CHICAGO — Self-service laundry operators can attest to the various challenges of operating a laundry business.
A part of this equation is realizing the amount of income your laundry business has to report on a quarterly and yearly basis to your state’s revenue department and to the Internal Revenue Service (IRS).
Though there are certain tax exemptions for self-service laundry operators, properly calculating and reporting your laundry’s income can be a cumbersome process.
Daryl Johnson, owner of Giant Wash Laundry, Clear Lake, Iowa, and president of the Iowa Self-Service Laundry Association (ISSLA), faced this situation at his Laundromat.
He, and other self-service laundry operators in the state, were imposed with an additional sales tax on revenue that they collected from their washers and dryers, with some paying up to a 9% sales tax on the revenue.
“We had bought our first store in Iowa and we realized that we were, through our accountant, obligated to pay sales tax on the revenue that went through the washing machine,” says Johnson.
“That was a bit of a shock for us because we didn’t know it going in.”
The discovery paved the way for the ISSLA to seek legislative action toward repealing the state’s existing sales tax on revenue operators collected from their self-serve washers and dryers.
With the help of a lobbyist, ISSLA was able to draft and introduce the bill HF 603 to the Iowa Legislature, which called for an act “exempting from the sales tax the sales price for the use of self-pay washers and dryers.”
Through their efforts, the bill passed unanimously (50-0) in early June in the Iowa Senate, as well as the Iowa House (76-14). Iowa Gov. Terry Branstad signed the legislation on June 18.
‘AN INVOLVED EFFORT’
Laying the groundwork for the bill was “an involved effort,” says Johnson.
At the time Johnson approached Coin Laundry Association President/CEO Brian Wallace about the issue, Iowa did not have a CLA affiliate.
“In our conversations … we came to realize that Iowa once upon a time had a local CLA affiliate … but it kind of dissolved,” says Johnson. “At one point, they had tried to repeal the tax. They had got some movement on it, but really, it never had gotten any traction.”
Their conversation lead to the formation of the ISSLA. The first item on the group’s agenda was to inform its membership as well as state lawmakers about the existing sales tax.
“What we found was that most of our legislators—whether they were Democrat or Republican, senator or representative—they didn’t know [about the tax],” says Johnson.
SEARCHING FOR A CHAMPION
To bolster their efforts, Johnson said the group then sought a legislator who would “champion” their bill, eventually employing the help of Republican State Sen. David Johnson (no relation).
“Sen. Johnson was … gracious enough to introduce our bill and he kept it alive. He kept introducing the bill and what that allowed for, was … for other senators to be aware of it.”
Daryl Johnson explained that, despite the ISSLA’s best efforts, the group faced “fits of starts and stops” along the process, adding that it took the group about three years for their bill to really gain traction.
Along the way, other state legislators began to take notice, including Republican State Rep. Thomas Sands, who is also chair of the Iowa House of Representatives Ways and Means Committee, and Republican State Rep. Josh Byrnes.
“Those two guys worked it through Ways and Means and got us to the point where we could be on the House floor,” says Johnson.
In addition to encouraging ISSLA’s members to meet with their local legislators, the group decided to reach out to a lobbyist, employing Larry Blixt in June 2014.
“He kind of became our coach or our quarterback, if you will, and started calling the plays for us ... because he knew the players, he knew who we needed to get on board with our bill,” says Johnson.
‘AN UNQUALIFIED YES’
One key player the group needed to speak with: Democratic State Sen. Joe Bolkcom.
“[Bolkcom is] the chairman of the Ways and Means Committee in the Senate … and he was the one that would always bury our bill,” explains Johnson.
ISSLA member and laundry operator Brian DeCoster invited Bolkcom to his Laundromat to demonstrate how the sales tax affected laundry businesses.
“Brian turned [Bolkcom from] an absolute no to an unqualified yes in that one meeting. That was very critical,” says Johnson.
In the same vein, Johnson reached out to his local legislator, Republican State Rep. Linda Upmeyer.
“[Upmeyer] is a ranking member in the House, and she essentially is the gatekeeper for the House for all bills,” says Johnson. “She determines when those bills actually hit the floor of the House to be voted on.”
“I invited Linda into my Laundromat and walked her through it, and she became a champion for us.”
Johnson attributes the ISSLA’s win to its delegates reaching out to local legislators.
“If our local affiliate members had not done that, we wouldn’t have passed the bill; it’s that critical,” says Johnson.
Check back Wednesday for the conclusion!
Have a question or comment? E-mail our editor Bruce Beggs at [email protected].