Taxpayer Bill of Rights

The Department examines various taxpayer information in an effort to make sure that taxpayers are following Iowa’s tax laws and rules. The Department will work with you and will carefully consider all necessary information before making a decision. Procedures for tax returns, listed below, also apply if we question your failure to file a tax return. If you are selected for an Iowa tax audit, or examination, you should know how the process works and what your rights are at each stage. Our examination may result in a billing or, in some cases, a refund.

You can represent yourself in an audit or appeal. If you want someone else to represent you, you should submit a completed IA 2848 Iowa Department of Revenue Power of Attorney Form, 14-101 for our records. The IA 2848 form gives your permission, in writing, for another person to represent you. Representatives of business entities may need to complete a Representative Certification form. Only those individuals listed in Iowa Administrative Code rule 701—7.6 may represent a taxpayer in a contested case proceeding following the Department’s denial of an appeal. For more information, see Confidentiality, Disclosure, and Authorized Representation.

If you will be making an audio recording of your interview(s) with our auditors, let us know in advance of the scheduled meeting. We will tell you in advance if we plan to record your interview(s). If you would like a copy of the recording of your interview, we will provide a digital copy or a copy on removable media free of charge.

The Department handles many examinations and questions entirely by mail. You may receive a request for more information, a request to file a return, a notice of additional tax due, or a refund. At the conclusion of the examination, we include an explanation of changes made to your return and include a notice of additional tax due, if applicable.

If you agree with the changes noted, simply make a payment using EasyPay Iowa.

If you disagree with the changes made to your return, please provide a written explanation. Include all important documents or facts you wish to have considered. If you feel the issue cannot be resolved by mail, you have the right to schedule a personal interview. If the tax matter is not resolved to your satisfaction, you must file a formal appeal within 60 days of the date on the Notice of Assessment (or refund denial letter). You must file the appeal within the 60 days, even if you continue to communicate with the auditor or examiner.

If you don’t understand the notice you received, please call us at the number listed on the notice.

If the Department wants to conduct the review through a personal interview, or if you ask for an interview, you have the right to ask that the review take place at a reasonable time and place that works for both you and the Department. We will try to work with your schedule, but the Department makes the final decision of how, when, and where the review takes place.

If you disagree with the final report, you may discuss your case further with the auditor’s supervisor. If your tax matter is not resolved to your satisfaction, you must file a formal appeal within 60 days of the date on the Notice of Assessment (or refund denial letter). You must file this appeal within the 60 days, even if you continue to communicate with the auditor or examiner.

Field audits normally occur at the taxpayer’s place of business during regular business hours. We will hold a pre-audit conference with you during which the auditor will inform you of the types of records needed for review, audit procedures, method of conducting the audit, and possible audit issues.

When we complete the audit, a post-audit conference will give both parties the opportunity to discuss the audit listings, issues still in dispute, audit results, and appeal procedures. If your tax matter is not settled to your satisfaction, you must file a formal appeal within 60 days of the date on the Notice of Assessment (or refund denial letter). You must file this appeal within the 60 days, even if you continue to communicate with the auditor or examiner.

How to File an Appeal

You must file an appeal in writing within 60 days of the date on the Notice of Assessment (or refund denial letter). You must file this appeal within the 60 days, even if you continue to communicate with the auditor or examiner. If you are issued a Notice of Assessment and do not file the appeal within the 60 days, you may pay the balance due (if any) and file a timely refund claim. When a refund is denied, you must file an appeal within 60 days to challenge the refund denial.

You must complete the appeal according to Iowa Administrative Code chapter 7. Iowa Administrative Code rule 701—7.9 explains format requirements. You may use the Appeal of Department Action, 76-500 form. Or, you may fill out an appeal form in GovConnectIowa for the following tax types: sales, use, E911, withholding, motor fuel, hotel/motel, local option sales, automobile rental, water service excise, corporate income, S corporation income, franchise, partnership income, composite (PTE-C), tax credits, and distributions associated with these tax types.

Appeals can be submitted:

• Online: GovConnectIowa (for tax types listed above)
• By email: idrhearings@iowa.gov
• By mail: Legal Services and Appeals Division, Iowa Department of Revenue, P.O. Box 14457, Des Moines, Iowa 50306-3457.
• In person: the Department’s customer service desk in the Hoover State Office Building (visitor information)

For more information or questions about the appeal process, contact the Legal Services and Appeals Division at idrhearings@iowa.gov or 515-242-5269.

