Iowa Administrative Code › Agency 701 - Revenue Department › Title III - Sales, Use, and Excise Tax › Chapter 202 - Filing Returns and Payment of Tax › Rule 701-202.11 - Claim for Refund of Tax

Current through Register Vol. 47, No. 3, July 24, 2024
(1)
Eligibility for refund; filing claims.
Refunds of tax shall be
				made only to those who have actually paid the tax. A person or persons may
				designate the retailer who collects the tax as an agent for purposes of
				receiving a refund of tax. A person or persons who claim a refund shall prepare
				and file the claim on Form IA 843, Refund Return, with the department, stating
				in detail the reasons and facts and, if necessary, provide supporting documents
				for which the claim for refund is based.
(2)
Denial of refund
				claim-appeal.
If the claim for refund is denied, and the person wishes
				to appeal the denial, the department will consider an appeal to be timely if
				filed no later than 60 days following the date of denial. Rule
				701-7.9 (17A) contains more
				information on appeals.
(3)
Request for abeyance.
When a person is in a position of
				believing that the tax, penalty, or interest paid or to be paid will be found
				not to be due at some later date, then in order to prevent the statute of
				limitations from running out, a claim for refund or credit must be filed with
				the department within the statutory period provided for in Iowa Code section
				423.47. The claim must be filed
				requesting that it be held in abeyance pending the outcome of any action that
				will have a direct effect on the tax, penalty, or interest involved.
				Nonexclusive examples of such action are court decisions, departmental orders
				and rulings, and commerce commission decisions.
EXAMPLE 1: X, an Iowa sales tax permit holder, is audited by
				  the department for the period from July 1, 2014, to June 30, 2017. A $10,000
				  tax, penalty, and interest liability is assessed on materials the department
				  determines are not used in processing. X does not agree with the department's
				  position but still pays the full liability even though X is aware of pending
				  litigation involving the materials taxed in the audit.
Y is audited for the same period involving identical
				  materials used to those taxed in the audit of X. However, Y, rather than paying
				  the assessment, takes the department through litigation and wins. The final
				  litigation is not completed until September 30, 2023.
X, on October 1, 2023, upon finding out about the decision of
				  Y's case, files a claim for refund relating to its audit completed in June
				  2017. The claim will be totally denied as beyond the three-year statute of
				  limitations. However, if X had filed a claim along with payment of its audit in
				  June 2017, and requested that the claim be held in abeyance pending Y's
				  litigation, then X would have received a full refund of its audit liability if
				  the decision in Y's case was also applicable to X.
EXAMPLE 2: X is audited by the department for the period from
				  July 1, 2015, to June 30, 2018, and assessed July 31, 2018. X pays the
				  assessment on December 31, 2018. No protest was filed, and no claim for refund
				  or credit was filed requesting it be held in abeyance. On January 31, 2020, X
				  files a claim for refund relating to the entire audit. The claim is based on a
				  recent court decision that makes the tax liability paid by X now refundable.
				  However, only the tax paid from January 1, 2017, through June 30, 2018, will be
				  allowed since this is the only portion within the three-year statute of
				  limitations set forth in Iowa Code section
				  423.47. If the claim had been
				  filed on or before December 31, 2019, then the entire audit period could have
				  been considered for refund since the claim would have been filed within one
				  year of payment.
(4)
Refund of use tax.
A taxpayer will need to file an amended
				return in order to claim a refund of use tax. A taxpayer cannot use Form IA
				843, Refund Return, to claim this refund.
This rule is intended to implement Iowa Code sections
				  423.45 and
				  423.47.