Iowa Administrative Code › Agency 701 - Revenue Department › Title IV - Individual Income Tax › Chapter 308 - Estimated Income Tax for Individuals › Rule 701-308.3 - Estimated Tax for Nonresidents

Current through Register Vol. 47, No. 3, July 24, 2024
(1)
General rule.
Except as noted in 49.3(2), payers of Iowa
				income to nonresidents of Iowa are required to withhold Iowa income tax and to
				remit the tax to the department. See rule
				701-46.4 (422) for withholding
				on payments to nonresidents.
(2)
Estimate payments in lieu of withholding.
Nonresidents who
				prefer to pay estimated tax in lieu of having state income tax withheld by a
				state withholding agent must obtain a certificate or release from withholding.
				The nonresident estimated tax form must be accompanied by full payment and must
				include a list of the name(s) and address(es) of any tenant or farm manager, or
				cooperative elevator, or other Iowa agent or payer from which the taxpayer
				anticipates receiving income. The total gross income anticipated for the year
				must also be shown on the nonresident estimated tax form.
After the department's receipt of and approval of the
				  completed nonresident estimate tax form with the full payment of the tax shown
				  due on the form, the certificate of release from withholding will be forwarded
				  to the withholding agent or payer designated on the form. Since the nonresident
				  estimate form is filed for the purpose of obtaining a release from withholding,
				  the form must be filed prior to the time of the transactions which would
				  subject the taxpayer to the state withholding tax requirements. The nonresident
				  estimate tax form and payment should be mailed to Estimate Processing, Iowa
				  Department of Revenue, P.O. Box 10466, Des Moines, Iowa 50306.
(3)
Example.
Nonresident estimated tax payments may be illustrated with the following
				example:
A nonresident individual owns a farm in Iowa which is
				  operated by a farm manager. For tax purposes the farm manager is considered to
				  be the Iowa withholding agent when distributing proceeds from the farm to the
				  nonresident. A crop is sold through the local farm cooperative elevator and a
				  check is issued to the farm manager, who then sends the check to the
				  nonresident. Before doing so, Iowa income taxes must be withheld from the gross
				  proceeds and remitted to the Iowa department of revenue for deposit and credit
				  to the income tax liability of the nonresident, unless the farm manager has
				  possession of a certificate of release from withholding issued by the
				  department of revenue. In the event that the farm cooperative elevator sends
				  the check for payment of the crops directly to the nonresident, the cooperative
				  becomes the withholding agent.
(4)
Election by withholding agents to
				make estimated payments on behalf of nonresident taxpayers with net incomes
				from agricultural commodities or products.
Effective for tax years
				beginning on or after January 1, 1989, withholding agents such as farm
				management companies can elect to make estimate tax payments on behalf of
				nonresidents for net incomes that the nonresidents will have for the tax year
				from sales of agricultural commodities or products. If the withholding agent
				elects to make the estimate tax payments for the nonresident taxpayers, the
				estimate tax payments should be submitted to the department of revenue on or
				before the last day of the first month after the end of the tax year of the
				nonresidents. The estimate payments should be sent with Form IA 1040ES (45-002)
				and mailed to: Estimate Processing, Iowa Department of Revenue, P.O. Box 10466,
				Des Moines, Iowa 50306. Net income from agricultural commodities or products
				means net incomes from those agricultural commodities or products described in
				paragraph
"a"
of 701-subrule 46.4(6). If the estimate tax
				payments made on behalf of the nonresident taxpayers by the withholding agents
				are not sufficient to pay the Iowa income taxes on the net incomes of the
				nonresidents from the agricultural commodities or products, the nonresidents
				may be subject to penalties for underpayment of estimated taxes.
This rule is intended to implement Iowa Code sections
				  422.16 and
				  422.17.