| SEPTEMBER 2009 |
 |
Message
from the Director:
As we go into a new income tax filing season, let us help you help us. Listed below are what we find as common income tax errors. If we can correct these errors prior to filing, you have less work and we have less work. We will both operate more efficiently.
Corrections to common income tax return errors are:
- Complete county and school district in Step 1.
- In Step 1: "Is your address the same as last year? Yes or No." If this is the first time you are filing an Iowa return, check “No.”
- Single filers must answer the question concerning dependency in the Filing Status Step.
- Do not use the long form (IA 1040) tax tables when computing tax on the short form (IA 1040A) or the other way around.
- Make sure the return is signed.
- Do not mail a paper copy of the return after you have submitted your return electronically.
- Include copies of all W-2s and 1099s that report Iowa withholding. Do not forget the unemployment 1099-G form.
- Make sure the estimated payments claimed on the return match what was paid. If necessary, the taxpayer or representative with a power of attorney from the taxpayer can call the Department to verify the payments we have on file.
- Do you meet the qualifications for exemption from tax? See IA 1040 line 26 instructions.
- If you are a part-year or nonresident: Complete county and school district correctly in Step 1 on the IA 1040. Indicate if you are a part-year or nonresident on the IA 126 schedule. Also provide move in or out dates on the IA 126 schedule.
- Military personnel should read the expanded instructions for the 2009 IA 1040.
- Provide a detailed explanation for amending a return and include documents/forms for support such as a federal 1040X, additional W-2s, or form 2441.
Our 2009 forms and instructions will be online in early December.
Have a good tax filing season.
Mark R. Schuling
Director
| eFile & Pay: Updates to System | Billings and Collections |
| Tax Research and Economic Indicators | |
| Income Tax Envelopes | Snow Removal - Applying Sand, Salt, Ice-melt |
| Tax Classes | |
| 2009 Legislative Summary |
eFile & Pay: Updates to System
We continue to improve the eFile & Pay system. Many of our improvements are based on customer feedback. The following changes were made:
- On each screen, your cursor will automatically be set on the first text box. You will no longer have to click the first entry box to start.
- You can now use the Enter key instead of clicking on the Continue button to move to the next screen, except when you need to Submit a return or Edit information.
- eHistory is now three years instead of a limit of 75 returns.
- We have a new screen reminding
those who choose “mail a check” to print
their voucher from the confirmation screen.
Consider ePay (direct debit). Good for the environment. Good for you.
The Department is aware of some confusion about sales tax on kitchen / bathroom cabinets and countertops. How and when sales tax applies depends upon the type of transaction involved. The following information is intended to clarify:
- A homeowner purchases pre-fabricated cabinets and countertops from a retailer. The homeowner installs them in the home. In this situation, the homeowner has purchased tangible personal property and must pay sales tax on the retail price of the cabinets and countertops.
- A homeowner purchases pre-fabricated cabinets and countertops from a retailer, but hires a third party to install them. The homeowner has again purchased tangible personal property and must pay sales tax on the retail price of the cabinets and countertops.
- A homeowner selects pre-fabricated cabinets and countertops from a retailer, and contracts with the retailer to have them installed. The retailer may have its own employees perform the installation work, or the retailer may contract with a third party to do the installation. Under these circumstances, the retailer is considered the final consumer of the cabinets and countertops and is responsible for the payment of tax on their cost of those materials. No tax is charged directly to the homeowner in this case, although the retailer may include the tax expense as part of the price for the work just as any other overhead expense would be.
- A homeowner hires a contractor to replace the cabinets and countertops in the home. The contractor hired to do the work provides the cabinets and countertops that will be used. The contractor is the final consumer of the cabinets and countertops in this situation. As such, the contractor is responsible for the payment of tax on their cost of those materials. No tax is charged directly to the homeowner, although the contractor may include the tax expense as part of the price for the work.
- A homeowner hires someone to repair broken cabinets or countertops in the home. The person doing the repair charges sales tax to the homeowner on the materials used. If the labor performed is a taxable service, such as carpentry, the homeowner would also be charged tax on the repair labor. Please refer to the publication, Services: Which Ones Are Taxable?,” for a list of taxable services.
The examples above are designed to provide general guidance, rather than detailed discussions of Iowa tax law. Additional guidance can be found in our Construction Contractors informational publication. For answers to specific questions, contact our Taxpayer Services Section by phone at 515-281-3114 or 1-800-367-3388 (Iowa, Omaha, Rock Island, Moline), or by e-mail at idr@iowa.gov.
Snow Removal - Applying Sand, Salt, Ice-melt
Snow removal is not subject to Iowa sales tax.
The service of applying sand, salt, or ice-melt is likewise not taxable.
However, the materials applied – sand, salt, ice-melt – are taxable products. Sales tax is due on these materials.
- When the snow removal business applies these materials for their customer and does not make a separately itemized charge for them, that business is the consumer of the materials and owes sales tax to its supplier when they are purchased. No tax is charged to the snow removal business’ customer for services or materials.
- In some cases, the
snow removal business may separately itemize charges to their customer
for the materials. If so, the business may be able to purchase the
materials for resale and not pay sales tax to its supplier when three
conditions are met.
- The business and its customer must agree that the product is being sold separately from the service, and
- The product must be sold to the customer in a definite form or amount and with a specific price attached, and
- The cost of the product must be itemized on the bill.
When purchasing products for resale, a valid Sales Tax Exemption Certificate (pdf) will be provided by the snow removal business to the supplier who sells them the materials. In this situation, the snow removal business must charge sales tax to their customer on the materials, but not on the services.
IA 1040 mailing envelopes will no longer be provided by or be available from the Iowa Department of Revenue. Envelopes will not be included in the 2009 Iowa individual income tax booklet, nor will a supply of return envelopes be available to tax professionals or others.
Mailing labels and an IA 1040V Payment Voucher will continue to be included in the income tax booklet.
The following addresses should be used when sending returns and payments by mail:
If you are receiving a refund or filing a return with no refund and no tax due, mail your return to:
Iowa Income Tax - Refund Processing
Hoover State Office Building
Des Moines IA 50319-0120
If you have tax due, mail your return and payment with an IA 1040V payment voucher to:
Iowa Income Tax - Document Processing
PO Box 9187
Des Moines IA 50306-9187
Have you received a bill from us? Do you have questions? Our Billing & Collections FAQ may help.
Tax Research and Economic Indicators
One of our Tax Research & Program Analysis Section's responsibilities is to produce the Iowa Leading Indicators Index report. This report is a tool for monitoring the future direction of the Iowa economy.
Its eight components include:
- an agricultural futures price index,
- an Iowa stock market index,
- average weekly manufacturing hours in Iowa,
- initial unemployment insurance claims in Iowa,
- an Iowa new orders index,
- diesel fuel consumption in Iowa,
- new residential building permits in Iowa, and
- the national yield spread
If you would like to be notified by e-mail when these monthly reports are put online, subscribe to our eList category "Economic, Fiscal, and Statistical Research." Be sure to respond to the e-mail you will receive from the system!
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.