Reinstatement

If we dismiss your appeal as untimely or for failure to respond to the Department’s motion to dismiss, you may apply for reinstatement. The Department may reinstate an untimely appeal if the Department did not correctly mail or deliver a notice of assessment or refund denial. The Department may reinstate an appeal that is dismissed for failure to respond if you prove that you had good cause to miss the relevant deadline. You may use the Application for Reinstatement, 76-504. Use the applicable form for either appeals dismissed on or before November 9, 2021 or on or after November 10, 2021. For more information, or questions about the reinstatement process, contact the Legal Services and Appeals Division at idrhearings@iowa.gov or 515-242-5269.

You must submit your Application(s) for Reinstatement no later than 30 days from the date we dismissed the appeal.

Appeal Intake Process

Appeals generally go through the following process. The Clerk of the Legal Services and Appeals Division reviews the documents you have submitted as part of the appeal. If the documents are complete and in proper format, the Division will docket them as an appeal. If the documents provided are missing necessary information, you will be contacted by the Legal Services and Appeals Division and given 30 days to provide the missing information. If the missing information is provided, the appeal will be reviewed according to the procedures described below. If the missing information is not provided, the appeal will be dismissed. If the appeal is dismissed, you may request reinstatement through the process described above.

Appeal Review Process

The Department’s Appeals Section will review the matter to determine if a resolution can be reached without the need for a hearing. This is commonly referred to as “informal procedures.” Procedures at this stage include, but are not limited to, requests for additional information from the taxpayer, informal conferences to discuss the matter in person or over the phone, and settlements. If the matter is still not resolved, we will send you a Letter of Findings. If you disagree with the Letter of Findings, you may request a hearing. Failure to respond to the Letter of Findings or other requests on time may result in the dismissal of your appeal.

Expedited Hearing

You and the Department may agree to have your appeal set for expedited proceedings. This procedure is used in cases involving small dollar amounts that have no precedential value. Both you and the Department must agree not to conduct discovery. Both you and the Department must agree not to appeal the Administrative Law Judge’s decision under the expedited hearing format.

Requests to Waive Informal Procedures

You do not have to go through the informal procedures described above or wait for a Letter of Findings to request a hearing. If a proper appeal has been pending before the Department for at least six months, you can make a written request to the Legal Services and Appeals Division to begin a contested case proceeding. If you do so, the Department must file an Answer within 30 days of receipt of your request. After the Department files its Answer to your appeal, an Administrative Law Judge will issue a Notice of Hearing that sets the date, time, and location for the hearing.

If the Department fails to answer within the 30-day period, interest on an assessment is suspended from the time an Answer is required to be filed until the Department files an Answer. If the appeal involves a refund denial and the Department fails to answer within the 30-day period, interest on the refund accrues at twice the normal rate until the Answer is filed.

The Hearing

At the hearing, an Administrative Law Judge hears testimony and accepts exhibits from both you and the Department. This hearing is similar to a court of law but is more informal. It is important that all relevant information be presented because the record made at the hearing will be reviewed by the courts if your case is appealed to a higher level. You may represent yourself at the hearing or you may be represented by a person that meets the requirements of Iowa Administrative Code rule 701—7.6.

Telephone Hearing

Both you and the Department may agree to present the contested case through a telephone hearing. The telephone hearing is usually not appropriate for complex cases or those involving numerous exhibits.

Appeal Steps

After the hearing, the Administrative Law Judge issues a proposed order. If you and the Department agree with the order, the matter is considered resolved unless the Director reviews the proposed order on his or her own motion. If either party disagrees with the order, that party may appeal to the Director of the Department for a decision. The Director may hold a hearing and will issue a final decision. If you disagree with the Director’s decision, an appeal may be made to the District Court. (Note: You may also have the option to skip the appeal to the Director and appeal directly to the District Court.) District Court decisions may be appealed to the Iowa Supreme Court.

Recovering Litigation Expenses

You may be able to recover some of your administrative and litigation costs if an Order finds that the Department’s position was substantially unjustified on most issues. You must have given the Department all the information necessary to resolve your case and you must have requested recovery of those costs in your appeal.

Once you have paid your balance due in full, if you believe the tax due is incorrect, you have the right to file a claim for refund. If the Department reduces or denies your claim for refund, you have the same appeal rights as when a Notice of Assessment is issued. If your claim for refund has been pending before the Department for six months, and has not been reduced or denied, you may file an appeal on your claim. A refund claim of overpaid tax must be requested within one year of the date of the payment or within three years of the due date of the tax return, whichever is later.

