General

The state setoff program matches people and businesses who owe delinquent debts to public agencies with money that is owed to those people and businesses by public agencies. Sources of funds available for setoff include, but are not limited to, tax refunds, casino and sports wagering winnings, State-issued vendor payments, and Iowa Lottery winnings. To the extent allowed by law, when a match occurs, the Iowa Department of Revenue withholds or sets off money to apply toward the delinquent debt.

Federal law (26 U.S.C. Section 6050X) now requires government entities receiving payments of $50,000 or more in certain suits or agreements, to file a specific information return with the IRS, as well as furnish a statement to each person who is a party to the suit or agreement.

The Department has issued new guidance related to Iowa’s conformity with certain tax provisions of the federal Consolidated Appropriations Act, 2021. This guidance focuses primarily on Iowa’s nonconformity with this federal law for tax years beginning prior to January 1, 2020. Iowa generally conforms with the federal tax changes to the extent they affect Iowa income taxes for tax years beginning on or after January 1, 2020.

In May 2019, the Iowa legislature enacted House File 590, a bill providing requirements and penalties for tax return preparers. Beginning January 1, 2020, individuals preparing certain tax returns or claims for refund under Iowa Code chapter 422 may be classified as tax return preparers. Tax return preparers will be subject to continuing education requirements and penalties for failing to provide their preparer tax identification number (PTIN) on returns they prepare.