Iowa Department of Revenue electronic newsletter: Iowa Tax eNews

<%@LANGUAGE="JAVASCRIPT" CODEPAGE="1252"%> Iowa Department of Revenue electronic newsletter: Iowa Tax eNews

MARCH 2005

eFiling of Iowa Sales and Retailer’s Use Tax Coming Soon

For tax periods beginning in July 2005, businesses that are registered to collect Iowa sales or retailer’s use tax will use eFile & Pay to electronically file their return information. Payment of the tax due may also be made electronically through eFile & Pay, although payment by paper check will be an option for most taxpayers.

eFile & Pay is the department’s new system for filing Iowa business taxes either online or by touchtone telephone. An increasing number of taxpayers have been requesting new electronic methods for filing and paying Iowa business taxes. eFile & Pay is our response to those requests. The benefits of the system include the convenience to file and pay on a 24/7 basis and no need to rely on the department to distribute paper returns. We also expect electronic filing to reduce the number of returns that must be reviewed for accuracy. The department’s experience with electronic filing of individual income tax returns shows that returns submitted electronically have significantly fewer errors.

eFile & Pay began in January for Iowa employee withholding tax. Those who are registered for Iowa withholding and have already received a Business eFile Number (BEN) from the department will use the same BEN to file other taxes as well. All Iowa sales/retailer’s use tax permit holders who are not registered for withholding will receive a letter including their personal BEN prior to the first filling deadline.

As was the case for withholding, paper returns will no longer be available; however, payment by paper check will continue to be one of the payment options for most taxpayers. Preprinted payment vouchers will be mailed to those who qualify.

We recognize this is a change. Over the coming months, we will use every means at our disposal to keep you informed. The department will send information to each permit holder about the process, and educational and training opportunities will be made available.

We will also use e-list messages to send updates on eFile & Pay. If you know business owners who haven't signed up to receive our free tax news by e-mail, encourage them to go to our Web site at and click on the e-list graphic.

The department has received a number of positive comments from taxpayers regarding eFile & Pay. A few of them are included below:

"I wasn’t sure the eFile & Pay system was going to be an improvement. Glad to admit I was wrong."

"I truly appreciate filing & paying monthly withholding this way. What a step forward!"

"I appreciate you guys working on ways to make our jobs easier!"

"Thank you for this great convenience!!"

"Thank you eFile! Rock on!"

"What a great system! Easy to use, fast, efficient."

Questions on eFile & Pay? You can e-mail our eFile & Pay Unit or visit our Web site.

New withholding tax tables issued

Employers will be reducing the amount of Iowa tax deducted from employees’ paychecks beginning April 1. The Iowa Department of Revenue mailed the new tax tables and formulas to more than 80,000 withholding agents at the end of February.
Iowa withholding tax rates have not changed since 1998.

Tables are revised when changes in state or federal law result in a significant imbalance between the amount of tax withheld and the amount of tax actually owed. The new tables are intended to restore the balance and should reduce the amount of withholding tax sent to the State of Iowa by approximately $100 million in 2005.

According to the Iowa Department of Revenue, most taxpayers will see an increase in their take-home pay throughout the year; however, the size of the refund they receive after filing their 2005 tax returns will decrease. Furthermore, some taxpayers that now receive refunds may end up paying additional tax when they file their 2005 tax returns.

Employers and taxpayers who have questions should call Taxpayer Services at 1-800-367-3388 to talk to a tax specialist.

Withholding eFile classes well attended

The results are in on the presentations the department's field Tax Specialists gave over the past few weeks. 32 presentations were given to a total of more than 1,400 participants. Attendees posed many helpful questions and most of the comments were favorable. The figures below reflect the number of class participants for each specialist.

TSS	Talks	Attendees
Mary	6	279
Terry	10	222
Don	6	325
Wayne	4	294
Opal	6	292
TOTAL	32	1,412

Lawncare, landscaping subject to Iowa sales tax

A reminder that lawncare and landscaping services performed in Iowa are subject to sales tax.

“Lawn care” includes but is not limited to the following services: mowing, trimming, watering, fertilizing, reseeding, resodding and killing of insects, moles, other vermin, weeds, or fungi which may be threatening a lawn. Persons who mow lawns are providing a taxable service regardless of their ages.

The services performed by one who arranges and modifies the natural condition of a given parcel or tract of land so as to render the land suitable for public or private use or enjoyment is engaged in the business of “landscaping.” Landscaping performed on or in connection with new construction, reconstruction, alteration, expansion or remodeling of a building or structure is not subject to tax.

For complete information, please read our brochure, "Iowa Tax Rules: Landscaping and Lawn Care." (pdf)

Vegetable seeds, plants, and fruit trees

If the purchaser of vegetable seeds, plants or fruit trees will be consuming the produce from the seeds, plants or trees, the sale is taxable in Iowa. Sales of vegetable seeds, plants, and fruit trees are exempt if the buyer will be selling the produce.

Classes About Iowa Business Taxes

Are you a new business? Or just need to know more? Our tax classes are held all year statewide.

Lists
The department is making every effort to inform businesses of these and future changes. Please help us promote the department’s Business Taxes eList to other businesses. Our department may not have the resources for future mass mailings. Future changes will be made through the media, our Web site and our eList system.

By subscribing to this free eList news service on our Web site, businesses will automatically receive Iowa tax news updates and newsletters. Anyone may sign up!

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