message from the director:
Welcome to the latest
edition of eTax News. Our department is always interested in your feedback,
and I am particularly interested in your comments and suggestions about
the new eFile & Pay program.
As you know, the
program began in January with the filing of withholding returns and
payment of withholding taxes online and by telephone. Sales and retailer's
use taxes became available on eFile & Pay in July, and consumer's
use will be added in October. Other applications are being developed
so that, when completed, Iowa businesses will have total electronic
interaction with the Department of Revenue. You'll be able to file
returns, make payments, check histories and otherwise totally manage
your tax accounts at YOUR convenience, not ours. We've made changes
based on taxpayer suggestions, and your ongoing comments are encouraged.
In addition to the
eFile & Pay program, your comments on other topics are welcome.
Is this newsletter meeting your needs? What issues would you like to
see addressed in future editions? The bottom line is that our newsletter
staff wants to hear from you. As always, thank you very much.
Since the eFile & Pay system
is now available, paper sales tax monthly deposit and quarterly return
forms are no longer mailed to permit holders by the department. In
addition to filing deposits and returns electronically, we recommend
electronic payment for all filers as well. If you received payment
vouchers from the department, you have the option of mailing a paper
check with the voucher.
Please remember that
this payment voucher is not a substitute for the deposit or return.
Monthly and quarterly returns need to be completed either on the Internet
or telephone. A confirmation number will be supplied to write on the
Sales of boats and
other watercraft in Iowa are subject to the state sales tax rate of
5 percent and any applicable local option taxes. As of July 1, 2005,
this is the case not only for sales by dealers, but also for sales
between individuals. The "casual sale" exemption no longer applies
to sales of boats and other watercraft by individuals who are not regularly
engaged in making such sales.
a boat from an individual should obtain a receipt that shows the purchase
price of the boat and the cost of the trailer if one was purchased
with the boat. The buyer will then pay the 5 percent sales tax, plus
any applicable local option tax, on the cost of the boat to the county
recorder when the boat is registered. The rate of local option tax
is based on where the buyer takes possession of the boat.
The 5 percent motor
vehicle use tax on the cost of the trailer is paid to the county treasurer
when the trailer is registered with them. Local option tax does not
apply to purchases subject to motor vehicle use tax, so the trailer
will be taxed at the 5 percent rate only.
If a buyer takes
possession of a boat in another state, then brings the boat to Iowa,
only the state use tax of 5 percent is due.
If you have questions
about sales tax on boats - or on any Iowa tax law - call Taxpayer Services
at 1-800-367-3388 or e-mail us.
The department's legislative
summary is now available. This summary provides a brief description
of actions affecting tax issues that were taken by the 2005 session
of the Iowa General Assembly.
are exempt from sales tax, as long as they are separately stated,
reasonable in amount and related to the cost of transportation. Delivery
charges are currently defined as follows:
"Delivery Charges" means
charges assessed by a seller of personal property for preparation
and delivery to a location designated by the purchaser of personal
property including, but not limited to, transportation, shipping,
postage, handling, crating, and packing charges.
Prior law indicted
that if stated as a single item and mandatory to obtain the merchandise,
shipping and handling charges were considered part of the purchase
price of the merchandise and were subject to sales tax. However,
handling charges now fall under the definition of delivery charges
and are exempt from tax on that basis.
from sales tax
Sales of building
materials, supplies, and services to Habitat to Humanity are now
exempt from sales tax if used in the construction or repair of one-family
or two-family dwellings for low income families.
Sales of toys to
nonprofit organizations such as Toys for Tots, which received donations
for the purchases of the toys, are exempt from sales tax. To qualify,
the organization must be exempt from federal income tax under Internal
Revenue Code section 501 and the organization must distribute the
purchased toys to children at no cost.
The Military Family
Tax Relief Act of 2003 allows the exclusion of income for federal
tax purposes for the amount of the death gratuity benefit payment
received by survivors of deceased members of the armed forces for
deaths occurring after September 10, 2001. Since the references to
the Internal Revenue Code were updated through January 31, 2005,
a separate Iowa exclusion for the death gratuity benefit was not
needed and the same exclusion can be taken on the Iowa return.
The Military Family
Tax Relief Act of 2003 also allowed a deduction for overnight travel
expenses of individuals in the National Guard and military reserves
who travel away from home more than 100 miles in the performance
of their duties. This deduction was not capped for federal tax purposes.
Once again, since the Iowa references to the Internal Revenue Code
were updated through January 31, 2005, a separate Iowa deduction
was not needed. National Guard and military reservists are allowed
the same deduction for Iowa tax purposes for overnight travel that
is allowed for federal tax purposes.
as to whether a particular construction activity is considered new
construction or a repair can sometimes be difficult to make. Construction
activity that involves repairing a structure or realty is subject to
sales tax. Services that improve or change in a material way a structure
that isn't damaged or in need of repair would likely be considered
new construction/remodeling and are exempt from sales tax.
is available in the contractors guide.
If you haven't already,
please sign up for the construction contractors eList.
We will be sending examples to subscribers in the near future that
point out the differences between a repair and new construction/remodeling.
About Iowa Business Taxes
tax classes are held all year statewide. In addition, we make
house calls! If your business would benefit from training on Iowa
taxes, contact us.