A Message from Director Ralston

Thank you for taking time to read the department’s latest e-News. I hope you will let me know if there are topics or issues about which you wish more information. In the meantime, please see the article below about the new eFile & Pay initiative. This project was undertaken because Iowans asked for it, and our goal is to implement programs that meet your needs first (and the state’s second). Thank you again, and best wishes for a prosperous 2005.

Mike Ralston

Local option sales taxes

Iowa local option sales taxes may become effective twice each year: July 1 and January 1.The list of new jurisdictions for January 1, 2005, is now available on our Web site. You will also find complete lists of all counties and cities in our Excel file.

Snow removal exempt

The service of snow removal is exempt from Iowa sales tax.

New File & Pay begins January 2005

For tax periods that begin on January 1, 2005, more than 80,000 employers will file their Iowa withholding returns electronically using the department’s new eFile & Pay system. The eFile & Pay system is a paperless method of filing Iowa employee withholding deposits and returns. It will also provide the option to pay electronically. Computer users will enjoy the ease and efficiency of the eFile & Pay online system. If taxpayers prefer to eFile & Pay by touch-tone telephone, they may. Both are safe, secure systems. Paper returns will no longer be provided, although paper payment vouchers will be sent to most taxpayers for whom payment by paper check will still be an option.

Payment Options for 2005:

• ePay (direct debit through this system)
• ACH Credit (through your financial institution)
• Credit Card (link and telephone number are provided while filing)
• Mail a Check (with the payment voucher mailed by the Department in late December)

Note: Semi-monthly filers are required to pay electronically.

“Iowa taxpayers have been requesting new and more efficient ways to do business with state government,” said Michael Ralston, department director. “eFile & Pay is another step toward that goal.”

Taxpayers will discover that filing and paying electronically is a better way to do business with the department.

• No waiting for paper returns in the mail
• Access to electronic filing and paying system 24 hours a day/7 days a week
• Access to filing and payment history 24 hours a day/7 days a week
• Confirmation that returns and payments are received
• Secure and confidential transmission of information
• Ability to schedule payments in advance

Later in 2005, sales/use tax, motor fuel tax, and other taxes may be added into the eFile & Pay system. More information will be provided on these taxes at a later date.

A letter will be sent to each withholding agent in early January before their first filing deadline for 2005 withholding tax. This letter will include a personal Business eFile Number, which is required to gain access to the eFile & Pay system. It will also contain detailed instructions on using the new system and will explain an online demo feature which will allow you to practice filing without actually submitting a return.

More information on eFile & Pay is available. Semi-monthly filers and those who use a payroll service should be sure to read the eFile & Pay information available there. Some general instructions regarding the system follow:

The following instructions apply to both filing methods: Internet and telephone.

Before you access the Business eFile & Pay system from our Web site or by telephone, you will need the following:

• Your Business eFile Number (BEN).
• Your Iowa permit number. For withholding, this is typically your Federal Identification Number, plus the 3-digit Iowa extension. It is identified on the Iowa withholding payment vouchers as “Employer ID Number.” Payment vouchers are new for 2005.
• The information for the tax period you are filing. If you are filing a semi-monthly or monthly deposit, you need the amount of withholding and the total amount of credits for the period, if any. If you are filing a quarterly or annual return, you need the amount of withholding for the period, deposit amount, and breakdown by credit, if any to report.
  Note: The four credits include New Jobs Credit, Supplemental Jobs Credit,
  Housing Assistance Credit, Accelerated Career Education Program

To enter the system each time, you must first enter your 8-digit Business eFile Number.
Below is the screen you will see if filing by computer. When you click CONTINUE the very first time
you enter the system, you will be asked to fill out “Your Profile.”

Complete “Your Profile” – This is required! The system will automatically assign you a 4-digit number the first time you enter. If more than one person in your business will be using the system, the first person in your business to access the system will be given number 0001 and automatically becomes the administrator. This user determines who in your business is allowed to access the system and what user rights they have. This person will also reset other user’s access if a lockout occurs. However, if user 0001 is locked out, he or she must contact the Iowa Department of Revenue to be reset. Additional users may be given access through the Web application – but not the telephone – by the business administrator.

Help and FAQ screens are available on each screen while filing. There is also a DEMO feature to access once you are in the application. We recommend practicing using the DEMO feature prior to actually filing or making a payment.