Bill Text: IA HF2435 | 2013-2014 | 85th General Assembly | Introduced
NOTE: There are more recent revisions of this legislation. Read Latest Draft
Bill Title: A bill for an act relating to taxation by updating the Code references to the Internal Revenue Code, providing for the repeal of the generation skipping transfer tax and Iowa estate tax, and including effective date and retroactive applicability provisions. Effective 7-1-14, with exception of section 6, effective 4-3-14.
Spectrum: Committee Bill
Status: (Passed) 2014-04-03 - Signed by Governor. H.J. 666. [HF2435 Detail]
Download: Iowa-2013-HF2435-Introduced.html
Bill Title: A bill for an act relating to taxation by updating the Code references to the Internal Revenue Code, providing for the repeal of the generation skipping transfer tax and Iowa estate tax, and including effective date and retroactive applicability provisions. Effective 7-1-14, with exception of section 6, effective 4-3-14.
Spectrum: Committee Bill
Status: (Passed) 2014-04-03 - Signed by Governor. H.J. 666. [HF2435 Detail]
Download: Iowa-2013-HF2435-Introduced.html
House
File
2435
-
Introduced
HOUSE
FILE
2435
BY
COMMITTEE
ON
WAYS
AND
MEANS
(SUCCESSOR
TO
HSB
644)
A
BILL
FOR
An
Act
relating
to
taxation
by
updating
the
Code
references
1
to
the
Internal
Revenue
Code,
providing
for
the
repeal
of
2
the
generation
skipping
transfer
tax
and
Iowa
estate
tax,
3
and
including
effective
date
and
retroactive
applicability
4
provisions.
5
BE
IT
ENACTED
BY
THE
GENERAL
ASSEMBLY
OF
THE
STATE
OF
IOWA:
6
TLSB
5297HV
(1)
85
mm/sc
H.F.
2435
DIVISION
I
1
INTERNAL
REVENUE
CODE
REFERENCES
2
Section
1.
Section
15.335,
subsection
7,
paragraph
b,
Code
3
2014,
is
amended
to
read
as
follows:
4
b.
For
purposes
of
this
section
,
“Internal
Revenue
Code”
5
means
the
Internal
Revenue
Code
in
effect
on
January
1,
2013,
6
and
as
amended
by
the
American
Taxpayer
Relief
Act
of
2012
,
7
Pub.
L.
No.
112-240
2014
.
8
Sec.
2.
Section
422.3,
subsection
5,
Code
2014,
is
amended
9
to
read
as
follows:
10
5.
“Internal
Revenue
Code”
means
the
Internal
Revenue
Code
11
of
1954,
prior
to
the
date
of
its
redesignation
as
the
Internal
12
Revenue
Code
of
1986
by
the
Tax
Reform
Act
of
1986,
or
means
13
the
Internal
Revenue
Code
of
1986
as
amended
to
and
including
14
January
1,
2013,
and
as
amended
by
the
American
Taxpayer
Relief
15
Act
of
2012
,
Pub.
L.
No.
112-240
2014
.
16
Sec.
3.
Section
422.10,
subsection
3,
paragraph
b,
Code
17
2014,
is
amended
to
read
as
follows:
18
b.
For
purposes
of
this
section
,
“Internal
Revenue
Code”
19
means
the
Internal
Revenue
Code
in
effect
on
January
1,
2013,
20
and
as
amended
by
the
American
Taxpayer
Relief
Act
of
2012
,
21
Pub.
L.
No.
112-240
2014
.
22
Sec.
4.
Section
422.32,
subsection
1,
paragraph
g,
Code
23
2014,
is
amended
to
read
as
follows:
24
g.
“Internal
Revenue
Code”
means
the
Internal
Revenue
Code
25
of
1954,
prior
to
the
date
of
its
redesignation
as
the
Internal
26
Revenue
Code
of
1986
by
the
Tax
Reform
Act
of
1986,
or
means
27
the
Internal
Revenue
Code
of
1986
as
amended
to
and
including
28
January
1,
2013,
and
as
amended
by
the
American
Taxpayer
Relief
29
Act
of
2012
,
Pub.
