DTMF is always out of band for IAX.
Do an iax2 debug from the CLI and see if the codes are coming though.
I’ve experienced the same problem.
Asterisk seems to have a problem when jitterbuffer is used on IAX. DTMF codes are comming through, but when jitterbuffer is on, it is unpredictable if Asterisk will notice the codes coming in. When I shut off the jitterbuffer the problem goes away, and the nasty sound of jitter rears it’s head.
I’ve posted a bug report on the issue tracker but no one seems to be looking at the problem.
I really can’t believe this is a rare problem. I’ve seen it on three different builds of Asterisk now.