|June 2013 ------------------------------------------------------------------------------------------------------------------------------------------------
In This Issue
IDR webinar series continues
The Iowa Department of Revenue has partnered with MyEntre.Net to provide tax Webinars to small business owners on IASourceLink. The series of Webinars continues in July, August and September with the following:
- Iowa Sales Tax Issues for Construction Contractors – July 11, 2013
- Iowa Sales Tax Issues Related to Agriculture – August 8, 2013
- Iowa Sales/Use Tax Basics – September 5, 2013
All webinars begin at noon and run for one hour. For more details and information on how to register, please see our Online Training page.
Local option sales tax ends in Johnson County
The local option sales tax in Johnson County will end (sunset) on June 30, 2013. Local option tax is a 1% sales tax imposed in addition to the 6% state sales tax.
No jurisdiction in Johnson County will impose local option tax as of July 1, 2013. Retailers should no longer charge the 1% local option tax as of July 1st on sales made in Johnson County.
Cities in Johnson County where the local option tax was imposed through June 30 are Iowa City, Lone Tree, Oxford, Solon, University Heights, Hills, Swisher, Tiffin, and Shueyville. The local option tax had been in effect in these cities since July 1, 2009.
Other local option sales tax changes effective July 1, 2013
Van Buren (#89)
Sunset Date Changes
("sunset removed" means the date the tax was scheduled to end
has been eliminated – LOST is still in effect)
Cerro Gordo (#17)
New penalty waiver request form now available
Taxpayers who wish to request a waiver of penalty from the Iowa Department of Revenue have a new option. A fillable Penalty Waiver Request form is now available on the Department’s Web site. This new form can be used to request a penalty waiver for these tax types:
- Retailers Use
- Consumer’s Use
- Motor Fuel
The form can be saved and e-mailed to the Department – this is the best option for taxpayers to use. The form can also be printed and mailed or faxed.
IA 1040A and IA 1120A Short Forms discontinued for 2013
The short forms for Iowa individual income tax (IA 1040A) and Iowa corporation income tax (IA 1120A) will be discontinued for tax year 2013. Taxpayers who may have used these forms in the past will need to use the IA 1040 or IA 1120 beginning with 2013.
This step is being taken due to declining use of the short forms, as well as to allow more taxpayers to file electronically. Iowa short forms weren’t eligible for electronic filing. It is estimated 97% of current IA 1040A users can eFile for free.
While the IA 1040 and IA 1120 have more lines and schedules than the short forms, taxpayers who were eligible to file a short form in the past will have no need to use most of those additional lines / schedules. Therefore, filing should still be relatively easy.
Itemized Deductions - Use Iowa Schedule A for 2013
The option to substitute the Federal Schedule A for individuals who itemize deductions on their Iowa returns will not be available for tax year 2013. All taxpayers who itemize deductions on the Iowa return will use the Iowa Schedule A beginning with 2013.
Previously, taxpayers who used the Federal Schedule A for Iowa purposes may have been required to make adjustments to the amounts on the federal schedule. It is believed the use of Iowa’s Schedule A for all taxpayers will reduce the possibility of errors connected with those adjustments. In addition, the Iowa Schedule A includes lines for a proration calculation for married taxpayers using filing status 3 or 4. Lines for that calculation are not part of the Federal Schedule A.
Sales Tax Holiday set for August 2-3, 2013
Iowa's annual Sales Tax Holiday will be held Friday, August 2, and Saturday, August 3, 2013.
For more information, please see our Sales Tax Holiday information.
Iowa legislative summaries
Legislative summaries for 2013 will be posted on our Web site as soon as they are available
Temporary Sales Tax Permits for special events
Special events are any type of show, flea market, road side stand or event where vendors offer products or services for sale. Sponsors of such events, and vendors making sales at them, should review their sales tax responsibilities.
Sales tax on services performed by students
During the summer months many students may perform services that are subject to Iowa sales tax. A complete list of taxable services can be obtained in our publication titled Iowa Sales and Use Tax: Taxable Services.
For example, the services of landscaping, lawn mowing, and lawn care are taxable unless performed on or in connection with new construction, reconstruction, alteration, expansion, or remodeling of a building or structure. Persons who mow lawns are providing a taxable service regardless of their ages; however, effective 7/1/06 a casual sale exemption exists if (1) the owner of the business is the only person performing the services; (2) the owner of the business is a full-time student; and (3) total gross receipts from the services do not exceed $5,000 for a calendar year. Please see our handout on landscaping and lawn care .
A casual sale exemption may also apply to services which would otherwise be taxable if:
1. It is a sale of a nonrecurring nature, and
2. The seller at the time of the sale must not be engaged in selling goods or taxable services for profit; or if the seller is so engaged, the casual sale must be outside the regular course of business.
Two separate selling events outside the regular course of business within a 12-month period are considered nonrecurring. Three separate selling events within a 12-month period are considered recurring. Tax applies beginning with the third separate selling event. However, when a sale event is planned and occurs consistently over a span of years, the sale is recurring and not casual, even though only one sale event occurs each year.
Students performing taxable services for which a casual sale exemption does not exist should apply for a sales tax permit online at Apply for an Iowa permit .