September 3, 2015

Sales tax holiday underway through Saturday

Shopping for kids.

Stores across Iowa that sell clothes and shoes will be busier today and Saturday, thanks to the state’s 15th annual Sales Tax Holiday.

The state’s 6 percent sales tax will be waived as well as local option taxes for purchases of clothing, footwear and a few other select items.

The holiday has gotten consistently good reviews over its previous 14 years, according to Victoria Daniels, at the Iowa Department of Revenue.

“I think from a retailer’s perspective, they know it’s a good time to get people out to the stores to shop, so retailers probably think it’s a success,” Daniels says. “I would believe the average consumer thinks it’s a success because they get to go and get a little bit of a break on back-to-school clothing and footwear.”

The state gave up roughly $3.4 million in sales tax revenue from the holiday last year. The projection for this year is a savings for consumers of $3.6 million. Like most good deals, there are a few strings attached, Daniels notes. “Basic parameters are: clothing and footwear only, so that’s not going to include any kind of school supplies, like computers, pencils that type of thing, and not backpacks,” Daniels says. “Backpacks are not considered to be clothing.”

Consumers also need to keep individual prices in mind as they fill up their shopping carts. “The other important thing to remember is, the item you’re purchasing must be under $100,” Daniels says. “If it’s $100.01, it won’t qualify for the sales tax exemption.” Consumers nationwide are expected to spend $68 billion on back-to-school shopping this year. The clothing category is broad and includes a wide list of items, like: socks, boots, coats, diapers, jeans, underwear, swimsuits and pantyhose.

Find more information on the Sales Tax Holiday at the website: tax.iowa.gov

(Reporting by Pat Powers, KQWC, Webster City)

IRS warns of phony letters requesting your information

IRS LogoThe Internal Revenue Service is warning Iowa taxpayers to watch out for a new tactic being used by con artists that’s actually more of an old-school scam — direct mail.

The agency’s Michael Devine says taxpayers need to be vigilant if they get a letter that appears to be from the IRS and requests personal information or an immediate payment.

Devine says, “If the only contact you normally have with the IRS is sending in your tax return once a year, you should be very suspicious of any unexpected contact.” The letters being sent out look legitimate and if in doubt, Devine says to double-check by calling the IRS.

“Some of them may look very authentic, but they’re fake,” he says, and he stresses the agency does not contact taxpayers via phone, email or social media. Devine says scammers are keeping the IRS investigators on their toes. “We are getting better at catching these criminals,” he says, “but they’re evolving in their tactics and their techniques to try and steal your information, steal your money, and we’re always playing catch-up.”

For more information, call 800-TAX-1040 or visit irs.gov.

 

Iowans paid 6.4 percent more in income taxes to state in July

Revenue-DeptIowans paid over a quarter of a billion dollars in personal income taxes to the State of Iowa last month.

There are a record number of Iowans in the workforce now and that $251 million in personal income taxes paid to the state last month was 6.4 percent more than Iowans paid in July of last year.

Many Iowans have their income taxes withheld from their paychecks. There was a four percent increase in withholding payments in July, along with a big surge of nearly 21 percent in estimated income tax payments to the state. Estimated payments come from farmers, retirees and self-employed Iowans who do not have a regular paycheck and must estimate their annual income and the income taxes they’ll owe the state.

The monthly report from the Legislative Services Agency also shows corporate income tax payments to the state were down this July compared to July of 2014. Sales tax collections were up about two percent. A panel of experts has predicted corporate income taxes will not be as robust this year, but the panel is predicting a five percent increase in sales tax collections for the entire 12-month fiscal year.

Rand Paul touts ‘one page’ federal income tax return

Rand Paul during a campaign stop.

Rand Paul during a campaign stop.

Republican presidential candidate Rand Paul is campaigning in eastern Iowa today, touting his proposal to get rid of the complicated federal income tax code and replace it with a simple “flat” tax.

“We have a 70,000 page tax code and I think it’s chasing American jobs and chasing American companies overseas,” Paul said.

Paul proposes a 14.5 percent “flat” tax on income.

“You could fill out your tax return on one page,” Paul said. “It would be a big boon to Iowa. It would leave a lot of money — millions and millions of dollars would stay in Iowa and never get to Washington.”

Paul started early this morning by speaking to about 50 voters in Waterloo, where nearly 14 percent of the city’s population is black. Paul has been an advocate of criminal justice reform and he has called for making more non-violent drug crimes misdemeanors rather than felonies.

“I wouldn’t be locking up whole generations of young people,” Paul said. “Our drug war has disproportionately locked up African Americans.”

