<%@LANGUAGE="JAVASCRIPT" CODEPAGE="1252"%> Iowa Department of Revenue electronic newsletter: Iowa Tax eNews
JUNE 2009
graphic for Iowa Department of Revenue Tax eNews electronic newsletter

Message from the Director:

The 2009 legislative session has ended and July 1 is the effective date of most legislation. We have placed a summary of all tax related legislation on our Web site at www.state.ia.us/tax/taxlaw/taxlawlegis.html

The legislation is indexed by bill number and also by tax topic. Legislation tax topics include income tax (corporate and individual), property taxes, sales and use, hotel/motel, motor fuel, local option, and miscellaneous. We are in the process of drafting rules to assist in understanding the changes.

The most time sensitive changes are the repeal of certain exemptions from the hotel/motel tax (see separate article in this newsletter), the elimination of casual sale for ATVs, and the treatment of leased motorcycles like leased cars for tax purposes.

It is a Department goal to keep you current on Iowa tax issues of importance to you. Please look at our Web site regularly. We highlight current tax topics of interest on our home page. You will also find links to IRS pages that we determine may be of interest to Iowans. Please let us know if you would like to see any changes in our Web site. We consider ourselves to be a service organization, and service to Iowans will remain our top priority.

Mark R. Schuling
Director

New Local Option Sales Tax Jurisdictions - July 1, 2009

Ida County (#47) 1%

  • Arthur
  • Battle Creek
  • Ida Grove
Johnson County (#52) 1%
  • Hills
  • Iowa City
  • Lone Tree
  • Oxford
  • Shueyville
  • Solon
  • Swisher
  • Tiffin
  • University Heights
Linn County (#57) 1%
  • Center Point
  • Hiawatha
  • Marion
  • Robins
  • Walford
Marshall County (#64) 1%
  • Saint Anthony

Local option rate increase from 0.5% to 1%

Webster County (#94)

  • Fort Dodge
  • Gowrie
  • Dayton
  • Lehigh
  • Otho
  • Stratford
  • Badger
  • Barnum
  • Callendar
  • Clare
  • Duncombe
  • Harcourt
  • Moorland
  • Vincent
  • Unincorporated

2009 Sales Tax Holiday

graphic advertising 2009 Sales Tax HolidayThe 10th annual Sales Tax Holiday will be held Friday and Saturday, August 7 and 8. Businesses open on these days are required to participate.

Please be aware that the holiday does not include Sunday.

 

 

eFile & Pay: Filing "Zero" Returns

Customers registered for sales, use, or withholding tax must file a tax return, even if they have no tax due. 

If you do owe, payments can be made four ways:

  • ePay (free direct debit) through eFile & Pay
  • Credit card, through Official Payments Corp (2.5% convenience fee charged by credit card vendor)
  • ACH Credit through your bank
  • Mail a check with the payment voucher. The voucher does not replace filing the return.  (Semi-monthly filers must pay electronically.)

You are probably already filing your returns through eFile & Pay. If you are mailing your payment, consider ePay. You will mail nothing!

Retailers NOT Allowed to Absorb Sales Tax

Retailers must add sales tax to the price of taxable goods or services and collect the tax from the purchaser. The retailer cannot advertise or in any way indicate that the sales tax is being absorbed or paid by the retailer.  

A retailer may include the sales tax in the price, which is often done when selling concessions or admissions to movie theaters and sporting events. When this happens, the retailer must post a notice or make a statement on the invoice / receipt that the purchase price includes the sales tax.

Also remember that sales tax is due when taxable goods are delivered or taxable services are performed, not when payment is received from the customer.

Hotels and Motels –
State Excise Tax, Local Hotel / Motel Tax, and Sales Tax Information

The following is a summary of the taxation of room rentals.  

Contracts made directly with Iowa state / local governmental entities and schools

Prior to 7-1-08:  Contracts made directly with Iowa state / local governmental entities and schools were exempt from the 5% state excise tax (previously sales tax) on room rental, but were not exempt from the local hotel / motel tax.    

From 7-1-08 to 6-30-09:  Contracts made directly with Iowa state / local governmental entities and schools are exempt from both the 5% state excise and local hotel / motel taxes.

Beginning 7-1-09:  Contracts made directly with Iowa state / local governmental entities and schools will be subject to both the 5% state excise and local hotel/motel taxes.

Contracts made directly with the federal government

Contracts made directly with the federal government are exempt from both the state 5% excise tax and local hotel/motel tax throughout these various periods. However, rooms rented to federal government employees who are paying with cash, personal check, or personal credit card are subject to tax. This is true even if the employees will be reimbursed by the federal government.

Also exempt from state excise and local hotel / motel taxes during all periods 

  • Room rental contracts for periods of more than 31 consecutive days. To qualify for this exemption, the renter must contract to rent for a single period of more than 31 days and cannot accumulate these days.
  • Renting of sleeping rooms in dormitories and in memorial unions at all universities and colleges located in Iowa.
  • Renting of a room to the guest of a religious institution located on real property exempt from tax as the property of a religious institution, if the reason for renting the room is to provide a place for a religious retreat or function and not a place for transient guests generally.  

All conference and banquet room rental is exempt from the following Iowa taxes:           

  • The state 5% excise tax on room rental
  • Any local hotel / motel tax, which can be imposed at a rate up to 7%
  • The state 6% sales tax and any local option sales tax (LOST) 

These exemptions apply to conference and banquet room rental in hotel and motels, as well as to freestanding conference centers and restaurant banquet rooms.

There may be other items or services included or associated with the banquet or conference room rental that are subject to the state 6% sales tax, plus any applicable LOST.  Examples of taxable items or services that may be included or associated with room rental include prepared foods, alcohol, soft drinks, candy, security services, and the rental of furnishings or equipment.

If the facility bills a lump sum for the room rental and taxable items or services, the state 6% sales tax, plus any LOST, applies to the entire bill.  If taxable items and services are separately stated from the room rental on the invoice, the state 6% sales tax, plus any LOST, only applies to the sales price of the taxable items and services.

When Contacting Us

When you contact our Department, please have available the form, bill, document, or other material about which you have a question. We can serve you better and faster if you do.

When mailing multiple returns

When mailing tax returns for more than one period, please send them in separate envelopes. This reduces the chances of a return being accidentally overlooked and not processed properly.

Legislation

Legislative summaries are posted in the Research category of our Web site.

Classes about Iowa Taxes

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

In addition, we make house calls! Gather your employees or your organization's membership. We will come to you and address your Iowa business tax concerns. This service is free of charge. Just e-mail us to contact you.

Contact Us

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