(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
701-464.
(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 wouldsubject
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 lA 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.
