Iowa Administrative Code › Agency 701 - Revenue Department › Title I - Administration › Chapter 11 - Administration › Rule 701-11.10 - Bonding Procedure

Current through Register Vol. 47, No. 3, July 24, 2024
The director may, when necessary and advisable in order to
				  secure the collection of the tax, require any person subject to the tax to file
				  with the department a bond in an amount as the director may fix, or in lieu of
				  the bond, securities approved by the director in an amount as the director may
				  prescribe. Pursuant to the statutory authorization in Iowa Code section
				  4233.
				  5, the director has determined that the following procedures will be instituted
				  with regard to bonds:
(1)
When
				required.
a.
Classes of
				business.
When the director determines, based on departmental records,
				other state or federal agency statistics or current economic conditions, that
				certain segments of the business community are experiencing above average
				financial failures such that the collection of the tax might be jeopardized, a
				bond or security may be required from every retailer operating a business
				within this class unless it is shown to the director's satisfaction that a
				particular retailer within a designated class is solvent and that the retailer
				previously timely remitted the tax. If the director selects certain classes of
				business for posting a bond or security, rule making will be initiated to
				reflect a listing of the classes in the rules.
b.
New applications for sales tax
				permits.
Notwithstanding the provisions of
				paragraph
"a"
above, an applicant for a new sales tax permit
				may be required to post a bond or security if (I) it is determined upon a
				complete investigation of the applicant's financial status that the applicant
				would be unable to timely remit the tax, or (2) the new applicant held a permit
				for a prior business and the remittance record of the tax under the prior
				permit falls within one of the conditions in paragraph
"c"
below, or (3) the department experienced collection problems while the
				applicant was engaged in business under the prior permit, or (4) the applicant
				is substantially similar to a person who would have been required to post a
				bond under the guidelines as set forth in paragraph
"c"
or the
				person had a previous sales tax permit which has been revoked. The applicant is
				"substantially similar" to the extent that said applicant is owned or
				controlled by persons who owned or controlled the previous permit holder For
				example, X, a corporation, had a previous sales tax permit revoked. X is
				dissolved and its shareholders create a new corporation, Y, which applies for a
				sales tax permit. The persons or stockholders who controlled X now control Y.
				Therefore, Y will be requested to post a bond or security.
c.
Existing permit holders.
Existing permit holders may be required to post a bond or security under the
				following circumstances:
(1) When they have
				had one or more delinquencies in remitting the sales tax or filing timely
				returns during the last 24 months if filing returns on an annual
				basis.
(2) When they have had two
				or more delinquencies in remitting the sales tax or filing timely returns
				during the last 24 months if filing returns on a quarterly basis.
(3) When they have had four or more
				delinquencies in remitting the sales tax or filing timely deposits or returns
				during the last 24 months if filing returns on a monthly basis.
(4) When they have had eight or more
				delinquencies during the last 24 months if filing returns on a semimonthly
				basis.
The simultaneous late filing of the return and the late
				  payment of the tax will count as one delinquency. See rule 701-13.7(422).
				  However, the late filing of the return or the late payment of the tax will not
				  count as a delinquency if the permit holder can satisfy one of the conditions
				  set forth in Iowa Code section
				  42127..
d.
Return of
				bond.
If a permit holder has been required to post a bond or security
				or if an applicant for a permit has been required to post a bond or security,
				upon the filing of the bond or security if the permit holder maintains a good
				filing record for a period of two years, the permit holder may request that the
				department return the bond or security. The department may elect to return the
				bond without a request from the permit holder
e.
Applying bond.
The
				department may apply a bond to any existing tax liability of the permit holder
				at its discretion.