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INDIVIDUAL INCOME, CORPORATE, AND FRANCHISE TAXES, §422.16
422.16 Withholding of income tax at source — penalties — interest — declaration of
estimated tax — bond.
1. a. Every withholding agent and every employer as defined in this chapter and further
defined in the Internal Revenue Code, with respect to income tax collected at source,
making payment of wages to a nonresident employee working in Iowa, or to a resident
employee, shall deduct and withhold from the wages an amount which will approximate the
employee’s annual tax liability on a calendar year basis, calculated on the basis of tables to
be prepared by the department and schedules or percentage rates, based on the wages, to be
prescribed by the department. Every employee or other person shall declare to the employer
or withholding agent the number of the employee’s or other person’s personal allowances
to be used in applying the tables and schedules or percentage rates. However, no greater
number of allowances may be declared by the employee or other person than the number to
which the employee or other person is entitled except as allowed under sections 3402(m)(1)
and 3402(m)(3) of the Internal Revenue Code and as allowed for the child and dependent
care credit provided in section 422.12C. The claiming of allowances in excess of entitlement
is a serious misdemeanor.
b. Nonresidents engaged in any facet of feature film, television, or educational production
using the film or videotape disciplines in the state are not subject to Iowa withholding if the
employer has applied to the department for exemption from the withholding requirement and
the department has determined that any nonresident receiving wages would be entitled to a
credit against Iowa income taxes paid.
c. For the purposes of this subsection, state income tax shall be withheld from pensions,
annuities, other similar periodic payments, and other income payments of those persons
whose primary residence is in Iowa in those circumstances in which those persons have
federal income tax withheld from pensions, annuities, other similar periodic payments, and
other income payments under sections 3402(o), 3402(p), 3402(s), 3405(a), 3405(b), and
3405(c) of the Internal Revenue Code at a rate to be specified by the department.
d. For the purposes of this subsection, state income tax shall be withheld on winnings in
excess of six hundred dollars derived from gambling activities authorized under chapter 99B
or 99G. State income tax shall be withheld on winnings in excess of one thousand dollars
from gambling activities authorized under chapter 99D. State income tax shall be withheld
on winnings in excess of twelve hundred dollars derived from slot machines authorized under
chapter 99F.
e. For the purposes of this subsection, state income tax at the rate of six percent shall
be withheld from supplemental wages of employees in those circumstances in which the
employer treats the supplemental wages as wholly separate from regular wages for purposes
of withholding and federal income tax is withheld from the supplemental wages under section
3402(g) of the Internal Revenue Code.
f. Nonresidents engaged in emergency response work or training meeting the
requirements of section 422.7, subsection 57, are not subject to withholding by the applicable
electric utility for which such emergency response work or training is being performed if the
electric utility has applied to the department for exemption from the withholding requirement
and the department has determined that the payments received by the nonresidents would
be exempt from taxation pursuant to section 422.7, subsection 57.
g. Individuals described in section 29C.24 are not subject to withholding, as provided in
that section.
2. a. A withholding agent required to deduct and withhold tax under subsections 1 and
12 shall file a return and remit to the department the amount of tax on or before the last day
of the month following the close of the quarterly period on forms prescribed by the director.
However, a withholding agent who withholds more than five hundred dollars in any one
month and not more than five thousand dollars in a semimonthly period shall deposit with the
department the amount withheld, with a monthly deposit form as prescribed by the director.
The monthly deposit form is due on or before the fifteenth day of the month following the
month of withholding, except that a deposit is not required for the third month of the calendar
quarter. The total quarterly amount, less the amounts deposited for the first two months of the
quarter, is due with the quarterly return due on or before the last day of the month following
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Iowa Code 2017, Section 422.16 (23, 3)
§422.16, INDIVIDUAL INCOME, CORPORATE, AND FRANCHISE TAXES
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the close of the quarterly period on forms prescribed by the director. However, a withholding
agent who withholds more than five thousand dollars in a semimonthly period shall deposit
with the department the amount withheld, with a semimonthly deposit form as prescribed by
the director. The first semimonthly deposit form for the period from the first of the month
through the fifteenth of the month is due on the twenty-fifth day of the month in which the
withholding occurs. The second semimonthly deposit form for the period from the sixteenth
of the month through the end of the month is due on the tenth day of the month following the
month in which the withholding occurs. A withholding agent must also file a quarterly return
which reconciles the amount of tax withheld for the quarter with the amount of semimonthly
deposits. The quarterly return is due on or before the last day of the month following the
close of the quarterly period on forms prescribed by the director.
