<%@LANGUAGE="JAVASCRIPT" CODEPAGE="1252"%> Iowa Department of Revenue electronic newsletter: Iowa Tax eNews
graphic for Iowa Department of Revenue Tax eNews electronic newsletter
e-News
September 2011 ------------------------------------------------------------------------------------------------------------------------------------------------

In This Issue

 

Some computer purchases are
exempt from Iowa sales tax

Computers used in the processing or storage of data or information by an insurance company, financial institution, or commercial enterprise may be exempt from Iowa sales tax.

Please see our publication titled Iowa Sales Tax on Computers for details on computer hardware, software, and other computer related services.

Automatic mailing of income tax booklets eliminated for 2011

With the continued growth of electronic filing, the Iowa Department of Revenue (IDR) will no longer automatically mail paper income tax forms and instruction booklets to individual taxpayers beginning with tax year 2011. This change is part of the IDR's focus on creating efficiencies through the increased use of technology. The Internal Revenue Service (IRS) and many other states have already taken this step.

Likewise, the IA 1040C (Composite Return) will not be automatically mailed to those who have received it in the past, but will continue to be available on our Web site.

We strongly encourage all taxpayers to file their returns electronically. eFiling is safe, easy, and refunds are issued in days instead of weeks. For 2010 information on how to file your tax return electronically, click here. (2011 information will be available in January 2012). You may even qualify to eFile for free!

For more information on filing electronically, see Individual Income Tax - Electronic Filing Options.

For more details on obtaining income tax forms and the discontinued mailing of the IA 1040 booklet, see our Frequently Asked Questions.

Can you eFile for free?

Are you 25 or younger?

Are you 65 or older?

Are you in the military?

Do you qualify for earned income credit?

Find out at www.iowa.gov/tax!

File your federal & Iowa returns at the same time from links on our Web site.

Get your refund in days instead of weeks.
eFiling is fast, safe, and easy.

Barcoding program in place for 2011 Iowa forms

The IDR is pleased to announce it is implementing a barcoding program for tax year 2011. Returns filed on paper that are created using participating computer software vendors or printed from the IDR Web site, will contain a barcode to assist in processing those returns. Barcodes will appear in the upper right and lower left on page 1 of the IA1040, as well as the lower left on many other Iowa individual income tax forms and schedules.

When the Department receives your paper tax return with barcodes, an image of the return and the tax information is scanned directly into the tax system. This ensures your return is processed quickly and accurately, saving the Department time and money. 

IDR will offer 2D Barcode in addition to electronic filing of individual income tax returns. eFiling continues to be the best customer option for a fast and easy refund!

Data center/web search portal businesses & Iowa sales/use tax

Exemptions
Iowa Code sections 423.3(92), 423.3(93), and 423.3(95) provide various sales tax exemptions for qualifying data centers and Web search portal businesses. These businesses are able to claim exemption on qualifying purchases by providing their suppliers with a completed Iowa Sales Tax Exemption Certificate. This is the case when the qualifying business is making the purchase directly.

In situations where a construction contract is involved, purchases of qualifying items may be made by the contractor, rather than by the business. If the contractor purchases items that will remain tangible personal property, such as computers and equipment, the contractor can purchase these items tax-free for resale. The qualifying data center/Web search portal business then provides the contractor with an exemption certificate for those items. If the business has paid tax in error, it should file an IA 843 Claim for Refund with the Iowa Department of Revenue.

Refund of Tax Paid by Contractor
If the contractor purchases items that will become part of real property, they are considered the final consumer of those building materials. Since the contractor doesn't qualify to purchase building materials tax-free, they must pay the tax and pass it along to the business as part of the contract amount. In those cases, the qualifying data center/Web search portal business must file a claim for refund with the Iowa Department of Revenue to receive a refund of the sales tax passed on to them by the contractor. The following steps should be taken in those situations:

The contractor pays Iowa sales/use tax on all building materials and includes that cost in the bid.

The contractor then submits a "Contractors Statement" (form 35-002 pdf) to the qualifying business documenting the amount of Iowa sales/use tax paid on the materials incorporated into real property.

The business applies to the Iowa Department of Revenue for a refund of that tax by using the "Construction Contract Claim for Refund" (form 35-003 pdf).

Other Refunds
Data center businesses in Iowa not meeting the requirements for exemption or refund above, may be eligible for a refund of 50% of the sales / use tax paid on certain computers, equipment, fuel, and electricity used in the operation of the data center business. The data center must meet the requirements of Iowa Rule 701-230.13 to be eligible.

Qualifying data center businesses should file an IA 843 Claim for Refund with the Iowa Department of Revenue. The claim should be filed annually, no later than one year after the purchase of the qualifying computers, equipment, fuel, or electricity and within three months after the end of the refund year. In addition to filing the IA 843, the owner of a data center business seeking a refund must also file an affidavit with the Department certifying that qualifications for the refund have been met. The affidavit must be
filed prior to any refund request and must be approved by the Department before a refund claim can be filed. Please see Rule 230.13(7)d. for the format of the affidavit.

If you have questions, please contact us at idr@iowa.gov.