Tax May Push Recruiter Out of Iowa

Bill Humbert, a recruiter in Iowa, claims that Iowa’s sales tax on employee recruitment fees is unfair.

His company contracts with employers to provide recruiting strategies and performs a limited amount of hands-on recruiting. 

Recruiters who only placed individuals in employment at locations outside of Iowa are not subject to the tax if the person’s principal place of employment is outside of Iowa.

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However, he learned last month that his company now owes sales tax on recruitment services provided to out-of-state companies, according to the Cedar Rapids Gazette.

That’s because Iowa state law says that out-of-state exclusion doesn’t apply to executive search firms, and Humbert found out the hard way that an “executive position” simply meant someone earning $30,000 per year or more.

Elaine Rigoli has nearly 15 years of experience managing content and community for various B2B and consumer websites. Elaine has written thousands of business and technology articles and has been quoted in The Wall Street Journal and eWeek, among other publications.

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3 Comments on “Tax May Push Recruiter Out of Iowa

  1. What unadulterated crock. Whatever happened to not taxing interstate commerce? There’s got to be some element to this that contravenes some federal statute.

    And Iowa of all places. A land of common sense, self-reliance, hard work.

    I would be interested in how Bill gets around this. With all the foaming-at-the-mouth taxing going on now, there should be an equivalent of the– oh I forgot the name of it– electronic freedom foundation? You know, the ones who defend against companies bullying citizens with lawsuits, and other implications of new technolgy that lets beauracracies and conglomerates run roughshod over free speech and individual liberty. (That includes no taxation without common sense as far as I’m concerned)

    There should be some foundation set up by concerned legal minds who dont mind taking cases to help with a new era of lets-fix-it-by-taxing-the-people.

    Uncle. If 30k is an executive, then aren’t hairdressers and garbagemen executives?

    Go Bill.

  2. This is pretty sad. Time to move your operation to Las Vegas, Nevada. No sales tax on services like this one. Plus no state, corporate or inheritance tax. Save more and live better. Best food and entertainment in the USA.

  3. This is not just about me. This is about every recruiter in Iowa that conducts business in other states and every business in Iowa that pays recruitment fees. This tax comes out of employment budgets when people are out of work. It doesn’t make much sense, does it? It was the predatory nature of the code that is so disturbing.

    For the record I have had an Iowa Sales Tax permit for 10 years in case I did contingent fees.

    I have the list of things that we’ll pack into our Outback and will leave Iowa within 1 1/2 hours after hearing that our legislative efforts fail. Thanks for the Las Vegas suggestion. We’re headed to Park City, UT.

    Every Iowa recruiter should be on their legislators right now. My accountant told me this is a point of emphasis in the Department of Revenue this year. They know who you are. It’s on your tax form.

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