There is no statutory requirement that individual income
taxpayers file their Iowa income tax returns electronically. Some businesses,
estates, and trusts may be required to file Iowa tax returns electronically.
Taxpayers not subject to an electronic filing requirement also have the option
to file by paper. When a taxpayer files an electronic return, all information
related to the return should be electronically transmitted through an approved
channel. No information is to be submitted on paper unless specifically
requested by the department. A taxpayer's electronic Iowa return shall include
the same information as if the taxpayer had filed a paper return.
(1)
Definitions. For the
purpose of this rule, the following definitions apply, unless the context
otherwise requires:
"Acknowledgment" means a report generated by
the department and sent electronically to a transmitter via the IRS indicating
the department's acceptance or rejection of an electronic submission.
"Declaration for e-File Return form" means a
taxpayer declaration form that authenticates the electronic tax return,
authorizes its transmission, and consents to the financial transaction order as
designated using the financial institution information provided.
"Direct debit" means an order for electronic
withdrawal of funds from a taxpayer's financial institution account for payment
to the department.
"Direct deposit" means an order for
electronic transfer of a refund into a taxpayer's financial institution
account.
"E-file provider" means a firm that is
assigned an Electronic Filing Identification Number (EFIN) by the IRS to assume
any one or more of the following IRS e-file provider roles: electronic return
originator, intermediate service provider, transmitter, software developer, or
reporting agent.
"Electronic filing" means a paperless filing
of the Iowa income tax return, order for financial transaction, or both by way
of the IRS e-file program, also known as federal/state electronic filing
(MeF).
"Electronic return originator"
or"ERO" means an authorized IRS e-file provider that
originates the electronic submission by any one of the following methods:
electronically sending an electronic tax return to a transmitter that will
transmit the electronic tax return to the IRS, directly transmitting the
electronic tax return to the IRS, or providing the electronic tax return to an
Intermediate Service Provider for processing prior to transmission to the
IRS.
"Electronic signature" includes data in
electronic form, which is logically associated with other data in electronic
form and executed or adopted by a person with the intent to sign a document.
This type of signature has the same legal standing as a handwritten signature
if the requirements in either paragraph 8.5(2)"b"
or"c" are met. Electronic signatures appear in many forms and
may be created by many different technologies. No specific technology is
required.
"Intermediate service provider" means the
firm that assists with processing submission information between the ERO (or
the taxpayer in the case of online filing) and a transmitter.
"Online filing" means the process for
taxpayers to self-prepare returns by entering return data directly into
commercially available software, software downloaded from an Internet site and
prepared offline, or through an online Internet site.
"Origination of an electronic return" means
the action by an ERO of electronically sending the return directly to an
Intermediate Service Provider, a transmitter, or the IRS.
"Reporting agent" means a firm that
originates the electronic submission of certain returns for its clients or
transmits the returns to the IRS in accordance with the IRS electronic filing
procedures, or both.
"Software developer" means an approved IRS
e-file provider that develops software according to IRS and Iowa specifications
for the purposes of formatting electronic returns, transmitting electronic
returns directly to the IRS, or both. A software developer may sell its
software.
"Stockpiling" means collecting returns from
taxpayers or from other e-file providers and waiting more than three calendar
days after receiving the information necessary for transmission to transmit the
returns to the department.
"Transmitter" means a firm that transmits
electronic tax return information directly to the IRS and routes electronic
acknowledgments from the IRS (and the states) to the firm originating the
electronic return.
(2)
Completion and documentation of the electronic return.
a. The electronic submission must match the
prepared return. The taxpayer(s) must declare the authenticity of the
electronic return before it is transmitted. If the ERO makes changes to the
electronic return after the Declaration for e-File Return form has been signed
by the taxpayer(s), a new Declaration for e-File Return form must be completed
and signed by the taxpayer(s) before the return is transmitted.
b. Electronic signature via remote
transaction. In lieu of in-person handwritten signatures, a paid preparer, at
the discretion of the taxpayer, may collect taxpayers' electronic signatures
remotely by a process using identity verification and audit trail in the manner
that the IRS allows for Form 8879.
c. Electronic signature via in-person
transaction. Before a taxpayer electronically signs a Declaration for e-File
Return form in which the ERO is physically present with the taxpayer, the ERO
must validate the taxpayer's identity unless there is a multiyear business
relationship. A multiyear business relationship is one in which the ERO has
originated returns for the taxpayer for a prior tax year and has identified the
taxpayer using a valid government picture identification and the method in
paragraph 8.5(2)"b." For in-person transactions, identity
verification through a record check is optional.
d. The ERO must provide the taxpayer with a
copy of all information to be filed. The taxpayer and ERO must retain all tax
documentation for three years. The Declaration for e-File Return form and
accompanying schedules are to be furnished to the department only when
specifically requested.