b. Every withholding agent on or before the end of the second month following the close
of the calendar year in which the withholding occurs shall make an annual reporting of taxes
withheld and other information prescribed by the director and send to the department copies
of wage and tax statements with the return. At the discretion of the director, the withholding
agent shall not be required to send wage statements and tax statements with the annual
reporting return form if the information is available from the internal revenue service or other
state or federal agencies.
c. If the director has reason to believe that the collection of the tax provided for in
subsections 1 and 12 is in jeopardy, the director may require the employer or withholding
agent to make the report and pay the tax at any time, in accordance with section 422.30.
The director may authorize incorporated banks, trust companies, or other depositories
authorized by law which are depositories or financial agents of the United States or of this
state, to receive any tax imposed under this chapter, in the manner, at the times, and under
the conditions the director prescribes. The director shall also prescribe the manner, times,
and conditions under which the receipt of the tax by those depositories is to be treated as
payment of the tax to the department.
d. The director, in cooperation with the department of management, may periodically
change the filing and remittance thresholds by administrative rule if in the best interest of
the state and the taxpayer.
3. Every withholding agent employing not more than two persons who expects to employ
either or both of such persons for the full calendar year may, with respect to such persons,
pay with the withholding tax return due for the first calendar quarter of the year the full
amount of income taxes required to be withheld from the wages of such persons for the full
calendar year. The amount to be paid shall be computed as if the employee were employed for
the full calendar year for the same wages and with the same pay periods as prevailed during
the first quarter of the year with respect to such employee. No such lump sum payment of
withheld income tax shall be made without the written consent of all employees involved.
The withholding agent shall be entitled to recover from the employee any part of such lump
sum payment that represents an advance to the employee. If a withholding agent pays a lump
sum with the first quarterly return the withholding agent shall be excused from filing further
quarterly returns for the calendar year involved unless the withholding agent hires other or
additional employees.
4. Every withholding agent who fails to withhold or pay to the department any sums
required by this chapter to be withheld and paid, shall be personally, individually, and
corporately liable therefor to the state of Iowa, and any sum or sums withheld in accordance
with the provisions of subsections 1 and 12, shall be deemed to be held in trust for the state
of Iowa. Notwithstanding section 489.304, this subsection applies to a member or manager
of a limited liability company.
5. In the event a withholding agent fails to withhold and pay over to the department any
amount required to be withheld under subsections 1 and 12 of this section, such amount may
be assessed against such employer or withholding agent in the same manner as prescribed
for the assessment of income tax under the provisions of divisions II and VI of this chapter.
6. Whenever the director determines that any employer or withholding agent has failed
to withhold or pay over to the department sums required to be withheld under subsections 1
and 12 of this section the unpaid amount thereof shall be a lien as defined in section 422.26,
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Iowa Code 2017, Section 422.16 (23, 3)
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INDIVIDUAL INCOME, CORPORATE, AND FRANCHISE TAXES, §422.16
shall attach to the property of said employer or withholding agent as therein provided, and
in all other respects the procedure with respect to such lien shall apply as set forth in said
section 422.26.
7. a. Every withholding agent required to deduct and withhold a tax under subsections
1 and 12 of this section shall furnish to such employee, nonresident, or other person in
respect of the remuneration paid by such employer or withholding agent to such employee,
nonresident, or other person during the calendar year, on or before January 31 of the
succeeding year, or, in the case of employees, if the employee’s employment is terminated
before the close of such calendar year, within thirty days from the day on which the last
payment of wages is made, if requested by such employee, but not later than January 31 of
the following year, a written statement showing the following:
(1) The name and address of such employer or withholding agent, and the identification
number of such employer or withholding agent.
(2) The name of the employee, nonresident, or other person and that person’s federal
social security account number, together with the last known address of such employee,
nonresident, or other person to whom wages have been paid during such period.
(3) The gross amount of wages, or other taxable income, paid to the employee,
nonresident, or other person.
