99—published 1/26/00, effective 3/1/00]
[Filed 8/4/00, Notice 6/28/00—published 8/23/00, effective 9/27/00]◊
[Filed 9/1/00, Notice 7/26/00—published 9/20/00, effective 10/25/00]1
[Filed emergency 3/2/01—published 3/21/01, effective 3/2/01]
[Filed 1/18/02, Notice 12/12/01—published 2/6/02, effective 3/13/02]
[Filed 11/8/02, Notice 10/2/02—published 11/27/02, effective 1/1/03]
[Filed 5/5/06, Notice 3/29/06—published 5/24/06, effective 6/28/06]
[Filed ARC 4323C (Notice ARC 4202C, IAB 1/2/19), IAB 2/27/19, effective 4/3/19]
[Filed ARC 6508C (Notice ARC 6400C, IAB 7/13/22), IAB 9/7/22, effective 10/12/22]
◊	Two or more ARCs
1	At its meeting held October 9, 2000, the Administrative Rules Review Committee delayed the effective date of 107.16 until adjournment of the 2001 Session of the General Assembly.