(3)
Direct deposit and direct
debit.
a. Taxpayers designating
direct deposit of the Iowa refund or direct debit of payment remitted to the
department on electronically filed returns must provide proof of account
ownership to the ERO. The department is not responsible for the misapplication
of a direct deposit refund or direct debit payment caused by error, negligence,
or wrongdoing on the part of the taxpayer, e-file provider, financial
institution, or any agent of the above.
b. Once the return has been transmitted, the
financial order may not be altered. The department may, when processing
procedures allow, grant a taxpayer's timely request to revoke the financial
order. The taxpayer is responsible for revoking the financial order if the
specified payment is not exactly as intended. A direct deposit or direct debit
order will be disregarded by the department if the electronic submission is
rejected for any reason as indicated in the acknowledgment.
c. The department may, when processing
procedures require, convert a direct deposit order to a paper warrant. If a
refund is deposited into an incorrect bank account, the department will issue a
paper refund warrant once the funds are returned by the financial
institution.
d. Payment withdrawal
date.
(1) Funds will be withdrawn from the
account specified in the direct debit order no sooner than the date specified
by the taxpayer.
(2) Payment must
be timely made to prevent the assessment of all applicable penalty and
interest. A direct debit payment within an electronic submission is considered
timely made when:
1. The department accepts
the electronic submission;
2. The
electronic postmark date is prior to the tax due date;
3. The payment withdrawal date is prior to
the tax due date; and
4. The direct
debit payment is honored by the specified financial institution.
(3) When the tax due date has not
yet elapsed, the withdrawal date should occur on or before the tax due date.
Scheduling a withdrawal date after the tax due date will result in the
assessment of all applicable penalty and interest unless the taxpayer otherwise
makes payment before the tax due date.
(4) When the tax due date has already
elapsed, the withdrawal date should specify immediate payment to prevent the
accrual of additional interest.
(5)
Withdrawal cannot occur prior to the electronic postmark date. When the
taxpayer attempts to schedule a withdrawal date that is prior to the electronic
postmark date, the electronic postmark date is the withdrawal date.
(6) If a taxpayer wants to change the
withdrawal date specified in a financial order, the taxpayer must revoke the
financial order and submit a new financial order. If the department determines
that the taxpayer may have erroneously scheduled a withdrawal date, the
department may notify the taxpayer of the possible error, but the department is
not required to do so.
(4)
Software approval.
Software developers that want to develop electronic submission formatting
software for e-filing Iowa returns shall register their respective software
products annually with the department. The department publishes specifications,
test packages, and testing procedures. Software must pass transmission tests
before the department will approve it for electronic filing of Iowa income tax
returns. The department will define the test period annually.
(5)
ERO acceptance to
participate. Once accepted by the IRS as an ERO for a specific tax
type, the ERO is automatically accepted to e-file Iowa returns of that tax
type, provided that the department offers the tax type for e-file.
(6)
Suspension of an e-file provider
from participation in the Iowa electronic filing program.
a. The department may immediately suspend,
without notice, an e-file provider from the Iowa electronic filing program. In
most cases, a suspension is effective as of the date of the letter informing
the e-file provider of the suspension. Before suspending an e-file provider,
the department may issue a warning letter describing specific corrective action
required to correct deviations set forth in paragraph
8.5(6)"b." An e-file provider will be automatically prohibited
from participating in the Iowa electronic filing program if denied
participation in, or suspended from, the federal electronic filing
program.
b. An e-file provider that
is eligible to participate in the federal electronic filing program may be
suspended from the Iowa electronic filing program if any of the following
conditions occur. The list is for illustrative purposes only and is not deemed
to be all-inclusive.
(1) Deterioration in the
format of electronic returns transmitted.
(2) Unacceptable cumulative error or
rejection rate or failure to correct errors resulting from the transmission of
electronic returns.
(3) Untimely
received, illegible, incomplete, missing, or unapproved substitute Declaration
for e-File Return forms when requested by the department.
(4) Stockpiling returns at any time while
participating in the Iowa electronic filing program.
(5) Failure on the part of the transmitter to
retrieve acknowledgments within two working days of the department's providing
them.
(6) Failure on the part of
the transmitter to initiate the communication of acknowledgments to the ERO
within two working days of the department's providing them.
(7) Significant complaints about the e-file
provider.
(8) Failure on the part
of the e-file provider to cooperate with the department's efforts to monitor
e-file providers, investigate electronic filing abuse, and investigate the
possible filing of fraudulent returns.
(9) Submitting the electronic return with
information that is not identical to information on the Declaration for e-File
Return form.
(10) Transmitting the
electronic return with software not approved by the department for use in the
Iowa electronic filing program for the given tax type and tax period.
(11) Failure on the part of the e-file
provider to provide W-2s, 1099s, or out-of-state tax returns when requested by
the department.
(7)
Administrative procedure for
denial of participation or suspension of participation.
a. When a firm has requested participation in
the Iowa electronic filing program but there is reason to deny the request, the
department shall send written notice to the firm advising that entry into the
program has been denied. When an e-file provider is a participant in the Iowa
electronic filing program but is to be suspended from the program for any
condition described in subrule 8.5(6), the department will send written notice
to notify the e-file provider about its suspension from the program.
b. When the firm either disagrees with the
denial of participation or the suspension from participation, the firm must
file a written appeal to the department within 60 days of the date of the
denial or the suspension. The written appeal must be filed pursuant to rule
701-7.8 (17A). During the
administrative review process, the denial of the firm's participation in or the
suspension of the firm from the Iowa electronic filing program shall remain in
effect.
This rule is intended to implement Iowa Code sections
422.21 and
422.68.