(4) The total amount deducted and withheld as tax under the provisions of subsections 1
and 12 of this section.
(5) The total amount of federal income tax withheld.
b. The statements required to be furnished by this subsection in respect of any wages or
other taxable Iowa income shall be in such form or forms as the director may, by regulation,
prescribe.
8. An employer or withholding agent shall be liable for the payment of the tax required
to be deducted and withheld or the amount actually deducted, whichever is greater, under
subsections 1 and 12 of this section; and any amount deducted and withheld as tax under
subsections 1 and 12 of this section during any calendar year upon the wages of any employee,
nonresident, or other person shall be allowed as a credit to the employee, nonresident, or
other person against the tax imposed by section 422.5, irrespective of whether or not such
tax has been, or will be, paid over by the employer or withholding agent to the department
as provided by this chapter.
9. The amount of any overpayment of the individual income tax liability of the employee
taxpayer, nonresident, or other person which may result from the withholding and payment of
withheld tax by the employer or withholding agent to the department under subsections 1 and
12, as compared to the individual income tax liability of the employee taxpayer, nonresident,
or other person properly and correctly determined under the provisions of section 422.4, to
and including section 422.25, may be credited against any income tax or installment thereof
then due the state of Iowa and any balance of one dollar or more shall be refunded to the
employee taxpayer, nonresident, or other person with interest at the rate in effect under
section 421.7 for each month or fraction of a month, the interest to begin to accrue on the
first day of the second calendar month following the date the return was due to be filed or
was filed, whichever is the later date. Amounts less than one dollar shall be refunded to
the taxpayer, nonresident, or other person only upon written application, in accordance with
section 422.73, and only if the application is filed within twelve months after the due date
of the return. Refunds in the amount of one dollar or more provided for by this subsection
shall be paid by the treasurer of state by warrants drawn by the director of the department
of administrative services, or an authorized employee of the department, and the taxpayer’s
return of income shall constitute a claim for refund for this purpose, except in respect to
amounts of less than one dollar. There is appropriated, out of any funds in the state treasury
not otherwise appropriated, a sum sufficient to carry out the provisions of this subsection.
10. a. An employer or withholding agent required under this chapter to furnish a
statement required by this chapter who willfully furnishes a false or fraudulent statement,
or who willfully fails to furnish the statement is, for each failure, subject to a civil penalty of
five hundred dollars, the penalty to be in addition to any criminal penalty otherwise provided
by the Code.
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§422.16, INDIVIDUAL INCOME, CORPORATE, AND FRANCHISE TAXES
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b. In addition to the tax or additional tax, any person or withholding agent shall pay
a penalty as provided in section 421.27. The taxpayer shall also pay interest on the tax
or additional tax at the rate in effect under section 421.7, for each month counting each
fraction of a month as an entire month, computed from the date the semimonthly, monthly,
or quarterly deposit form was required to be filed. The penalty and interest become a part of
the tax due from the withholding agent.
c. If any withholding agent, being a domestic or foreign corporation, required under the
provisions of this section to withhold on wages or other taxable Iowa income subject to this
chapter, fails to withhold the amounts required to be withheld, make the required returns
or remit to the department the amounts withheld, the director may, having exhausted all
other means of enforcement of the provisions of this chapter, certify such fact or facts to
the secretary of state, who shall thereupon cancel the articles of incorporation or certificate
of authority, as the case may be, of such corporation, and the rights of such corporation to
carry on business in the state of Iowa shall thereupon cease. The secretary of state shall
immediately notify by registered mail such domestic or foreign corporation of the action taken
by the secretary of state. The provisions of section 422.40, subsection 3, shall be applicable.
d. The department shall upon request of any fiduciary furnish said fiduciary with a
certificate of acquittance showing that no liability as a withholding agent exists with respect
to the estate or trust for which said fiduciary acts, provided the department has determined
that there is no such liability.
