Another sales tax
The proposed National Sales Tax
Holiday has not been approved by Congress. Our
agency will make every attempt through the media
and our Web site to notify businesses and
consumers if and when the holiday is approved.
Sales tax on energy
of state sales tax on energy begins January 1,
2002. Click here to see who and what
- the state
rate decreases to 4 percent for calendar
fees will continue to remain taxable
- "regular" local
option and school local option taxes will continue
to be applied
applies based on the billing date for
metered gas and electricity
applies based on the delivery date for
other types of fuel
New local option tax jurisdictions
The list of new local
option tax jurisdictions effective January 1, 2002, is
Sales and use tax
receive three forms for each quarter: Two monthly
deposit forms and one quarterly return.
reporting: The deposits for the first two months
in each quarter should include total amounts
only. That is, do not send the county-by-county
breakdown of local option tax and school local
option tax with deposits. Be sure to remit these
taxes with each deposit.
is for a single month only, not any combination
The third and
final form for the quarter is the sales tax
quarterly return. On this return, all amounts,
including the local option amounts, are totaled
for all three months. Complete the detailed local
option return on the back of the quarterly
return includes the total amounts for all three
months of the quarter, not just the third month.
The quarterly return will reconcile the tax
reporting for all three months of each quarter.
quarterly return, on line 8 be sure to take
credit for the total of the first two
months deposits for taxable amount, local
option, and school local option.
the amounts by tax type: state sales tax, "regular" local
option tax, school local option tax. Do not multiply your
taxable receipts by 6% or 7% or report it on a single
line. Even if your sales are in one city or
county only, you must report local option
separately from the state sales tax. Our
computers cannot determine which county to credit
a local option tax if it is combined with the
state sales tax. Correct filing ensures your
local jurisdiction receives its proper tax
complete the local option tax return on the back
of the quarterly return.
fill in lines 1-4 of the quarterly or annual return.
Skipping to the "Taxable Amount" (line
5) is not sufficient.
Be sure to
send in your schedule of consolidated locations
with your quarterly return.
Why file on
important to file returns by the due date
to avoid penalty or interest charges.
late returns repeatedly -- four late
returns in a 24-month period for monthly
filers, for example -- may result in our
agency requiring a sales tax bond.
complying with the bond requirement can
result in the sales tax permit being
revoked, requiring the business to close.
without a permit is a serious misdemeanor
and can result in a substantial fine and
possible jail time.
note: Returns must be file, even for those months when
you dont have any sales. For those periods
that you dont have any sales, write zeroes
on the deposit form or quarterly return and mail
are going out of business and dont need a
permit any longer, you may cancel your permit by
completing the Information Form attached to your
tax return. Even better, go to our Web site to cancel or change
permit information online.
find or didnt receive your return?
You are still
required to file! Download a return from our Web site or
send a letter with the same information that is
normally on the sales tax return. [Editor's Note: As of July
2005, sales and use returns are now filed through eFile & Pay.
Paper returns are not mailed.]
your mailing address?
We need to
know! Update your registration information on our
"Exemption numbers" dont
Department of Revenue and Finance does not issue "sales tax exemption numbers" to
any person, business or organization. Anyone claiming
to be exempt must complete an Exemption
Certificate (form 31-014 pdf) and give it to the
A sales tax
permit does not give any person or business a
blanket exemption from sales tax. Many of our
callers are under the false impression that
having a sales tax permit number entitles them to
make purchases of any kind tax free.
accepting an Exemption Certificate and making a
tax-free sale, ask these basic questions:
- Is the
sale to a government entity? If so, the
sale is usually tax free.
- Is the
sale to a business that will resell the
item? If so, the sale is usually tax
- Is the
sale to a group that is exempted by law?
If so, the sale is usually tax free.
- Is the
sale to a nonprofit organization? Stop!
The sale is probably taxable.
necessarily tax exempt
entities, churches and religious organizations
are not automatically exempt from paying state
sales taxes on taxable goods and services. This
is true even if these entities are exempt from
the payment of state and federal income taxes.
State sales tax must be paid unless some other
general sales tax exemption applies. Local option
sales tax must also be paid on purchases made in
jurisdictions that impose the tax.
for resale are exempt from all sales tax.
Therefore, a nonprofit entity that purchases
items for resale is allowed the same resale
exemption as any other person or organization. In
other words, a nonprofit corporation, church or
other religious organization is treated the same
as any other private citizen for sales and use
tax purposes when purchasing goods and taxable
services at retail.
sale of items used for educational purposes to
any Iowa private nonprofit educational
institution is exempt. More information is
available in our publication for nonprofit entities.
Whether or not
sales of ATVs are taxable depends on how the
purchaser will use it. ATVs that are primarily
(more than 50 percent of the time) used in
agricultural production are exempt from sales
tax. Customers who purchase ATVs for recreation
or any non-agricultural purpose should be charged
If banks require a tax number
business owners have difficulty setting up
business accounts at their banks. The bank
requires "a tax number" before it is
able to issue a business account. This number is
either a Federal Employer Identification Number
(FEIN) or a Social Security Number.
business is a sole proprietor without employees,
the bank may allow a separate checking account
number by applying as an individual doing
business as (dba). For example, John Doe dba
Widgets Galore. The number used in this type of
case would be the persons Social Security
calls from businesses and consumers who believe
Internet sales are exempt from Iowa sales tax.
Often, the confusion is between the sale of
Internet access and the sale of tangible personal
personal property: Internet sales are subject to
Iowa state and local option sales tax and to the
same guidelines followed by other businesses. The
Federal moratorium on Internet sales does not
apply to these sales in Iowa.
access charges: These sales have not been taxable
in Iowa since July 1, 1999.
Shipping and handling
When billed as
a lump sum, the entire charge for shipping and
handling is subject to state sales tax and local
option tax, if applicable.
shipping is exempt and handling is taxed.
Withholding tax tables
The current booklet, dated January 1998,
is still valid. The withholding tax tables will
not change for 2002. [Editor's Note, posted 2006: The most current
withholding tax tables are dated April 1, 2006.]
1099s and W-2s
has access to Federal information and no longer
needs copies of 1099s and W-2s. Please do not
send them; they will not be used. However, you
should retain records of 1099s and W-2s for three
years after the end of the calendar year for
which the forms apply.
Summary of Payments is still required to be sent
How fast do you want your Iowa income tax refund?
refunds from paper-file returns will take at
least 12 weeks to process. You can receive your
Iowa refund in two weeks if you e-file. More
information is on our Web site.