Paul made a midday stop in Williamsburg and afternoon stops in Washington and Tipton. He’ll take batting practice Saturday morning in Davenport with the Quad City Bandits, a minor league baseball team.

(Reporting in Waterloo by Scott Fenzloff of KCNZ Radio; additional reporting and editing by Radio Iowa’s O. Kay Henderson)

Branstad axes extra money for K-12 public schools, three state universities

Governor Terry Branstad.

Governor Terry Branstad.

Governor Terry Branstad has been hinting for weeks that he was unhappy with the legislature’s bipartisan compromise on education funding — and late this afternoon the governor used his item veto authority to reject nearly $56 million in proposed funding for K-12 public schools.

Branstad points to $3 billion in state aide that he did approve for public school districts, but the governor says he cannot approve a one-time allotment of $56 million more. This past Monday Branstad told reporters that kind of one-time spending could “set the state up” for an across-the-board budget cut if state tax revenues fall.

“I want to maintain stability and predictability,” Branstad said. “And I want to make sure that we have a sustainable budget for the long term.”

The president of the state teachers union says the extra money would have been “a small degree of relief” for some school districts and Branstad’s decision to cut that money out of the legislature’s budget plan shows “his lack of commitment to public education.” A top Democrat in the Iowa Senate says the governor’s move not only “undermines” the bipartisan deal legislators struck, it jeopardizes a proposed tuition freeze at the three state universities. Branstad rejected one-time spending increases for the University of Iowa, Iowa State Universty and the University of Northern Iowa.

The chairman of the Senate Appropriations Committee says there’s “no reason” for the governor to cut so deeply since there’s been strong growth in state tax revenue. The state collected more than $8 billion in taxes in the last 12 months.

In other official action Thursday, Branstad followed through and formally rejected the bipartisan proposal that called for keeping the state-run Mental Health Institutes in Clarinda and Mount Pleasant open. The two facilities actually were closed for good earlier this week.

In addition to approving 14 budget bills that outline state spending plans for the next 12 months, there were a host of policy items stuck in the bills Branstad took action on today. For instance, non-public schools in Iowa are now required by state law to abide by the same school start date approved for public schools. The school start date debate raged until earlier this spring when legislators and the governor agreed that August 23 is the earliest day school may start in the fall.

Due to another policy item stuck in a budget bill, developers of a new reservoir near Osceola will have to prove they’ve exhausted all other options before they may seize property through eminent domain for the project. Backers of the project say they first started talking about Osceola’s limited water supply in 1992 and the area can’t grow economically without more water. Legislators who pushed for the new hurdles for  the project say they doubt developers’ claims that a current lake in Osceola couldn’t be expanded instead.

State tax receipts for 2015 fiscal year are just over $8 billion

One Hundred US Dollar Notes, close upFor the first time in state history, overall state tax collections for a fiscal year have topped $8 billion.

State officials have to subtract tax refunds and local option sales tax payments to schools from that $8 billion figure. It represents gross state tax receipts. That means net state tax collections were over $6.6 billion for the state fiscal year that ended Tuesday.

A report from the Legislative Services Agency indicates state tax collections grew by six percent over the 12 month period. That growth rate beat the official expectation of 5.5 percent growth in state tax revenue during the fiscal year.

The six percent increase amounts to nearly $377 million in additional tax payments to the state this fiscal year compared to the last one. The increase was spurred by a nearly six percent increase in personal income tax payments to the state, plus corporate income tax payment to the state were up by about five percent. Sales and use tax payments to the state were up by more than four percent. That’s just under the prediction from a three-member panel that sets an official estimate of state tax collections. Lawmakers use that prediction as the basis for their state budget plan.

Senator Grassley introducing bill to protect taxpayers from IRS

Senator Chuck Grassley

Senator Chuck Grassley

Recent incidents involving mismanagement and inappropriate conduct by employees at the Internal Revenue Service have shaken what little confidence taxpayers had in the agency, according to Iowa Senator Chuck Grassley.

“This afternoon, I will announce the introduction of a bill aimed at insuring that appropriate safeguards are in place to protect taxpayers’ rights by preventing IRS abuses,” Grassley says. The IRS has never been and never will be an agency anyone is glad to hear from, but Grassley says taxpayers should at least have the piece of mind they’ll be getting a “fair shake” if there’s an issue.

The new bill is needed, he says. “The legislation has new taxpayer protections,” Grassley says. “It also updates and strengthens several provisions enacted in prior Taxpayer Bill of Rights bills.”

The legislation sends a clear message, Grassley says, that poor service from the IRS won’t be tolerated.