<%@LANGUAGE="JAVASCRIPT" CODEPAGE="1252"%> Iowa Department of Revenue electronic newsletter: Iowa Tax eNews
JUNE 2007
graphic for Iowa Department of Revenue Tax eNews electronic newsletter


Message from the Director
:

Pay the tax and relax.

Anyone who wants to settle tax debts with the State of Iowa should take advantage of the Iowa Tax Amnesty program being offered from September 4 through October 31, 2007. Eligible taxpayers include those who did not file a required return, those who made mistakes on a previously-filed return, and those who may simply have tax debt with the Department.

The program allows for a waiver of all penalties and one-half the interest for past-due tax returns or reports and any additional taxes due for returns or reports that were originally due on or before December 31, 2006. The amnesty program is available for all state taxes administered by the Department of Revenue. The program does not apply to taxpayers currently under active criminal investigation or to a taxpayer who is part of a criminal proceeding pending in the Iowa court system.

The benefits of participating in the taxpayer amnesty program include the following:

  • participating taxpayers can “wipe the slate clean” by clearing up unpaid, underreported or overdue taxes without fear of retaliation;
  • taxpayers can save money because the program offers a one-time chance to pay without penalty and one-half the interest waived;
  • taxpayers will be able to avoid legal action; and
  • participating in the taxpayer amnesty program will not increase the chance of being audited in the future.

An application will be required when requesting Tax Amnesty. All tax returns or reports must be filed with the application. Write “Amnesty” across the top of the return or amended return and on any check or money order.

The Department will launch its Iowa Tax Amnesty Web site soon. The site will include frequently-asked questions and their answers and access to the Tax Amnesty application and other tax forms. In addition, a Tax Amnesty toll-free number and e-mail address will be available.

Mark Schuling, Director

Local option sales tax

 

The "regular" local option tax becomes effective in more than 40 new jurisdictions on July 1. In addition, Linn and Johnson counties approved the school local option tax.

Sales Tax Holiday

 

graphic of Iowa Sales Tax Holiday

Friday and Saturday, August 3-4, 2007

*On Select Clothing and Footwear*


Hotel / Motel Tax

 

Hotels and motels in additional jurisdictions will begin collecting the hotel / motel tax July 1.

Legislation

 

Legislative summaries will be available later this summer. They will be posted in the Research category of the IDR Web site.

Pay electronically

 

Each year, more than 3 billion payments are made by direct payment worldwide. Also called direct debit and electronic check, among others, direct payment is free.

ePay is the Iowa Department of Revenue direct payment option. As long as you're filing your return through eFile & Pay, you might as well try ePay and mail nothing!

Withholding for employees in interstate commerce

 

The department is aware of possible confusion regarding employees of railroads or trucking firms working in interstate commerce.

In compliance with federal law, employees working in two or more states for railroads or trucking firms in interstate commerce are subject to tax based on their state of residency.

Iowa tax should not be withheld from nonresidents working in Iowa as employees of railroads or trucking firms in interstate commerce if they are working in at least one other state. The state of residence may require its tax to be withheld or the employee to make estimated payments.

Iowa residents employed by railroad or trucking firms in interstate commerce are subject to Iowa withholding if they are working in two or more states.

Free tax news by e-mail

 

Please tell your business colleagues how to receive Iowa tax news instantly by e-mail.

If you were notified of this newsletter by e-mail, you are already signed up. If you are reading this on our Web site, you need to sign up ! You will receive an e-mail from us asking you to confirm your subscription. Be sure to reply!

Classes about Iowa taxes

 

Are you a new business? Or just need to know more? Our tax classes are held all year statewide.

In addition, we make house calls! Gather your employees or your organization's membership. We will come to you and address your Iowa business tax concerns. This service is free of charge. Just e-mail us to contact you.

Landscaping and Lawn Care

 

It is the time of year when the department receives numerous inquiries related to sales tax on the services of landscaping and lawn care. The information that follows addresses some of the most frequently asked questions.

Landscaping – The service of landscaping is subject to Iowa sales tax. Landscaping is defined as arranging and modifying the natural condition of a given parcel or tract of land to make the land suitable for public or private use or enjoyment. Any services for which registration is required as a “landscape architect” under Iowa Code section 544B.2 are not subject to tax if performed by a registered landscape architect and separately billed.

The gross receipts from landscaping services performed on or in connection with new construction, reconstruction, alteration, expansion or remodeling of a building or structure are not subject to tax.

Landscaping Materials – The sale of sod, dirt, trees, shrubbery, bulbs, sand, rock, woodchips and other similar landscaping materials, when used for landscaping and sold to final consumers, is subject to sales tax. In this context, “final consumer” ordinarily means the owner of the land to which the landscaping materials are applied, or a general building contractor when the landscaping contractor contracts with the general building contractor. When a landscaping contractor uses materials to fulfill a contract, the landscape contractor is considered the retailer of the landscaping materials and is obligated to collect sales tax on the selling price from the final consumer.

When the retailer of landscaping materials installs these items as a part of a contract for landscaping or improving land for a lump sum, the entire gross receipts are subject to tax. Any retailer's charges for “landscaping” are taxable. However, a retailer's charges for nontaxable services are not taxable if contracted for separately; or, if no written contract exists, the charges are itemized separately on the invoice.

Construction Materials – Landscaping materials should not be confused with construction materials. When a landscaper provides both labor and materials to erect a structure, he/she is considered to be a construction contractor for that portion of the job. Structures include such items as retaining walls, lawn lighting systems, lawn irrigation systems, pools, walks, and any other permanently-attached item to realty or real estate. The landscaper is considered the consumer of any construction materials used to build a structure. In the role of a construction contractor, landscapers must pay sales taxes and local option taxes, if any, on all construction materials to their suppliers; however, they do not collect any tax from their customer for materials or labor.

Lawn Care – Persons in the business of lawn care are performing a service which is subject to tax. 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 perform lawn care are providing a taxable service regardless of their ages; however, effective 7/1/06 a casual sale exemption exists if (1) the owner of the business is the only person performing the services; (2) the owner of the business is a full-time student; and (3) total gross receipts from the services do not exceed $5,000 for a calendar year.

More information is available in the Landscaping and Lawn Care publication (pdf).

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