Court ruling clears way for Iowa to collect new sales taxes

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DES MOINES, Iowa (AP) — The U.S. Supreme Court is clearing the way for Iowa to collect sales taxes on digital goods and services.

The court ruled Thursday that states can force companies operating online to collect taxes, reversing decades-old decisions that had stymied efforts to collect sales taxes on many online transactions.

Earlier this year, Iowa legislators approved expanding sales tax to digital goods like e-books, subscription services like Netflix, ride-sharing apps like Uber and physical goods purchased online.

The new sales taxes will go into effect in January.

The nonpartisan Legislative Services Agency estimates the expansion will bring in $42 million to the state in the fiscal year beginning July 1. That climbs to about $103 million in the next fiscal year. It was unclear before the court’s ruling whether the new taxes would be collected.

The expected revenues would help reduce the estimated cost of property tax cuts in the same legislation.

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