Taxable Services in Iowa and Important Considerations for Non-Profit Boards of Directors

What services are taxable in Iowa?
Taxable Services Aircraft lease or rental, 60 days or less. Aircraft repair, remodeling, or maintenance, except when used in a scheduled or nonscheduled interstate FAA certified air carrier operation. Alteration and garment repair. Armored car services. Bank and financial institution service charges.
Read more on tax.iowa.gov

Certain in-state services are subject to a state sales tax in Iowa. These include, but are not limited to:

1. Landscaping and lawn care services

2. Cleaning and janitorial services

3. Personal grooming services (such as haircuts, manicures, pedicures),

4. Pet grooming and boarding services

6. Telecommunications services

7. Cable and satellite television services

8. Computer services (such as programming, data processing, web hosting)

9. Repair services (such as electronics, appliances, vehicles)

It is critical that companies offering these services register with the Iowa Department of Revenue, collect sales tax on their taxable services, and pay that tax to the appropriate government agency.

On the other hand, non-profit organizations are excluded from paying sales tax on their acquisitions of products and services. To minimize conflicts of interest and preserve their tax-exempt status, non-profit organizations must carefully assess who should be on their board of directors.

People with a financial stake in the non-profit organization, such as vendors or contractors, shouldn’t sit on the board of directors of a non-profit company. A person may also have a conflict of interest if they are close friends with a member of the paid staff or another board of directors.

Because it needs a thorough understanding of financial administration, fund raising, and legal compliance, managing a non-profit company can be difficult. Non-profit organizations must also follow stringent reporting guidelines and uphold operational openness.

The answer is yes to the query of whether a husband and wife can sit on a non-profit board of directors. However, it’s crucial to make sure the pair doesn’t own a majority stake in the company and that they are transparent about any potential conflicts of interest.

Likewise, siblings are permitted to sit on the same board as long as they declare any potential conflicts of interest and do not own a majority stake in the company.

To sum up, companies offering specific services in Iowa must register with the Iowa Department of Revenue, collect sales tax on their taxable services, and pay that tax to the appropriate government agency. To avoid conflicts of interest and keep their tax-exempt status, non-profit organizations must carefully assess who should be on their board of directors. Although managing a non-profit organization can be difficult, with careful preparation and attention to legal compliance, non-profit organizations are able to successfully carry out their missions and benefit their communities.

FAQ
Can the president of a nonprofit also be the treasurer?

Yes, a nonprofit’s president can also serve as its treasurer, but for the reasons of financial responsibility and transparency, it is usually advisable to have different people in these roles. The board of directors should create clear guidelines for financial management, including requirements for oversight and reporting. The board should also make sure that the treasurer is knowledgeable about all relevant tax laws and regulations, particularly those that pertain to any taxable services that the organization may offer.

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