The Iowa Department of Revenue is collecting back taxes from 46 Iowa police officers who haven’t paid sales tax for off-duty assignments, such as wedding receptions and business security.
If officers have never filed a tax return for moonlighting jobs, the department plans to pursue back taxes for up to 10 years, state Department of Revenue spokeswoman Victoria Daniels said.
“They know they have this obligation, but there is always a subset of people who say they don’t know and aren’t paying,” Daniels said.
The move is part of a larger audit program focusing on people who are “engaged privately in security or detection work,” which is a taxable service in Iowa.
The Iowa State Police Association and other law enforcement groups have tried for years to convince Revenue officials that police officers shouldn’t be required to collect sales tax from businesses and individuals who hire them for off-duty gigs.
Revenue officials considered drafting a change to the state’s administrative code to exempt officers, but ultimately decided the law clearly required officers to pay up.
“We understand your clients’ position and sincerely appreciate their assistance in understanding the complexities of this issue,” wrote Cody Edwards, a revenue department attorney, in a letter to Kellie Paschke, an attorney representing the Iowa State Police Association. (Story continues below document)
Letter to Kellie Paschke, attorney representing the Iowa State Police Association
“However, under current law, peace officers performing security and detection services while off-duty are ‘engaged privately’ in security, and need to obtain sales tax permits, collect the sales tax on charges for those services, and make the appropriate filings and remittances.”
The Revenue Department sent a letter last week to 46 officers who owe back sales tax. The total amount owed was not available Friday. (Story continues below document)
Letter to Iowa police officers
Sgt. Chris Scott, public information officer for the Des Moines Police Department, said many of the officers who got letters are from his department.
“The initial concern was all the back taxes these officers were going to have to pay,” said Scott, who doesn’t do off-duty shifts and didn’t know why some officers hadn’t collected sales tax in the past.
Cedar Rapids police have been collecting and remitting sales tax for decades through their union, said Cedar Rapids police Sgt. Mark Andries.
He’s one of two officers on the Extra Work Committee, which alerts officers to moonlighting gigs and coordinates with businesses or groups needing off-duty services. The committee bills each group for the services and collects the sales tax off the top before paying the officers who performed the jobs.
“We send in quarterly and annual returns,” Andries said. The group remits an average $1,500 to $2,000 a month in sales tax for all Cedar Rapids officers who do off-duty assignments.
Waterloo police officers who do off-duty jobs are on their own for collecting sales tax, Capt. Tim Pillack said. “Officers know that it’s up to them to do what they need to do,” he said. “The department doesn’t get involved.”
The Des Moines Police Department doesn’t have a committee like Cedar Rapids, and Scott said it would likely take a full-time employee to manage those duties for the 379-officer department.
The Des Moines Police Bargaining Union Association takes calls for off-duty security jobs, according to the union’s website. The group charges $40 per hour with a three-hour minimum for each assignment. Holidays are double time.
Cedar Rapids police don’t have a set rate for off-duty work, said Officer Mikel Wombacher, chief union steward. He was surprised to learn that officers from other jurisdictions weren’t collecting sales tax for their moonlighting.
“Ouch,” he said. “That would hurt because you have to figure out how much you owe.”
Revenue officials invited police groups to seek a sympathetic lawmaker to push for a law change.
“The department would not oppose a legislative change that would not be administratively burdensome,” states the letter to Paschke. Paschke and Capt. Dave Mohlis, president of the Iowa State Police Association and a Waterloo police officer, did not return calls for this story.