11. a. A person or married couple filing a return shall make estimated tax payments if
the person’s or couple’s Iowa income tax attributable to income other than wages subject to
withholding can reasonably be expected to amount to two hundred dollars or more for the
taxable year, except that, in the cases of farmers and fishermen, the exceptions provided in
the Internal Revenue Code with respect to making estimated payments apply. The estimated
tax shall be paid in quarterly installments. The first installment shall be paid on or before
the last day of the fourth month of the taxpayer’s tax year for which the estimated payments
apply. The other installments shall be paid on or before the last day of the sixth month of the
tax year, the last day of the ninth month of the tax year, and the last day of the first month after
the tax year. However, at the election of the person or married couple, an installment of the
estimated tax may be paid prior to the date prescribed for its payment. If a person or married
couple filing a return has reason to believe that the person’s or couple’s Iowa income tax
may increase or decrease, either for purposes of meeting the requirement to make estimated
tax payments or for the purpose of increasing or decreasing estimated tax payments, the
person or married couple shall increase or decrease any subsequent estimated tax payments
accordingly.
b. In the case of persons or married couples filing jointly, the total balance of the tax
payable after credits for taxes paid through withholding, as provided in subsection 1 of this
section, or through payment of estimated tax, or a combination of withholding and estimated
tax payments is due and payable on or before April 30 following the close of the calendar
year, or if the return is to be made on the basis of a fiscal year, then on or before the last day
of the fourth month following the close of the fiscal year.
c. If a taxpayer is unable to make the taxpayer’s estimated tax payments, the payments
may be made by a duly authorized agent, or by the guardian or other person charged with
the care of the person or property of the taxpayer.
d. Any amount of estimated tax paid is a credit against the amount of tax found payable
on a final, completed return, as provided in subsection 9, relating to the credit for the tax
withheld against the tax found payable on a return properly and correctly prepared under
sections 422.5 through 422.25, and any overpayment of one dollar or more shall be refunded
to the taxpayer and the return constitutes a claim for refund for this purpose. Amounts less
than one dollar shall not be refunded. The method provided by the Internal Revenue Code
for determining what is applicable to the addition to tax for underpayment of the tax payable
applies to persons required to make payments of estimated tax under this section except the
amount to be added to the tax for underpayment of estimated tax is an amount determined
at the rate in effect under section 421.7. This addition to tax specified for underpayment of
the tax payable is not subject to waiver provisions relating to reasonable cause, except as
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Iowa Code 2017, Section 422.16 (23, 3)
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INDIVIDUAL INCOME, CORPORATE, AND FRANCHISE TAXES, §422.16
provided in the Internal Revenue Code. Underpayment of estimated tax shall be determined
in the same manner as provided under the Internal Revenue Code and the exceptions in the
Internal Revenue Code also apply.
e. In lieu of claiming a refund, the taxpayer may elect to have the overpayment shown
on the taxpayer’s final, completed return for the taxable year credited to the taxpayer’s tax
liability for the following taxable year.
12. a. In the case of nonresidents having income subject to taxation by Iowa, but not
subject to withholding of such tax under subsection 1 hereof, withholding agents shall
withhold from such income at the same rate as provided in subsection 1 hereof, and such
withholding agents and such nonresidents shall be subject to the provisions of this section,
according to the context, except that such withholding agents may be absolved of such
requirement to withhold taxes from such nonresident’s income upon receipt of a certificate
from the department issued in accordance with the provisions of section 422.17, as hereby
amended. In the case of nonresidents having income from a trade or business carried on by
them in whole or in part within the state of Iowa, such nonresident shall be considered to be
subject to the provisions of this subsection unless such trade or business is of such nature
that the business entity itself, as a withholding agent, is required to and does withhold Iowa
income tax from the distributions made to such nonresident from such trade or business.
b. Notwithstanding this subsection, withholding agents are not required to withhold
state income tax from payments subject to taxation made to nonresidents for commodity
credit certificates, grain, livestock, domestic fowl, or other agricultural commodities or
products sold to the withholding agents by the nonresidents or their representatives, if the
withholding agents provide on forms prescribed by the department information relating
to the sales required by the department to determine the state income tax liabilities of the
nonresidents. However, the withholding agents may elect to make estimated tax payments
on behalf of the nonresidents on the basis of the net incomes of the nonresidents from the
agricultural commodities or products, if the estimated tax payments are made on or before
the last day of the first month after the end of the tax years of the nonresidents.
c. Notwithstanding this subsection, withholding agents are not required to withhold state
income tax from a partner’s pro rata share of income from a publicly traded partnership, as
defined in section 7704(b) of the Internal Revenue Code, provided that the publicly traded
partnership files with the department an information return that reports the name, address,
taxpayer identification number, and any other information requested by the department for
each unit holder with an income in this state from the publicly traded partnership in excess
of five hundred dollars.