L.
No.
112-240
2014
.
30
Sec.
5.
Section
422.33,
subsection
5,
paragraph
e,
31
subparagraph
(2),
Code
2014,
is
amended
to
read
as
follows:
32
(2)
For
purposes
of
this
subsection
,
“Internal
Revenue
Code”
33
means
the
Internal
Revenue
Code
in
effect
on
January
1,
2013,
34
and
as
amended
by
the
American
Taxpayer
Relief
Act
of
2012,
35
-1-
LSB
5297HV
(1)
85
mm/sc
1/
9
H.F.
2435
Pub.
L.
No.
112-240
2014
.
1
Sec.
6.
EFFECTIVE
UPON
ENACTMENT.
This
division
of
this
2
Act,
being
deemed
of
immediate
importance,
takes
effect
upon
3
enactment.
4
Sec.
7.
RETROACTIVE
APPLICABILITY.
This
division
of
this
5
Act
applies
retroactively
to
January
1,
2013,
for
tax
years
6
beginning
on
or
after
that
date.
7
DIVISION
II
8
REPEAL
OF
GENERATION
SKIPPING
TRANSFER
TAX
AND
IOWA
ESTATE
TAX
9
Sec.
8.
Section
12.71,
subsection
8,
Code
2014,
is
amended
10
to
read
as
follows:
11
8.
Bonds
issued
under
the
provisions
of
this
section
are
12
declared
to
be
issued
for
a
general
public
and
governmental
13
purpose
and
all
bonds
issued
under
this
section
shall
be
exempt
14
from
taxation
by
the
state
of
Iowa
and
the
interest
on
the
15
bonds
shall
be
exempt
from
the
state
income
tax
and
the
state
16
inheritance
and
estate
tax.
17
Sec.
9.
Section
12.80,
subsection
3,
Code
2014,
is
amended
18
to
read
as
follows:
19
3.
Bonds
issued
under
this
section
are
declared
to
be
issued
20
for
an
essential
public
and
governmental
purpose
and
all
bonds
21
issued
under
this
section
shall
be
exempt
from
taxation
by
the
22
state
of
Iowa
and
the
interest
on
the
bonds
shall
be
exempt
23
from
the
state
income
tax
and
the
state
inheritance
and
estate
24
tax.
25
Sec.
10.
Section
12.81,
subsection
8,
Code
2014,
is
amended
26
to
read
as
follows:
27
8.
Bonds
issued
under
the
provisions
of
this
section
are
28
declared
to
be
issued
for
a
general
public
and
governmental
29
purpose
and
all
bonds
issued
under
this
section
shall
be
exempt
30
from
taxation
by
the
state
of
Iowa
and
the
interest
on
the
31
bonds
shall
be
exempt
from
the
state
income
tax
and
the
state
32
inheritance
and
estate
tax.
33
Sec.
11.
Section
12.87,
subsection
8,
Code
2014,
is
amended
34
to
read
as
follows:
35
-2-
LSB
5297HV
(1)
85
mm/sc
2/
9
H.F.
2435
8.
Any
bonds
issued
and
sold
under
the
provisions
of
this
1
section
are
declared
to
be
issued
and
sold
for
an
essential
2
public
and
governmental
purpose,
and
all
bonds
issued
and
sold
3
under
this
section
except
as
otherwise
provided
in
any
trust
4
indentures,
resolutions,
or
other
instruments
authorizing
their
5
issuance
shall
be
exempt
from
taxation
by
the
state
of
Iowa
and
6
the
interest
on
the
bonds
shall
be
exempt
from
the
state
income
7
tax
and
the
state
inheritance
and
estate
tax.
8
Sec.
12.
Section
12.91,
subsection
9,
Code
2014,
is
amended
9
to
read
as
follows:
10
9.
Bonds
issued
under
the
provisions
of
this
section
are
11
declared
to
be
issued
for
a
general
public
and
governmental
12
purpose
and
all
bonds
issued
under
this
section
shall
be
exempt
13
from
taxation
by
the
state
of
Iowa
and
the
interest
on
the
14
bonds
shall
be
exempt
from
the
state
income
tax
and
the
state
15
inheritance
and
estate
tax.
