Policy letter; casual sales; Oct13, 1997
Topic Code: C046Casual Sales (ST) Document Reference: 97300094
October 13, 1997
Recently, the Department received your letter regarding whether a garage sale day that is scheduled to be held in November in the parking lot by employees and board members of would be exempt from Iowa sales tax as a casual sale. On October 7, 1997, you spoke to Greg Stokke of our Department who advised you that such a sale may be exempt from Iowa sales tax as a casual sale and he advised that you seek written confirmation from the Department regarding the issue. Based on the facts of your letter, is having this sale as a one-time fundraising project for the Children's Miracle Network and the Bidwell Riverside organization. The proceeds from this sale will be split among these two organizations with a third portion of the proceeds to be given to the individuals that donated the items for the sale.Department rules have the force and effect of the law and are presumed valid. Hope Evangelical Lutheran Church v. Iowa Department of Revenue and Finance, 463 N.W.2d 76 (Iowa 1990), Richards v. Iowa Department of Revenue, 360 N.W.2d 830 (Iowa 1985). Department rule 701 IAC 18.28 governs the casual sale exemption. The relevant portion of this rule provides the following: Casual sales are exempt from the Iowa sales and use taxes except for the casual sale of vehicles subject to registration, and vehicles subject only to the issuance of a certificate of title. On and after July 1, 1988, the casual sale of aircraft is also taxable. In order for a casual sale to qualify for exemption, two conditions must be present: (1) the sale of tangible personal property or taxable services must be of a nonrecurring nature, and (2) the seller, at the time of the sale, must not be engaged for profit in the business of selling tangible goods or services taxed under Iowa Code section 422.43 or, if so engaged, the sale must be outside the regular course of the seller's business (Order of State Board of Tax Review, Martin Development Corporation, Docket No. 136, December 1, 1976, incorporating by reference Order of Department of Revenue Hearing Officer in Docket No. 75-28-6A-A, July 9, 1976). See subrule 18.28(2) for an explanation of the casual sale exemption applicable to the liquidation of trade or business. If either of the conditions above are lacking, no casual sale occurs. Moreover, prior to July 1, 1985, the casual sale exemption was limited to sales of tangible personal property, and casual enumerated taxable services did not qualify for the exemption. KTVO, Inc. v. Bair, Equity No. 385 Linn County District Court, September 5, 1975... Two separate selling events outside the regular course of business within a 12-month period shall be considered nonrecurring. Three such separate selling events within a 12-month period shall be considered as recurring. Tax shall only apply commencing with the third separate selling event. However, in the event that a sale event occurs consistently over a span of years, such sale is recurring and not casual, even though only one sales event occurs each year. Des Moines Police Department v. Bair, Equity No. CE3-1591, Polk County District Court, November 1, 1976. (emphasis added)Based on the foregoing, this garage sale fund-raiser by is a casual sale and exempt from Iowa sales tax. is a community credit union. As a result, I assume that this garage sale is a sale outside of the regular course of business for In your letter you stated that this is a one time project and barring any two similar events in the previous 12 month period, this would qualify as being nonrecurring. Accordingly, this event is a casual sale.I hope this information is of assistance to you. Please be advised that this letter is an informal opinion and does not bind the Department in any future action. If I can be of any further assistance, please do not hesitate to contact me.Sincerely,Jerri M.K. DeVriesPolicy SectionOffice: (515) 281-3194Fax: (515) 281-3756