13. The director shall enter into an agreement with the secretary of the treasury of
the United States with respect to withholding of income tax as provided by this chapter,
pursuant to an Act of Congress, section 1207 of the Tax Reform Act of 1976, Pub. L. No.
94-455, amending 5 U.S.C. §5517.
14. a. The director may, when necessary and advisable in order to secure the collection of
the tax required to be deducted and withheld or the amount actually deducted, whichever is
greater, require an employer or withholding agent to file with the director a bond, issued by a
surety company authorized to conduct business in this state and approved by the insurance
commissioner as to solvency and responsibility, in an amount as the director may fix, to
secure the payment of the tax and penalty due or which may become due. In lieu of the bond,
securities shall be kept in the custody of the department and may be sold by the director
at public or private sale, without notice to the depositor, if it becomes necessary to do so in
order to recover any tax and penalty due. Upon a sale, any surplus above the amounts due
under this section shall be returned to the employer or withholding agent who deposited the
securities.
b. If the withholding agent fails to file the bond as requested by the director to secure
collection of the tax, the withholding agent is subject to penalty for failure to file the bond.
The penalty is equal to fifteen percent of the tax the withholding agent is required to withhold
on an annual basis. However, the penalty shall not exceed five thousand dollars.
[C39, §6943.048; C46, 50, 54, 58, 62, 66, 71, 73, 75, 77, 79, 81, §422.16; 81 Acts, ch 131, §4
– 6, ch 133, §1, 4; 82 Acts, ch 1022, §1, 2, 8, ch 1023, §29, ch 1180, §2, 8]
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Iowa Code 2017, Section 422.16 (23, 3)
§422.16, INDIVIDUAL INCOME, CORPORATE, AND FRANCHISE TAXES
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83 Acts, ch 160, §3, 4; 83 Acts, ch 179, §11; 84 Acts, ch 1173, §4; 86 Acts, ch 1007, §23 – 25;
86 Acts, ch 1208, §1; 86 Acts, ch 1241, §16; 87 Acts, ch 115, §55; 87 Acts, ch 214, §4; 87 Acts,
1st Ex, ch 1, §26; 88 Acts, ch 1028, §25, 26; 88 Acts, ch 1157, §1; 89 Acts, ch 6, §4, 5; 89 Acts,
ch 251, §17, 18; 90 Acts, ch 1172, §8; 90 Acts, ch 1248, §11
[Unnumbered paragraph 2 of subsection 1 was inadvertently deleted in the 1991 Code and
1991 Code Supplement]
91 Acts, ch 215, §4, 8; 92 Acts, 2nd Ex, ch 1001, §238; 94 Acts, ch 1165, §13 – 15, 45, 47, 48;
99 Acts, ch 151, §6, 89; 2002 Acts, ch 1151, §6; 2003 Acts, ch 145, §286; 2003 Acts, ch 178,
§111, 121; 2003 Acts, ch 179, §142; 2004 Acts, ch 1101, §46; 2005 Acts, ch 140, §40, 73; 2006
Acts, ch 1010, §101; 2007 Acts, ch 185, §3; 2007 Acts, ch 186, §16; 2008 Acts, ch 1162, §135,
154, 155; 2008 Acts, ch 1184, §54; 2013 Acts, ch 30, §86; 2015 Acts, ch 116, §28 – 30; 2016
Acts, ch 1095, §5, 14, 15
Referred to in §15A.7, §29C.24, §99B.8, §99D.16, §99F.18, §99G.31, §260E.5, §260G.4A, §403.19A, §422.4, §422.11E, §422.17, §422.38,
§904.809
Subsection 1, paragraph f takes effect June 18, 2015, and applies retroactively to January 1, 2015, for tax years beginning on or after
that date; 2015 Acts, ch 116, §29, 30
Subsection 1, paragraph g takes effect April 21, 2016, and applies retroactively to January 1, 2016, for tax years beginning on or after
that date; 2016 Acts, ch 1095, §14, 15
Subsection 1, NEW paragraph g
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Iowa Code 2017, Section 422.16 (23, 3)
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