16
Sec.
13.
Section
16.177,
subsection
8,
Code
2014,
is
amended
17
to
read
as
follows:
18
8.
Bonds
issued
under
this
section
are
declared
to
be
issued
19
for
an
essential
public
and
governmental
purpose
and
all
bonds
20
issued
under
this
section
shall
be
exempt
from
taxation
by
the
21
state
of
Iowa
and
the
interest
on
the
bonds
shall
be
exempt
22
from
the
state
income
tax
and
the
state
inheritance
and
estate
23
tax.
24
Sec.
14.
Section
321.47,
subsection
2,
Code
2014,
is
amended
25
to
read
as
follows:
26
2.
The
persons
entitled
under
the
laws
of
descent
and
27
distribution
of
an
intestate’s
property
to
the
possession
28
and
ownership
of
a
vehicle
owned
in
whole
or
in
part
by
a
29
decedent,
upon
filing
an
affidavit
stating
the
name
and
date
of
30
death
of
the
decedent,
the
right
to
possession
and
ownership
31
of
the
persons
filing
the
affidavit,
and
that
there
has
been
32
no
administration
of
the
decedent’s
estate,
which
instrument
33
shall
also
contain
an
agreement
to
indemnify
creditors
of
34
the
decedent
who
would
be
entitled
to
levy
execution
upon
35
-3-
LSB
5297HV
(1)
85
mm/sc
3/
9
H.F.
2435
the
motor
vehicle
to
the
extent
of
the
value
of
the
motor
1
vehicle,
are
entitled
upon
fulfilling
the
other
requirements
of
2
this
chapter
,
to
the
issuance
of
a
registration
card
for
the
3
interest
of
the
decedent
in
the
vehicle
and
a
certificate
of
4
title
to
it.
If
a
decedent
dies
testate,
and
either
the
will
is
5
not
probated
or
is
admitted
to
probate
without
administration,
6
the
persons
entitled
to
the
possession
and
ownership
of
a
7
vehicle
owned
in
whole
or
in
part
by
the
decedent
may
file
8
an
affidavit
and,
upon
fulfilling
the
other
requirements
of
9
this
chapter
,
are
entitled
to
the
issuance
of
a
registration
10
card
for
the
interest
of
the
decedent
in
the
vehicle
and
a
11
certificate
of
title
to
the
vehicle.
The
affidavit
shall
12
contain
the
same
information
and
indemnity
agreement
as
is
13
required
in
cases
of
intestacy
pursuant
to
this
section
.
A
14
requirement
of
chapter
450
or
451
shall
not
be
considered
15
satisfied
by
the
filing
of
the
affidavit
provided
for
in
this
16
section
.
If,
from
the
records
in
the
office
of
the
county
17
treasurer,
there
appear
to
be
any
liens
on
the
vehicle,
the
18
certificate
of
title
shall
contain
a
statement
of
the
liens
19
unless
the
application
is
accompanied
by
proper
evidence
of
20
their
satisfaction
or
extinction.
Evidence
of
extinction
21
may
consist
of,
but
is
not
limited
to,
an
affidavit
of
the
22
applicant
stating
that
a
security
interest
was
foreclosed
as
23
provided
in
chapter
554,
article
9,
part
6
.
The
department
24
shall
waive
the
certificate
of
title
fee
and
surcharge
required
25
under
sections
321.20
,
321.20A
,
321.23
,
321.46
,
321.52
,
and
26
321.52A
if
the
person
entitled
to
possession
and
ownership
of
27
a
vehicle,
as
provided
in
this
subsection
,
is
the
surviving
28
spouse
of
a
decedent.
29
Sec.
15.
Section
421.60,
subsection
2,
paragraph
c,
30
subparagraph
(1),
Code
2014,
is
amended
to
read
as
follows:
31
(1)
If
the
notice
of
assessment
or
denial
of
a
claim
for
32
refund
relates
to
a
tax
return
filed
pursuant
to
section
422.14
33
or
chapter
450
,
450A
,
or
451
,
by
the
taxpayer
which
designates
34
an
individual
as
an
authorized
representative
of
the
taxpayer
35
-4-
LSB
5297HV
(1)
85
mm/sc
4/
9
H.F.
