Iowa Sales Tax Guide
Chapter 5: Filing and paying Iowa sales tax
You're registered with the Iowa Department of Revenue and you've begun collecting sales tax. Congratulations! Remember, those tax dollars don't belong to you. As an agent of the state of Iowa, your role is that of intermediary transferring tax dollars from consumers to state and local tax authorities. Let's take a deeper look at how filing Iowa sales tax returns impacts your business.What does it mean to file an Iowa sales tax return?
Technically speaking, filing Iowa sales tax returns is a two-step process comprised of submitting the required sales data and remitting the collected tax dollars (if any) to state and local tax authorities.
In most states, there are a number of options for submitting sales tax data to the state. Business owners may complete a Iowa sales tax filing form and mail it to the Iowa Department of Revenue or they can file electronically online. In all states, filing online is recommended.
The filing process forces the business owner to detail their total sales, the amount of sales tax they have collected, and from where. The Iowa Department of Revenue wants to be kept up to date on your business growth (or lack thereof) to make sure they are getting the tax dollars due. By completing ongoing filing of monthly, quarterly, or semi-annual, or annual Iowa sales tax returns, they stay abreast of your growing company.When am I required to file my sales tax return?
The Iowa Department of Revenue will assign you a filing frequency. Typically, this is determined by the size of your business. State governments typically ask larger businesses to file more frequently. Visit our Iowa filing due dates page for more information.Am I required to file and pay my Iowa sales tax at the same time?
Iowa sales tax returns must be filed and paid at the same time and are governed by the same due date.I want to webfile my Iowa sales tax. What are my options?
Avalara has built the TrustFile product to allow business owners a quick and easy way to prepare and webfile Iowa sales tax returns. Users can sign up and use the service to prepare Iowa returns free for 30-days.
Filers may also file directly with the Iowa Department of Revenue by visiting their site and entering your transaction data manually. This is a free service, but preparing Iowa sales tax (breaking it down by jurisdiction) can be time consuming - especially for larger sellers.Can a 3rd party file my sales tax on my behalf?
Yes! Many business owners recognize they are not a tax professional and therefore, choose to outsource their sales tax sales and use tax filing to services like Avalara TrustFile or to an accountant or bookkeeper. This is a normal business practice that can save business owners time and help them avoid costly mistakes due to inexperience and a lack of deep knowledge about Iowa sales tax code.What happens if I file or pay my sales tax return late?
Businesses that do not file their Iowa sales tax return by the assigned due date and at least 90% of the tax due is left unpaid will be required to pay an additional 10% of the unpaid tax. If the business’s return is filed on time but less than 90% of the tax due is paid, they will be required to pay an additional 5% of the unpaid tax.
The Iowa Department of Revenue points out that a filer will never be subject to both penalties.Do I need to file a return if I didn't collect any sales tax in Iowa?
Yes! Once you've successfully registered for and been issued a Sales Tax Permit, you are required to file at the completion of each assigned collection period regardless of whether any sales tax was collected. This is what is known as a "zero-tax filing".
Failure to submit a required zero-tax filing can result in penalties imposed on your business by the Iowa Department of Revenue so don't take this responsibility lightly.If I close my business, do I need to file a final sales tax return?
Yes! The Iowa Department of Revenue requires all businesses to "close their books" by filing a final sales tax return. This also holds true for business owners selling or otherwise transferring ownership of their business.Does the Iowa Department of Revenue offer a discount for filing on time?
At this time, the Iowa Department of Revenue does not offer sales tax filers a vendor discount.