Payroll Iowa, Unique Aspects of Iowa Payroll Law and Practice

By Charles Read
The Iowa State Agency that oversees the collection and reporting of State income taxes deducted from payroll checks is:

Department of Revenue
Income Tax Division
Hoover State Office Bldg.
P.O. Box 10457
Des Moines, IA 50306-0457
(515) 281-3114
(800) 367-3388 (in state)
www.state.ia.us/tax


Iowa requires that you use Iowa form "IA W-4, Centralized Employee Registry Reporting Form/Employee Withholding Allowance Certificate" instead of a Federal W-4 Form for Iowa State Income Tax Withholding.


Not all states allow salary reductions made under Section 125 cafeteria plans or 401(k) to be treated in the same manner as the IRS code allows. In Iowa cafeteria plans are not taxable for income tax calculation; taxable for unemployment insurance purposes. 401(k) plan deferrals are not taxable for income taxes; taxable for unemployment purposes.

In Iowa supplemental wages are taxed at a 6% flat rate.

State W-2s are not applicable in the state of Iowa.



The Iowa State Unemployment Insurance Agency is:

Department of Workforce Development
1000 E. Grand Ave.
Des Moines, IA 50319-0209
(515) 281-5387
http://www.iowaworkforce.org/wc/index.html


The State of Iowa taxable wage base for unemployment purposes is wages up to $19,700.00.


Iowa has optional reporting of quarterly wages on magnetic media.

Unemployment records must be retained in Iowa for a minimum period of five years. This information generally includes: name; social security number; dates of hire, rehire and termination; wages by period; payroll pay periods and pay dates; date and circumstances of termination.


The Iowa State Agency charged with enforcing the state wage and hour laws is:

Iowa Workforce Development
Labor Services Division
1000 East Grand Ave.
Des Moines, IA 50319-0209
(515) 281-5387
www.iowaworkforce.org//labor/index.html

The minimum wage in Iowa is $5.15 per hour.


There is also no general provision in Iowa State Law covering paying overtime in a non-FLSA covered employer.

Iowa State new hire reporting requirements are that every employer must report every new hire and rehire; independent contractors over $600. The employer must report the federally required elements of:

Employee's name
Employee's date of birth.
Employee's health insurance.
Employee's address
Start date of contract.

Employee's social security number
Employer's name
Employers address
Employer's Federal Employer Identification Number (EIN)

This information must be reported within 15 days of the hiring or rehiring.
The information can be sent as a W4 or equivalent by mail, fax or electronically.
There is a penalty contempt of court for a late report in Iowa.

The Iowa new hire-reporting agency can be reached at 515-281-533 or on the web at http://icer.dhs.state.ia.us/.


Iowa does not allow compulsory direct deposit.

Iowa requires the following information on an employee's pay stub:

Gross and Net Earnings
straight time and overtime pay
hours worked
itemized deductions

The State Wage and Hour Law provisions concerning pay stub information in Iowa is that it must be provided within 10 days of employee's request, only once a year unless earnings, hours, or deductions are changed.

Iowa requires that employee be paid no less often than monthly, semimonthly, or biweekly.


Iowa requires that the lag time between the end of the pay period and the payment of wages to the employee not exceed twelve days after pay period; excluding Sundays and holidays.


Iowa payroll law requires that involuntarily terminated employees must be paid their final pay by their next regular payday; 30 days for commissions and that voluntarily terminated employees must be paid their final pay by the next regular payday; 30 days for commissions or by mail if employee requests it.



There is no provision in Iowa law concerning paying deceased employees.


Escheat laws in Iowa require that unclaimed wages be paid over to the state after one year.

The employer is further required in Iowa to keep a record of the wages abandoned and turned over to the state for a period of 4 years.

Iowa payroll law mandates no more than 40% of minimum wage may be used as a tip credit.




In the Iowa payroll law there is no provision covering required rest or meal periods.

There is no provision in Iowa law concerning record retention of wage and hour records therefor it is probably wise to follow FLSA guidelines.



The Iowa agency charged with enforcing Child Support Orders and laws is:

Child Support Recovery Unit
Department of Human Services
Hoover Bldg., 5th Fl.
Des Moines, IA 50319
(515) 242-3237
(888) 229-9223
http://www.dhs.state.ia.us/dhs2005/dhs_homepage/financial_support/child_support/index.html

Iowa has the following provisions for child support deductions:

When to start Withholding? 10 days after receipt of order.
When to send Payment? Within 7 days of Payday.
When to send Termination Notice? "Promptly."
Maximum Administrative Fee? $2 per payment.
Withholding Limits? Federal Rules under CCPA.




Please note that this article is not updated for changes that can and will happen from time to time.




About the author:

Charles J. Read, CPA has been in the payroll, accounting and tax business for 30 years, the last fifteen in private practice.
Mr. Read is the author of “How to Start a New Business.”

To find professional payroll service at a budget price go to www.PayrollonaBudget.com a paperless payroll company.

For a full service payroll bureau with CPA’s on staff visit www.CustomPayroll.com .

See an excerpt of Mr. Read’s interviews from William Shatners “Heartbeat of America” television show on the web sites linked above.


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