Welcome to the inaugural issue of the
department's Iowa Tax
e-News newsletter. This
new service will enable us to keep you up to
date on recent developments that affect tax
Please e-mail us
with your comments, questions and suggestions
for future issues.
Package X no longer available
Limited resources have
required us to discontinue the printing and
mailing of the Iowa Package X. Forms will remain
available on Tax-Fax and on our Web site. Income
tax forms for 2001 will be uploaded onto these
systems at the end of November.
Iowa income tax return filing
returns is significantly cheaper than processing
paper returns. Taxpayers who file their Iowa
income tax returns on paper will wait at least 12
weeks for their refunds. Errors may add an
additional 6 months. E-filed returns will
generate refunds within 2 weeks, and sooner if
direct deposit is requested.
Tax professionals not
yet offering electronic filing to their customers should
enroll with the IRS to file electronically next year. To
do so, go to departments E-Services page to learn more
about this program.
have never e-filed their Iowa returns before may
go to the departments E-Services page to
learn about e-filing options.
The department will
promote e-filing in the following ways:
- The short form
booklet has been replaced by an e-file
booklet. This will include a TeleFile
worksheet, WebFile worksheet and a 1040A,
but with a message that using the paper
form will delay receiving any refund. [Editor's Note:
The WebFile option is no longer available.]
- TeleFile, WebFile
and 1040A will now be offered to
taxpayers with income up to $100,000.
(Certain limitations will apply to each
of these options.)
- The 1040 booklet
will contain several messages encouraging
taxpayers to use e-file options rather
than the paper return, and telling
taxpayers of the longer wait time for
refunds requested on paper returns.
- A direct mailing
is planned to encourage individuals who
filed a paper return to take advantage of
the various e-filing opportunities.
- Tax booklets and
other information will include our Web
site address to find a list of tax
professionals offering e-filing.
Taxpayers will enter their ZIP code to
obtain a complete list of tax
professionals offering electronic filing
in their area.
- The department
will no longer provide tax preparation
service in our offices, but will offer a
series of sessions across the state
assisting taxpayers in filing their
returns by WebFile.
- Tax booklets will
no longer be mailed to taxpayers who
electronically filed their return last
year. In addition to reducing forms
distribution costs, it is hoped that this
will encourage the individual to return
to their tax preparer this year where an
electronic return can be created.
- All long and short
form booklets that are sent as part of
our initial mass mailing will include a
Personal Identification Number (PIN)
needed to WebFile the return. While not
everyone will qualify to use the WebFile
program, more taxpayers than last year
forward to working with you to have a dramatic
increase in e-filed tax returns this season.
employees not necessarily exempt from Iowa sales
Federal employees must pay
Iowa sales tax and local option or hotel/motel tax, if
any, unless they pay with a credit card that
specifically says "tax exempt." Credit
cards used by the Federal government are usually
issued by MasterCard, VISA, or American Express,
but may include other credit card companies.
Two types of
credit cards are issued to government employees.
commonly-used card usually says, "United
States of America For Official Government
Purchases Only US Government Tax Exempt." No
taxes should be collected when this credit card
common card used usually says, "United
States of America For Official Government Travel
Only." Taxes must be collected on purchases
made with this card.
accept exemption certificates from Federal employees or
give a tax exemption unless they are using the
credit card that specifically has the words "US Government
to purchases of supplies, rooms, meals, and
up for our e-mail newsletters/notices!
Local Option Jurisdictions
Several new local
option jurisdictions taking effect January 1,
2002, will be posted by Nov. 1. We will
notify the public via our Sales/Use eList. If
you have not already signed up for eLists,
please click on the logo to the left.
Iowa Sales and Use Tax
Change Beginning January 1, 2002
Monthly and Quarterly
Filers: Forms will be mailed to you only twice
each year, rather than four times a year. The
forms in each mailing will cover two calendar
quarters. The period end and due dates will not
change. Annual filers will continue to receive
their forms once each year.
2002 interest rate set
The department has
announced that the annual interest rate in 2002
will be 10 percent. The monthly charge will be
0.8 percent. This is a decrease from the 11
percent annual rate and 0.9% monthly rate for tax
charges interest on taxes that are overdue;
income, sales and withholding taxes are included.
In addition, the department pays interest to
taxpayers who file their income tax returns on
time but do not receive their refunds by June 1.
Refunds of other taxes are paid with interest as
us with your Iowa tax questions
If you have questions
about Iowa state taxes, you may e-mail
the department or you can call
Taxpayer Services to speak with a tax specialist
on the phone (local and out of state at
515-281-3114 or within Iowa at 1-800-367-3388).