2435
with
respect
to
that
return,
or
if
a
power
of
attorney
has
been
1
filed
with
the
department
by
the
taxpayer
which
designates
an
2
individual
as
an
authorized
representative
of
the
taxpayer
with
3
respect
to
any
tax
that
is
included
in
the
notice
of
assessment
4
or
denial
of
a
claim
for
refund,
a
copy
of
the
notice
together
5
with
any
additional
information
required
to
be
sent
to
the
6
taxpayer
shall
be
sent
to
the
authorized
representative
as
7
well.
8
Sec.
16.
Section
450.7,
subsection
2,
unnumbered
paragraph
9
1,
Code
2014,
is
amended
to
read
as
follows:
10
Notice
of
the
lien
is
not
required
to
be
recorded.
The
11
rights
of
the
state
under
the
lien
have
priority
over
all
12
subsequent
mortgages,
purchases,
or
judgment
creditors;
and
a
13
conveyance
after
the
decedent’s
death
of
the
property
subject
14
to
a
lien
does
not
discharge
the
property
except
as
otherwise
15
provided
in
this
chapter
.
However,
if
additional
tax
is
16
determined
to
be
owing
under
this
chapter
or
chapter
451
after
17
the
lien
has
been
released
under
paragraph
“a”
or
“b”
,
the
lien
18
does
not
have
priority
over
subsequent
mortgages,
purchases,
19
or
judgment
creditors
unless
notice
of
the
lien
is
recorded
in
20
the
office
of
the
recorder
of
the
county
where
the
estate
is
21
probated,
or
where
the
property
is
located
if
the
estate
has
22
not
been
administered.
The
department
of
revenue
may
release
23
the
lien
by
filing
in
the
office
of
the
clerk
of
the
court
in
24
the
county
where
the
property
is
located,
the
decedent
owner
25
died,
or
the
estate
is
pending
or
was
administered,
one
of
the
26
following:
27
Sec.
17.
Section
450.68,
subsection
1,
paragraph
b,
Code
28
2014,
is
amended
to
read
as
follows:
29
b.
Federal
tax
returns,
copies
of
returns,
return
30
information
as
defined
in
section
6103(b)
of
the
Internal
31
Revenue
Code,
and
state
inheritance
tax
returns,
which
are
32
required
to
be
filed
with
the
department
for
the
enforcement
33
of
the
inheritance
and
estate
tax
laws
of
this
state,
shall
be
34
deemed
and
held
as
confidential
by
the
department.
However,
35
-5-
LSB
5297HV
(1)
85
mm/sc
5/
9
H.F.
2435
such
returns
or
return
information
may
be
disclosed
by
the
1
director
to
officers
or
employees
of
other
state
agencies,
2
subject
to
the
same
confidentiality
restrictions
imposed
on
the
3
officers
and
employees
of
the
department.
4
Sec.
18.
Section
455G.6,
subsection
14,
Code
2014,
is
5
amended
to
read
as
follows:
6
14.
Bonds
issued
under
the
provisions
of
this
section
are
7
declared
to
be
issued
for
an
essential
public
and
governmental
8
purpose
and
all
bonds
issued
under
this
subchapter
shall
be
9
exempt
from
taxation
by
the
state
of
Iowa
and
the
interest
on
10
the
bonds
shall
be
exempt
from
the
state
income
tax
and
the
11
state
inheritance
and
estate
tax.
12
Sec.
19.
Section
463C.12,
subsection
8,
Code
2014,
is
13
amended
to
read
as
follows:
14
8.
Tax-exempt
bonds
issued
by
the
authority
in
connection
15
with
the
program,
which
are
exempt
from
taxation
for
federal
16
tax
purposes,
are
also
exempt
from
taxation
by
the
state
of
17
Iowa
and
the
interest
on
these
bonds
is
exempt
from
state
18
income
taxes
and
state
inheritance
and
estate
taxes.
19
Sec.
20.
Section
524.1406,
subsection
3,
paragraph
a,
Code
20
2014,
is
amended
to
read
as
follows:
21
a.
