Iowa Administrative Code › Agency 701 - Revenue Department › Title IV - Individual Income Tax › Chapter 305 - Assessments and Refunds › Rule 701-305.3 - Overpayments of Tax

Current through Register Vol. 47, No. 3, July 24, 2024
The following are provisions for refunding or crediting to
				  the taxpayer's deposits or payments for tax in excess of amounts legally
				  due.
(1)
Claims for
				refund.
A claim for refund is a formal request made by the taxpayer or
				the taxpayer's personal representative to the department of revenue for
				repayment of state income tax that was paid with the taxpayer's previously
				filed individual income tax return. In order for a claim for refund to be
				considered to be a valid document, the taxpayer or the taxpayer's personal
				representative must file the claim on an IA 1040X Amended Return Form or on an
				IA 1040 Income Tax Return Form for the appropriate tax year, with the notation
				"Amended for Refund" clearly shown on the face of the return form. The taxpayer
				or the taxpayer's personal representative must file the claim for refund with
				the department under separate cover so the claim is not filed with another tax
				return or with other documents or forms submitted to the department.
In addition, the claim for refund must be filed within one of
				  the time periods specified in Iowa Code section
				  422.73(1)  in
				  order for the refund claim to be timely so that the claim may be considered on
				  its merits by the department.
If the department determines that the taxpayer's claim is
				  without merit and the claim for refund should be rejected, the department will
				  notify the taxpayer or the taxpayer's personal representative by mail that the
				  claim for refund has been rejected and of the reason for rejection. In
				  addition, the rejection letter will advise the taxpayer that the taxpayer has
				  60 days from the date of the letter to file a protest of the department's
				  rejection of the claim for refund. The taxpayer's appeal of the rejection of
				  the claim for refund must be filed in accordance with rule
				  701-7.8 (17A).
(2)
Offsetting refunds.
A
				taxpayer shall not offset a refund or overpayment of tax for one year as a
				prior payment of tax of a subsequent year on the return of a subsequent year
				without authorization in writing by the department. The department, may,
				however, apply an overpayment, or a refund otherwise due the taxpayer, to any
				tax due or to become due from the taxpayer.
(3)
Setoffs of qualifying debts
				administered by the department of administrative services.
Before any
				refund or rebate from a taxpayer's individual income tax return is considered
				for purposes of setoff, the refund or rebate must be applied first to any
				outstanding tax liability of that taxpayer with the department of revenue.
				After all outstanding tax liabilities are satisfied, any remaining balance of
				refund or rebate will be set off against any debt of the taxpayer, setoff of
				which is overseen by the department of administrative services pursuant to 2003
				Iowa Acts, House File 534, section 86.
(4) and
				(5) Reserved.
(6)
Overpayment credited to estimated tax.
Any remaining balance
				of overpayment, at the election of the taxpayer, will be refunded to the
				taxpayer or credited as a first payment of the taxpayer's estimated tax for the
				following year. However, a taxpayer may elect to credit an overpayment from a
				return to the estimated tax for the following tax year only in cases when the
				return is filed in the same calendar year that the return is due. For example,
				ataxpayer's 1994 return is due on April 30, 1995. If the taxpayer files that
				return on or before December 31, 1995, the taxpayer can elect to credit an
				overpayment on that return to estimated tax for 1995, and this election will be
				honored by the department. See also rule
				701-49.7 (422).
If an overpayment of income tax is shown as a credit to
				  estimated tax for the succeeding taxable year, the amount shall be considered
				  as a payment of the income tax for the succeeding taxable year and no claim for
				  credit or refund of the overpayment shall be allowed on the return where the
				  overpayment arose.
When a taxpayer elects to have an overpayment credited to
				  estimated tax for the succeeding year, interest may properly be assessed on a
				  deficiency of income tax for the year in which the overpayment arose. If a
				  taxpayer elects to have all or part of an overpayment shown on the return
				  applied to the estimated income tax for the succeeding taxable year, the
				  election is binding to the taxpayer.
An overpayment of tax may be used to offset any outstanding
				  tax liability owed by the taxpayer, but once an elected amount is credited as a
				  payment of estimated tax for the succeeding year, it loses its character as an
				  overpayment for the year in which it arose and thereafter cannot offset any
				  subsequently determined tax liability.
(7) Reserved.
(8)
Refunds-statute of limitations
				for tax years ending on or after January 1, 1979.
The statute of
				limitations with respect to which refunds or credit may be claimed are:
a. The later of
(1) Three years after due date of payment
				upon which refund or credit is claimed; or
(2) One year after which such payment was
				actually made.