<%@LANGUAGE="JAVASCRIPT" CODEPAGE="1252"%> Iowa Department of Revenue electronic newsletter: Iowa Tax eNews

MARCH 2011

graphic for Iowa Department of Revenue Tax eNews electronic newsletter

Department Welcomes New Director:

Courtney M. Kay-Decker became Director of the Iowa Department of Revenue on January 14, 2011. Ms. Decker received her B.A. in Economics from Northwestern University in Evanston, IL, and holds a doctor of jurisprudence with distinction from the University of Iowa College of Law.

Ms. Decker has been a practicing attorney since 1997 working in the general practice of law, including business, estate planning and administration, and tax issues. She was a member of the Iowa State Board of Tax Review from 2000-
2007; serving as the chair from 2003-2007. She is the President of the Board of Trustees of Rivermont Collegiate and a board member of the Quad Cities Golf Classic Charitable Foundation which operates the John Deere Classic golf tournament each year.

Internal Revenue Code Coupling Bill Update

As of the date of this newsletter, the Iowa legislature had not made a final decision on whether the federal tax changes affecting the 2010 tax year will be allowed for Iowa income tax purposes. The Iowa House and Senate have each passed different versions of a bill, Senate File 209, which provides for coupling with federal tax changes on Iowa income tax returns. Updates will be provided on the Department of Revenue website regarding the status of this legislation.

Changes to 2010 Iowa 1120S and 1065 Returns

The Iowa S Corporation return (IA 1120S) and Iowa Partnership return (IA 1065) were changed for 2010.  

Please be aware of these changes to avoid errors when preparing 2010 tax returns: 

Form 41-034 – Schedule of Partnership and Shareholder information – discontinued.

  •  This form is no longer in use and is not valid for returns beginning with the 2010 tax period.

Schedule K-1 Part II has new balance lines

  • Part II now has three total lines noted in bold on the form (Total Income, Total Deductions, and Balance)
  • These lines are new and all three need to be entered on the form.

Schedule K-1 Entity Type

  • Check to see if your tax software automatically defaults the “Entity Type” box on the K1.
  • Make a change if the default is not the correct entity type.  

Federal Schedule K-1

  • As of 2010, federal K1s are not required to be sent with the Iowa return. 

eFiling Begins for Partnership Returns

Electronically filing of Partnership Returns launched February 24, 2011. This is part of the Department’s Modernized eFile (MeF) initiative. See the Department Web site for details on software vendors providing this eFile option.

eFile & Pay: Filing "Zero" Returns

Customers registered for sales, use, or withholding tax must file a tax return, even if they have no tax due. 

If you do owe, payments can be made four ways:

  • ePay (free direct debit) through eFile & Pay
  • Credit card, through Official Payments Corp (2.5% convenience fee charged by credit card vendor)
  • ACH Credit through your bank
  • Mail a check with the payment voucher. The voucher does not replace filing the return.  (Semi-monthly filers must pay electronically.)

You are probably already filing your returns through eFile & Pay. If you are mailing your payment, consider ePay. You will mail nothing!

Temporary Events and Sales Tax Permits

Are you the sponsor of a temporary event, such as a flea market, craft show, art show, or antique show?  Are you a vendor or exhibitor at such an event?

If so, please review the information at the following links to our Web site:

Sales Tax and Special Events - Temporary Permits

Temporary Sales Tax Permit FAQs

Sales Tax on Gambling Activities

Almost all gambling activities conducted in Iowa are subject to state sales tax and local option sales tax, if any. Gambling activities conducted by church groups, school groups, and other charitable organizations are also taxable, even if the proceeds are used for religious, educational, or charitable purposes. Tax is due on the gross receipts (not net receipts) from gambling activities.

Any individual or group conducting gambling activities in Iowa must:

There are a few exceptions. The following gambling activities are exempt from sales and local option taxes:

  • conducted by county and city governments, or
  • held by the Iowa State Fair or Fair Society (organized under Iowa Code chapters 173 and 174), or
  • held at agricultural fairs (specified in Iowa Code section 99B.5)

For additional details, please see the Gambling: Games of Skill or Chance and Raffles publication on our Web site.

Department Adds Online Training to Web Site

The Iowa Department of Revenue's Web site now includes a link to an Online Training page. This page is home to several new tax-specific PowerPoint presentations, including information for employers, Iowa tax permit holders and individual income taxpayers.

We will be adding more presentations as resources allow and future plans include implementation of voiceover and video formats. This link will take you to the new Online Training page.

Income Tax Return Extensions and Payment Plans

Automatic Extension of Time to File Income Tax Returns

Iowa does not have an application to extend the time to file your income tax return. In addition, we do not accept a federal extension.

Instead, if you have paid at least 90% of the tax you owe by the due date of your return, you automatically have an additional six months to file your return and pay the additional tax due with no penalty. Interest continues to accrue on unpaid tax during the extension period.

If you need to make a payment to meet the 90% requirement, it must be paid or postmarked by April 30 (May 2 for 2010 returns) for calendar year filers. You can make your payment electronically through our eFile & Pay system or by mail using form 41-137 (pdf) for individuals, or form 42-019 (pdf) for corporations.

Payment Plans

Iowa does not have a payment plan option for tax shown due on the return. Pay as much as you can, and you will be billed for the balance due. Payment plans can be established only after a bill has been issued and has gone to our collections section for action.

Even if you cannot pay the amount due, file the return on time anyway. Filing the return by the due date will reduce any late payment penalty from 10% to 5%. 

Vegetable Seeds, Plants, and Fruit Trees

If your customer will be consuming the produce from the seeds, plants or trees, the sale is taxable.

If your customer will be selling the produce, the sale is exempt. Be sure to get a Sales Tax Exemption Certificate (pdf) from your customer.

Do you buy or sell at one of Iowa's many Farmers Markets? Be sure to take a look at our brochure:  http://www.iowa.gov/tax/educate/31039.pdf   

Landscaping, Lawn Mowing, and Lawn Care

The services of landscaping, lawn mowing, and lawn care are taxable unless performed on or in connection with new construction, reconstruction, alteration, expansion, or remodeling of a building or structure.

“Lawn care” includes but is not limited to the following services: mowing, trimming, watering, fertilizing, reseeding, resodding, and killing of insects, moles, other vermin, weeds, or fungi which may be threatening a lawn.

Persons who mow lawns are providing a taxable service regardless of their ages. However, your services will be exempt if:

  • you are the owner of your business and the only person performing the service, and
  • you are the owner of the business and a full-time student, and
  • the total gross receipts do not exceed $5,000 for a calendar year.

Please see our handout on landscaping and lawn care. (pdf)

Contact Us

Questions About eFile & Pay

Questions About Iowa Taxes

Newsletter Ideas