The Iowa Department of Revenue has completed the first phase of upgrades to its tax administration systems, known as GovConnectIowa. This first wave of changes touched sales and use tax, motor fuel and other excise taxes, and income tax withholding. To continue improving the sales and use tax compliance experience for businesses with filing obligations in Iowa, the Department has proposed statutory changes to the process of obtaining permits and filing returns for sales and use tax to take effect July 1, 2022. The Department has begun preparing for these changes and would like taxpayers to begin preparing for them as well, but please keep in mind, these changes are still tentative.
Assuming the legislature passes and the Governor signs the bill, taxpayers will see the following changes:
- Taxpayers, except for annual filers, will file returns on a monthly basis instead of on a quarterly basis.
- Taxpayers will file one combined return for sales and use taxes and will have one permit for both tax types, rather than separate permits and returns for each.
- Semimonthly deposits of sales tax collected will not be required.
- The annual filer threshold will increase from $120 to $1,200 of tax collected annually.
- Monthly filers will file their return through GovConnectIowa, unless they request permission from the Director to file otherwise because they cannot use computers or have other factors prohibiting electronic filing.
These changes will begin with the July, 2022 tax period, meaning tax collected in July will be due and a return must be filed by the end of August, 2022. Additional explanation of the current requirements and problems these changes will solve is below. The Department is working on revising administrative rules and forms to implement these changes and will update this guidance once the bill is passed and signed by the Governor, ensuring the changes will take effect.