Iowa 'first in the nation' in income tax eFiling

For the second straight year, the Iowa Department of Revenue has surpassed all other states for e-filing of income tax. According to survey information from the Federation of Tax Administrators, as a percentage of all income tax returns received, Iowa had 55% of returns electronically filed in 2003. Minnesota and South Carolina are second and third respectively with 50% and 49%.

“I am pleased to let Iowans know that their dedication and enthusiasm for electronic filing of Iowa income taxes has paid numerous dividends in quicker, more accurate returns and refunds for taxpayers and fewer processing costs for the State of Iowa,” said Iowa Department of Revenue Director Michael Ralston.

Iowa income tax returns can be electronically filed through most tax preparers, or over the Internet, by telephone or using purchased software for home computers. More information on e-filing can be found at the Department of Revenue Web site.

Department procedure for IA1139 refund claims

Previously, interest started on the day a claim was filed, regardless of whether a complete claim was filed. A copy of the federal 1139 is required with the IA1139 refund claim but is missing from several refund claims every year. In the past, instead of denying the claim for insufficient information, we would write the taxpayer for the additional information. Interest would continue to accrue while waiting for a response. In our current process, we still write for the information if the claim is not complete. However, interest on the claim for refund will not start until all the required information, as stated on the IA1139 instructions, is received.

There are a couple obvious cases where a federal 1139 would not be applicable. If Iowa deductions create the loss, no federal 1139 is required, and interest accrues from the date the claim was mailed. Second, the consolidated group for a company with filing status 2 or 3 may have taxable income. In this case, you should provide a copy of pages 1 through 4 of the consolidated return with the IA1139.

We no longer require information verifying the IRS accepted or adjusted the federal 1139 to be attached to the IA 1139. The department will request this on a case-by-case basis.

If you have questions, please contact the department by e-mail.

Iowa income tax changes for tax year 2003

We have posted a summary of Iowa income tax changes for 2003 on the department's Web site. Information on this page includes Federal legislation and its affect on Iowa law; tax credits administered by the Iowa Department of Economic Development; Iowa tax legislation; military tax benefits; and other important information. [Editor's Note: This information was removed. Please see the 2003 Legislative Summary.]

A few specific Iowa tax notes/reminders

Construction/Sales Tax

• Renting equipment for construction use is exempt if for new construction, remodeling, reconstruction, alteration or expansion. Otherwise, the contractor must pay sales tax on the rental price.

Agriculture/Sales Tax

• Repair labor for farm machinery is subject to sales tax, even though the farm machinery may be exempt.

Snow Removal

• Snow removal is not a taxable service.

Iowa local option tax news

• Grundy County: Reinbeck will NOT implement the regular local option tax on 1-1-04.
• Jefferson County: Vedic City has changed its name to Maharishi Vedic City.
• Dallas County: Regular local option will sunset in the following jurisdictions on December 31, 2003: Bouton, Minburn, Perry, Redfield
• Check our Web site for new jurisdictions beginning January 1, 2004.
• Our Excel file shows all jurisdictions and their local option tax status.

E-Payment options

Do you currently pay withholding or sales tax via Electronic Funds Transfer (EFT)? You can now do this online.

Do you want to pay withholding or sales tax by EFT? Take a look at our EFT information.

[Editor's Note: This system is no longer available. Returns and payments are now made through eFile & Pay.]

Classes about Iowa taxes

Learn what you need to know about Iowa tax and how it affects your business. In addition to classes held at community colleges, we also make house calls! Our tax specialists will meet with your staff and answer questions specific to your business type.

Click here to locate the nearest tax specialist.

Residential energy tax phase-out continues

Iowa House File 705 was enacted to provide a phase-out of state sales tax (but not local option taxes) for stated periods on charges for specific types of energy. The tax rate will drop to 2 percent beginning January 1, 2004. Click here for more information.

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