JUNE
2010 |
 |
The Department continues to be one of the leaders among state revenue agencies in electronic filing of individual income tax returns. For the returns filed in 2010 we will have received almost 80 percent of the individual income tax returns electronically. We appreciate the taxpayer’s and the practitioner’s acceptance of electronic filing. We believe it is better for the taxpayer and for the Department. The taxpayer can receive refunds in less than two weeks and acknowledgement from the Department that the return was received. The Department does not have to manually process the return. As state government reduces spending and the Department employs fewer people, reductions in paper returns and related manual processing is beneficial to the Department. The Department is pleased to announce that it now accepts corporate 1120 filings electronically. You must use a software provider that makes available an Iowa corporate 1120 electronic filing. We have received several 1120 returns as of this date. In January, 2011, we will be making available S corporation 1120S and partnership 1065 electronic filings. This will be followed with modernized electronic filing for individual income tax returns in August, 2011. The modernized electronic filing will provide improvements for the taxpayer. We are excited about these upcoming improvements and the benefits they will bring to taxpayers and practitioners. We will continue to seek out new ways to improve our services and always appreciate any suggestions you may have. Mark R. Schuling Iowa Legislative Summaries Summaries of tax-related 2010 Iowa legislation are now available here. Sales Tax Holiday Iowa's annual Sales Tax Holiday will be held Friday, August 6, and Saturday, August 7, 2010. For more information, please see our Sales Tax Holiday information. New Local Option Sales Tax Jurisdictions - July 1, 2010
Retailers NOT Allowed to Absorb Sales Tax Retailers must add sales tax to the price of taxable goods or services and collect the tax from the purchaser. The retailer cannot advertise or in any way indicate that the sales tax is being absorbed or paid by the retailer. A retailer may include the sales tax in the price, which is often done when selling concessions or admissions to movie theaters and sporting events. When this happens, the retailer must post a notice or make a statement on the invoice / receipt that the purchase price includes the sales tax. Also remember that sales tax is due when taxable goods are delivered or taxable services are performed, not when payment is received from the customer. Temporary Events and Sales Tax Permits Are you the sponsor of a temporary event, such as a flea market, craft 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: Pension / Retirement Income Exclusion – Changes for 2010 Tax Year Effective for tax years beginning on or after 1-1-2010, a change to Iowa Administrative Rule 701-40.47 may impact how the pension / retirement income exclusion is determined for married individuals. This exclusion is taken on line 21 of the IA 1040, Iowa Individual Income Tax Return. The exclusion can be up to $6,000 for individuals who file status 1, 5, or 6 and up to $12,000 for married taxpayers who file status 2, 3, or 4. The eligibility requirements are as follows:
Beginning with tax year 2010, only the pension income of the spouse who meets the eligibility requirements can be shown on line 21. Please see the examples below for further guidance.
Designated Exempt Entities - Construction Designated exempt entities awarding construction contracts may issue special exemption certificates to contractors and subcontractors, allowing them to purchase, or withdraw from inventory, building materials for the contract free from sales tax. To do so, designated exempt entities should review the Construction Contract Registration page on our Web site. It is important for designated exempt entities to provide the exemption certificates to their contractors and subcontractors in a timely manner. For the exemption to be allowed, contractors must present the exemption certificate to their suppliers when making purchases of building materials for the project. "Designated Exempt Entity" Includes Only the Following:
Nonprofit hospitals are NOT designated exempt entities for this purpose. Consumer's Use Tax Information for businesses and individuals Do you purchase items from out of state or from catalogs, magazines, vendors who advertise on television or radio, or through the Internet? Will those items be used in Iowa? Would they be subject to Iowa sales tax if purchased in Iowa? Are you paying tax on those purchases? If not, you owe Iowa use tax on the purchase price. If you purchase tangible property for use in Iowa and the seller does not charge you Iowa tax on the purchase, you owe a 6% tax known as the consumer’s use tax on the price of the purchase. This tax was established in 1937, three years after the sales tax was enacted, to create a fair playing field for Iowa businesses. The rate of the consumer's use tax is always equal to the state sales tax rate. Individuals: To pay your consumer's use tax, send a check payable to “Treasurer State of Iowa” to the Iowa Department of Revenue, PO Box 10412, Des Moines IA 50306-0412 with a note explaining that it is for consumer’s use tax. Include a list of the items purchased and their prices. Keep copies for your records. Anyone who regularly purchases merchandise from out of state for his or her own use in Iowa should register for a consumer’s use tax permit and pay the tax on a quarterly basis. Businesses: Businesses making taxable purchases on a regular basis should register with our Department to file consumer's use tax returns. However, some businesses may only occasionally make purchases for their own use and owe Iowa consumer's use tax. If this type of purchase is not typical for your business, instead of separately registering for consumer's use tax, you can report the purchase on Line 2 "goods consumed" of your quarterly sales tax return or file and pay the tax as outlined for individuals above. For more information, see our Consumer's Use Tax publication. Temporary Employees – Are Their Services Subject to Sales Tax? The charge made by an agency providing temporary workers employed by the agency is taxable to the entity to which those temporary employees are provided, if the services performed by the temporary employees are taxable services. For a list of services subject to Iowa sales tax, please reference our publication titled Services: Which Ones Are Taxable? “Temporary employee services” is not on the list of taxable services; however, to determine taxability, it is necessary to look at the underlying work being done by the temporary employee. The employee may perform services that are subject to sales tax, like operating the client's machinery or performing janitorial services. If the primary function of the temporary employee is the performance of a taxable service, and not merely incidental to the work being done, then the charge by the temporary agency to the client is subject to sales tax.
When services are performed on or connected with new construction, reconstruction, alteration, expansion, or remodeling of a building or structure, they are exempt from sales tax. Services may be purchased tax free for resale if the entity to which the temporary employees are being provided resells those services to their customer. An exemption would also exist if the temporary employees were, for instance, operating machines used in a manufacturing process.
Contact Us |