Iowa Department of Revenue electronic newsletter: Iowa Tax eNews
from the Director:
As we go into a new income tax filing
season, let us help you help us. Listed below are what we find as common
income tax errors. If we can correct these errors prior to filing, you have
less work and we have less work. We will both operate more efficiently.
Corrections to common income tax return errors are:
Complete county and school district in Step 1.
In Step 1: "Is your address the same as last year? Yes or No." If
this is the first time you are filing an Iowa return, check “No.”
Single filers must answer the question concerning dependency in the
Filing Status Step.
Do not use the long form (IA 1040) tax tables when computing tax on
the short form (IA 1040A) or the other way around.
Make sure the return is signed.
Do not mail a paper copy of the return after you have submitted your
Include copies of all W-2s and 1099s that report Iowa withholding.
Do not forget the unemployment 1099-G form.
Make sure the estimated payments claimed on the return match what was
paid. If necessary, the taxpayer or representative with a power of attorney
from the taxpayer can call the Department to verify the payments we have
Do you meet the qualifications for exemption from tax? See IA 1040
line 26 instructions.
If you are a part-year or nonresident: Complete county and school district
correctly in Step 1 on the IA 1040. Indicate if you are a part-year or
nonresident on the IA 126 schedule. Also provide move in or out dates
on the IA 126 schedule.
Military personnel should read the expanded instructions for the 2009
Provide a detailed explanation
for amending a return and include documents/forms for support such
as a federal 1040X, additional W-2s, or form 2441.
Our 2009 forms and instructions
will be online in early December.
continue to improve the eFile & Pay system. Many of our improvements
are based on customer feedback. The following changes were made:
On each screen, your cursor
will automatically be set on the first text box. You will no longer have
to click the first entry box to start.
now use the Enter key instead of clicking
on the Continue button to move to the next screen, except when you need
to Submit a return or Edit information.
eHistory is now three years
instead of a limit of 75 returns.
We have a new screen reminding
those who choose “mail a check” to print
their voucher from the confirmation screen.
Consider ePay (direct
debit). Good for the environment. Good for
Cabinets and Countertops
The Department is aware of some
confusion about sales tax on kitchen / bathroom cabinets and countertops. How and when sales
tax applies depends upon the type of transaction involved. The
following information is intended to clarify:
homeowner purchases pre-fabricated cabinets and countertops from a
retailer. The homeowner installs them in the home. In this
situation, the homeowner has purchased tangible personal property and
must pay sales tax on the retail price of the cabinets and countertops.
homeowner purchases pre-fabricated cabinets and countertops from a
retailer, but hires a third party to install them. The homeowner
has again purchased tangible personal property and must pay sales tax
on the retail price of the cabinets and countertops.
homeowner selects pre-fabricated cabinets and countertops from a retailer,
and contracts with the retailer to have them installed. The retailer
may have its own employees perform the installation work, or the
retailer may contract with a third party to do the installation. Under
these circumstances, the retailer is considered the final consumer
of the cabinets and countertops and is responsible for the payment
of tax on their cost of those materials. No tax is charged directly
to the homeowner in this case, although the retailer may include the
tax expense as part of the price for the work just as any other overhead
expense would be.
homeowner hires a contractor to replace the cabinets and countertops
in the home. The contractor hired to do the work provides the
cabinets and countertops that will be used. The contractor is
the final consumer of the cabinets and countertops in this situation. As
such, the contractor is responsible for the payment of tax on their
cost of those materials. No tax is charged directly to the homeowner,
although the contractor may include the tax expense as part of the
price for the work.
homeowner hires someone to repair broken cabinets or countertops in
the home. The person doing the repair charges sales tax
to the homeowner on the materials used. If the labor performed
is a taxable service, such as carpentry, the homeowner would also be
charged tax on the repair labor. Please refer to the publication, Services:
Which Ones Are Taxable?,” for a list of taxable
The examples above are designed
to provide general guidance, rather than detailed discussions of Iowa
tax law. Additional guidance can be found in our Construction
Contractors informational publication. For answers to specific
questions, contact our Taxpayer Services Section by phone at 515-281-3114
or 1-800-367-3388 (Iowa, Omaha, Rock Island, Moline), or by e-mail
Snow Removal - Applying
Sand, Salt, Ice-melt
Snow removal is not subject
to Iowa sales tax.
The service of applying sand, salt, or ice-melt is likewise not taxable.
However, the materials applied – sand, salt, ice-melt – are
taxable products. Sales tax is due on these materials.
When the snow removal
business applies these materials for their customer and does not make
a separately itemized charge for them, that business is the consumer
of the materials and owes sales tax to its supplier when they are purchased. No
tax is charged to the snow removal business’ customer for services
In some cases, the
snow removal business may separately itemize charges to their customer
for the materials. If so, the business may be able to purchase the
materials for resale and not pay sales tax to its supplier when three
conditions are met.
The business and its
customer must agree that the product is being sold separately from
the service, and
The product must be sold to
the customer in a definite form or amount and with a specific price attached,
The cost of the product must
be itemized on the bill.
When purchasing products for
resale, a valid Sales
Tax Exemption Certificate (pdf) will be provided by the snow removal
business to the supplier who sells them the materials. In this
situation, the snow removal business must charge sales tax to their customer
on the materials, but not on the services.
Income Tax Envelopes
IA 1040 mailing envelopes will
no longer be provided by or be available from the Iowa Department of
Revenue. Envelopes will not be included in the 2009 Iowa individual income
tax booklet, nor will a supply of return envelopes be available to tax
professionals or others.
Mailing labels and an IA 1040V
Payment Voucher will continue to be included in the income tax booklet.
The following addresses should be used when sending returns and payments
you are receiving a refund or filing a return with no refund and no tax
due, mail your return to:
Iowa Income Tax - Refund Processing
Hoover State Office Building
Moines IA 50319-0120
you have tax due, mail your return and payment with an IA 1040V payment
Iowa Income Tax - Document Processing
PO Box 9187
Des Moines IA 50306-9187
One of our Tax
Research & Program Analysis Section's responsibilities is to produce
Leading Indicators Index report. This report is a tool for monitoring
the future direction of the Iowa economy.
you a new business? Or just need to know more? Our
tax classes are held all year statewide.
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.