During tax filing season (January 1 - April 30),
phone lines are always very busy, so e-mail may
be a more efficient and time-saving option. The
Iowa Department of Revenue and Finance will
answer your e-mail within a single business day.
Do not e-mail
to receive tax forms or publications. You can
download forms or publications from our
Web site or call our Tax-Fax
system at 1-800-572-3943.
Get state tax
publications using Tax-Fax
Services are offered
24 hours a day, 7 days a week on our Web site, but
did you know that you can get any form or
publication from the Iowa Department of Revenue
and Finance without a computer? A telephone
system called Tax-Fax allows you to order the
information you need and then sends it to your
home or work fax machine. Its simple:
- Call 1-800-572-3943.
request a specific form, press option 1,
then key in the 7-digit document number,
followed by the pound (#) key.
request the table of contents (available
forms and document numbers), press option
- After you
make your requests, the automated system
will ask you to key in your fax number.
receive your faxes within a half-hour of your
Use only current
coupon for corporation estimated payments
If you receive preprinted
coupons from the Iowa Department of Revenue
and Finance or another forms provider, you should
know that each coupon is different and should be
used only for its appropriate filing period.
of numbers called a scanline is preprinted in the
upper-left quadrant of each form. These numbers
are read by a scanner. A computer displays the
taxpayers file, and the estimate amount is
keyed into the filing period embedded in the
old form is used, the amount is attributed to the
wrong filing period. The computer recognizes
this, and the form is "kicked out" for
further review. From there, the problem must be
fixed manually. In the meantime, an automatic
billing notice may be sent, further confusing the
how to check the scanline numbers to determine if
you have an old form:
numbers -- shown in bold for this example -- are
the last day of the filing period for which the
form should be used: June 30, 2001. If you use an
old form, the estimate payment will be credited
to the wrong fiscal year.
income tax payments can be made electronically
Why file on paper? You
can use our online resource to register to pay
your income payments through Electronics Funds
Transfer (EFT) and to review your past individual
income payments. [Editor's Note: This system has been replaced
by eFile & Pay.]
you will need the following information:
Security Number (SSN)
In order to
retrieve your payment history, you will also need
the amount of an exact tax payment made in any of
the previous tax years.
Withholding news for
News in Brief
withholding tax table booklet will not
change for 2002.
- Do not
send copies of W-2s with your Verified
Summary Report. Our agency receives this
information directly from the Internal
- The Iowa
W-4 for 2002 will be available on our Web
site by the end of the November.
employees need Iowa income tax withheld?
make less than $9,000 each year are not required
to have Iowa tax withheld from their paychecks.
If you employ minors or others who are claimed by
someone else, such as parents, on their tax
returns, the limit is $5,000.
benefit because their paychecks are larger, and
they do not have to file tax returns to receive
refunds. We appreciate your assistance in
informing qualified employees of this option.
exemptions, credits, deductions and exclusions
save Iowans billions of dollars each year
How much do Iowans
$4 billion annually, according to a first-ever
report produced by the Iowa Department of Revenue
and Finance. "Iowa Tax Expenditures
2000" is a summary of 280 exemptions,
credits, exclusions, and deductions selectively
available to groups of businesses and
2000 study addresses Iowas major taxes:
individual and corporate income taxes, and sales
and use taxes. Future reports will include local
government, State property tax relief, and other
State tax expenditures.
businesses: $340 million
businesses: $660 million
and families: $2.7 billion
and nonprofit corporations: $150 million
expenditures listed are:
medical insurance: $167.5 million
deduction of charitable contributions:
deduction of mortgage and investment
interest: $152.3 million
of federal individual income tax: $596.3
partial pension income exclusion: $59
- New Jobs
Withholding Credit: $33.7 million
by S-corporation shareholders: $8.6
percent deduction of federal tax: $76.7
and use exemptions
food for human consumption: $247.5
drugs and medical devices: $55.5 million
machinery, equipment and computers:
hospitals: $53.7 million
20 other states, including all of Iowas border
states except South Dakota, provide tax
expenditure information to their citizens.
tax permit changed
Iowa sales tax permits are issued every year by
the Iowa Department of Revenue and Finance. The
appearance of the permits has been redesigned to
save time and money. The department estimates
that approximately $9,000 in printing and postage
will be saved each year.
holders will receive a postcard instead of an
envelope with a permit stuffed inside. The
postcard itself is the sales tax permit and
should be kept with other business records. It is
not required to be displayed, but may be if the
information is not printed on the postcard. The
tax number assigned by the department and the
business name and address are public
record. Social Security Numbers and similar
confidential information is never released to the
this type of permit will also reduce the time it
takes to mail a permit by two days.