Iowa sales tax rate reduced on residential energy

Just a reminder that the state sales tax rate on metered natural gas, electricity, and other qualifying fuels used for residential energy will be reduced to 3 percent beginning January 1, 2003. Please note that local option tax, if any, still applies. Complete information is available on our Web site.

Regular and school local option taxes

New jurisdictions go on board January 1, 2003. You'll find that list and other information on our Web site.

If you make sales into Linn County, you should know that the regular local option tax will expire in all jurisdictions except Bertram and Prairieburg on December 31, 2002. The tax was approved to be in effect just one year. Only the jurisdictions of Bertram and Prairieburg are subject to local option tax after December 31, 2002. If there is a refund of local option tax in 2003 for a sale made in 2002, it should be reported on the local option schedule by either reducing the local option tax collected in that reporting period or by showing it as a negative amount, if no sales were made in Bertram or Prairieburg.

The regular local option tax in Liscomb/Marshall County expired 6/30/02.

ATV'S for off-road use

ATVs sold by an ATV dealer for off road use are subject to sales tax. Farmers may purchase ATVs exempt from sales tax if the ATV is used off road and is used directly and primarily for agricultural purposes. That is, using an ATV to fix livestock fences or for transporting food or water to livestock would both involve activities that were directly related to agricultural production. As long as the ATV is used primarily for similar purposes it is eligible for tax exemption. Vehicles, including ATVs, that are subject to registration or registered for highway use are generally subject to use tax and are not eligible for the agricultural production exemption.

Sales tax due dates

Our Web site includes an Excel file of due dates.

Helpful hints to make calls and office visits easier and faster

• If you received correspondence from us, be sure to call the number listed on it. If not, you may find you have to make a second call.
• Have any correspondence you received from us available when you call or come in to our Des Moines office.
• Did you receive a billing after you paid the tax? Bring proof of payment to help us resolve the situation.
• When you speak with someone from our office, be sure to get his or her first name. This may help if you have any follow-up questions later.
• And, finally, please be aware that you can always e-mail us or write us if you are unable to call or visit. Write to us at: Iowa Department of Revenue and Finance, PO Box 10457, Des Moines IA 50306

Sales made to churches and other nonprofit entities

Nonprofit 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 taxes must also be paid on purchases made in jurisdictions which impose the taxes.

Purchases made for resale are exempt from all sales tax. 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.

Learn more about sales to and sales by exempt entities.

Sales tax permit certificate

Sales tax permits are no longer required to be posted at your place of business. Therefore, our agency no longer provides a permit certificate to be used for that purpose. New businesses receive only a postcard with their permit number on it.

Sales by farm equipment dealers

Be cautious making exempt sales to owners of acreages. In general, these acreages do not qualify for agricultural exemptions. Food, supplies and equipment for horses and other pets, for example, are not exempt sales.

Tax Classes

Our taxpayer service specialists conduct Iowa tax classes at locations throughout the state. These classes cover a variety of tax issues. For more information, view the latest schedule of class offerings on our Web site.

Sales tax returns

Again for 2003 we will be sending out forms covering six months at a time. As always, please check the dates on the return you're using to be sure it is the one for the correct tax period.

Construction contracts and exempt entities

Beginning January 1, 2003, designated exempt entities will be able to provide a special exemption certificate to construction contractors so they can buy building materials for construction contracts without paying tax. Check our Web site for more information.

Withholding agents must register with Iowa

Obtaining a federal identification number does not automatically register you as a withholding agent in Iowa. You can register with us online.

Withholding coupons

Due to unforeseen circumstances, the department will be unable to continue to provide withholding coupons in a booklet format. The 2003 coupons are the same size and design as in the past; only the packaging is different. Withholding coupons will be mailed middle to late January. [Editor's Note: Beginning January 1, 2006, withholding is filed and paid through eFile & Pay. Returns/coupons are no longer mailed.]

Withholding tax tables

No changes have been made to the tax tables again this year. The Withholding Tax Guide for tax periods on or after January 1, 1998 is still current.

Anyone can subscribe to Iowa eLists !!

Help us spread the word! Five lists, customized for different groups of our customers are available. Subscribers will receive relevant, current news and updates on Iowa taxes - no SPAM! This service is absolutely free of charge.

1. Individual Income Tax for tax professionals and others

2. General Business Tax Sales, Use and Local Option tax information for businesses and others
   Iowa Tax e-News public newsletter

3. Withholding Tax for employers and others

4. Motor Vehicle Fuel Tax, especially for permit holders

5. Cigarette and Tobacco Tax, especially for permit holders

6. Contractors

7. Government Entities