Section 701.12.13. Determination of filing status.

         12.13(1) Prior to January 1, 2003. Iowa Code sections 422.51(4) and 422.52 provide, based on the amount of tax collected, how often retailers file deposits or returns with the department (see rule 701—12.1(422)).

The department will determine if the retailer’s current filing status is correct by reviewing the most recent four quarters of the retailer’s filing history.

The following criteria will be used by the department to determine if a change in filing status is warranted.

Filing Status	Statutory Requirement	Test Criteria
Semimonthly	$4,000 in tax in a semimonthly period.	Tax remitted in 3 of most recent 4 quarters exceeds $24,000.
Monthly	$50 in tax in a month.	Tax remitted in 3 of most recent 4 quarters exceeds $150.
Annual	$120 or less in tax in prior year.	Retailer remits $120 or less in tax for last 4 quarters and requests annual filing.
Seasonal		Retailer remits tax for only 1 quarter during the previous calendar year and requests filing for 1 quarter only.
Quarterly	All other filers.

When it is determined that a retailer’s filing status is to be changed, the retailer will be notified and will be given 30 days to provide the department with a written request to prevent the change.

Retailers may request that they be allowed to file less frequently than the filing status selected by the department but exceptions will only be granted in two instances:

            a.               Incorrect historical data is used in the conversion. A business may meet the criteria based on initial information available, but, upon investigation, the filing history may prove that the business does not meet the dollar criteria because of adjustments, amended returns, or requests for refunds.

            b.               Data available may have been distorted by the fact that it reflected an unusual pattern in tax collection. The factors causing such a distortion must be documented and approved by department.

Exceptions will not be granted in instances where the retailer’s request is based on a decline in business activity, reduction in employees or other potentially temporary business action which will affect current and future reporting.

Retailers will be notified in writing of approval or denial of their request for reduced filing periods.

Retailers may request that they be allowed to file more frequently than the filing status selected by the department. Approval will be granted based upon justification contained in the retailer’s request.

         12.13(2) January 1, 2003, and after. Effective July 1, 2002, the department and the department of management have the authority to change the above-mentioned filing thresholds established by department rule. After review of these filing thresholds, the department has determined that new thresholds are necessary and are to be implemented January 1, 2003. Accordingly, this subrule sets forth the filing thresholds for each filer based on the amount of sales tax collected.

Filing Status	Threshold	Test Criteria
Semimonthly	Greater than $60,000 in annual state sales tax (more than $2,500 in a semimonthly period).	Tax remitted in 3 of most recent 4 quarters examined exceeds $15,000 per quarter.
Monthly	Between $6,000 and $60,000 in annual state sales tax (more than $500 in a monthly period).	Tax remitted in 3 of most recent 4 quarters examined exceeds $1,500 per quarter.
Quarterly	Between $120 and $6,000 in annual state sales tax.	Tax remitted in 3 of most recent 4 quarters examined exceeds $30 per quarter.
Annual	Less than $120 in state sales tax for the prior year.	Tax remitted in prior year is less than $120.
Seasonal	Retailer remits tax for only 1 quarter during the previous calendar year and requests filing for 1 quarter only.

A retailer shall be notified in writing when it is determined that a retailer’s filing status will be changed. A retailer has the option of requesting, within 30 days of the date of the department’s notice of a change in filing frequency, that the retailer file more or less frequently than required by the department. A request to file on a less frequent basis than assigned by the department must be in writing and submitted to the department. Once such a written request is filed by the retailer, the department will review the request and issue a written determination to the retailer.

A change in assigned filing status to file on a less frequent basis will be granted in only two instances:

            a.               Incorrect historical data is used in the conversion. A business may meet the criteria based on the original filing data, but, upon investigation, the filing history may prove that the business does not meet the dollar criteria because of adjustments, amended returns, or requests for refunds.

            b.               Data available may have been distorted by the fact that the data reflected an unusual pattern in tax collection. The factors causing such a distortion must be documented and approved by the department.

A retailer may also request to file more frequently than assigned by the department; the request may be made orally, in person, or by telephone. With the exception of those retailers who previously filed on a quarterly basis and have been changed to an annual filing frequency, any retailer seeking to file on a more frequent basis than assigned shall be required to deposit revenues by electronic funds transfer if the department allows the retailer to file more frequently.

The department and the department of management may perform review of filing thresholds every five years or as needed based on department discretion. Factors the departments will consider in determining if the filing thresholds need to be changed include, but are not limited to: tax rate changes, inflation, the need to maintain consistency with required multistate compacts, changes in law, and migration between filing brackets.

This rule is intended to implement Iowa Code sections 421.14, 422.51, and 422.52, and sections 422.54 as amended by 2002 Iowa Acts, House File 2622, section 11, and 423.13 as amended by 2002 Iowa Acts, House File 2622, section 14.