If you are unable to pay the balance due in full, please contact the Department to discuss payment arrangements. Any of the Department’s collection authority may be used to collect on balance due accounts, including filing property liens.

Collection Activities

The Department’s collection authority includes, but is not limited to: letters, calls, offsetting payments, denying license renewal, bank levies, and wage garnishments.

Payment Plans

If you are unable to pay your balance due in full, please contact the agent identified on the correspondence you received to discuss payment arrangements. The Department may require a financial statement from you before agreeing to a payment plan.

Liens

If you fail to pay your taxes, the Department may file a lien against your property. Once filed, a tax lien is effective for 10 years and can be extended in 10-year increments. After your taxes are paid, the Department will release the lien on your property.

Property Levies

The Department is authorized to levy against, or take possession of, your real estate or property (such as automobiles or bank accounts) to collect past due taxes, penalty, and interest.

The Department will release a levy against your property once your balance due is paid in full. The Department may also release the levy if:

• The release will help the Department collect the balance due.
• The Department has agreed to a payment plan with you.

Wage Garnishments

The Department may garnish your wages or file an administrative wage assignment requiring your employer to deduct up to 100 percent of your wages to pay your past due taxes.

License Sanctions

If you have an outstanding balance due, the Department may send a Certificate of Noncompliance to relevant licensing authorities notifying them of your liability. The licensing authority may take steps to suspend, revoke, deny issuance, or deny renewal of your professional, occupational, recreational, business, or industry license. Before a Certificate of Noncompliance is issued, the Department will provide you notice of the potential license sanction and give you the opportunity to schedule a conference to challenge the license sanction or to enter into an approved payment plan.

Setoffs

The Department is authorized to retain tax refunds and vendor payments issued to you by the State of Iowa to apply to your debt. View additional information on the State Offset Program.

Collection Agencies

The Department may use private collection agencies to help collect unpaid taxes.

Jeopardy Assessments

If the Department believes that collection of your tax debt could be at risk due to a delay, it can issue a jeopardy assessment and immediately proceed to collect the tax. If you receive a jeopardy assessment, follow the same procedures for appeals of regular assessments. The Department may continue to collect the tax after you have filed an appeal.

If you are responsible for filing returns and making tax payments for a business, you may be personally liable for the unpaid tax, penalty, and interest of that business.

Special procedures apply if the Department examines a pass-through entity’s Iowa income tax return or questions the entity’s failure to file an Iowa income tax return. Partnerships, S corporations, limited liability companies, estates, and trusts can all be examples of pass-through entities. The examination is conducted at the entity level. The contact and decision maker for the examination will be the person designated on the entity’s income tax return as the Pass-through Representative (PTR). If the entity fails to appoint a PTR on the return the entity may appoint one later using the IA 8979 Pass-through Representative Appointment Form, 41-173. Or the Department may appoint a PTR.

The PTR has the sole authority to act on behalf of the entity in the examination. This includes having the power to appoint additional entity representatives using the IA 2848 Iowa Department of Revenue Power of Attorney Form, 14-101. The owners or beneficiaries have no right to intervene or participate in the examination.

At the conclusion of the examination, if the Department changes the income tax return in a way that affects tax items that pass through to the owners or beneficiaries on Iowa Schedules K-1, we will explain those changes on a Final Notice of Adjustment.

The PTR is required to take action on the Final Notice of Adjustment. If the PTR disagrees with the changes, refer to The Appeals Process above for how the PTR can appeal the Final Notice of Adjustment. The deadlines and processes to appeal a Final Notice of Adjustment are the same as for a Notice of Assessment. If an appeal concludes with required return changes, or if no appeal is filed, the entity and the owners or beneficiaries must file amended tax returns to reflect the changes and pay any additional Iowa tax that may be due within a certain period of time. The PTR may elect to have the entity pay the additional tax due on the owners’ or beneficiaries’ behalf rather than require those owners or beneficiaries to file amended tax returns. The owners or beneficiaries are bound by the changes on the Final Notice of Adjustment or the results of an appeal. If the entity, or the owners or beneficiaries, are unable or unwilling to pay the tax due, the Department may use its collection authority described above (see the Collection Procedures above) to collect any amounts due.