Notwithstanding
any
contrary
provision
in
chapter
22
490,
division
XIII
,
in
determining
the
fair
value
of
the
23
shareholder’s
shares
of
a
bank
organized
under
this
chapter
24
or
a
bank
holding
company
as
defined
in
section
524.1801
in
a
25
transaction
or
event
in
which
the
shareholder
is
entitled
to
26
appraisal
rights,
due
consideration
shall
be
given
to
valuation
27
factors
recognized
for
federal
and
state
estate
tax
purposes,
28
including
discounts
for
minority
interests
and
discounts
29
for
lack
of
marketability.
However,
any
payment
made
to
30
shareholders
under
section
490.1324
shall
be
in
an
amount
not
31
less
than
the
stockholders’
equity
in
the
bank
disclosed
in
its
32
last
statement
of
condition
filed
under
section
524.220
or
the
33
total
equity
capital
of
the
bank
holding
company
disclosed
in
34
the
most
recent
report
filed
by
the
bank
holding
company
with
35
-6-
LSB
5297HV
(1)
85
mm/sc
6/
9
H.F.
2435
the
board
of
governors
of
the
federal
reserve
system,
divided
1
by
the
number
of
shares
outstanding.
2
Sec.
21.
Section
633.3,
subsections
4
and
8,
Code
2014,
are
3
amended
to
read
as
follows:
4
4.
Charges
——
includes
costs
of
administration,
funeral
5
expenses,
cost
of
monument,
and
federal
and
state
estate
taxes.
6
8.
Costs
of
administration
——
includes
court
costs,
7
fiduciary’s
fees,
attorney
fees,
all
appraisers’
fees,
premiums
8
on
corporate
surety
bonds,
statutory
allowance
for
support
9
of
surviving
spouse
and
children,
cost
of
continuation
of
10
abstracts
of
title,
recording
fees,
transfer
fees,
transfer
11
taxes,
agents’
fees
allowed
by
order
of
court,
interest
12
expense,
including
but
not
limited
to
interest
payable
on
13
extension
of
federal
and
state
estate
tax,
and
all
other
fees
14
and
expenses
allowed
by
order
of
court
in
connection
with
15
the
administration
of
the
estate.
Court
costs
shall
include
16
expenses
of
selling
property.
17
Sec.
22.
Section
633.436,
subsection
1,
unnumbered
18
paragraph
1,
Code
2014,
is
amended
to
read
as
follows:
19
Except
as
provided
in
sections
633.211
and
633.212
,
shares
20
of
the
distributees
shall
abate,
for
the
payment
of
debts
and
21
charges,
federal
and
state
estate
taxes,
legacies,
the
shares
22
of
children
born
or
adopted
after
the
making
of
a
will,
or
the
23
share
of
the
surviving
spouse
who
elects
to
take
against
the
24
will,
without
any
preference
or
priority
as
between
real
and
25
personal
property,
in
the
following
order:
26
Sec.
23.
Section
633.449,
Code
2014,
is
amended
to
read
as
27
follows:
28
633.449
Payment
of
federal
estate
taxes.
29
All
federal
estate
taxes,
distinguished
from
state
30
inheritance
and
estate
taxes,
owing
by
the
estate
of
a
decedent
31
shall
be
paid
from
the
property
of
the
estate,
unless
the
will
32
of
the
decedent,
or
other
trust
instrument,
provides
expressly
33
to
the
contrary.
34
Sec.
24.
Section
633A.4703,
unnumbered
paragraph
1,
Code
35
-7-
LSB
5297HV
(1)
85
mm/sc
7/
9
H.F.
2435
2014,
is
amended
to
read
as
follows:
1
Except
as
otherwise
provided
by
the
governing
instrument,
2
where
necessary
to
abate
shares
of
the
beneficiaries
of
a
trust
3
for
the
payment
of
debts
and
charges,
federal
and
state
estate
4
taxes,
bequests,
the
share
of
the
surviving
spouse
who
takes
5
an
elective
share,
and
the
shares
of
children
born
or
adopted
6
after
the
execution
of
the
trust,
abatement
shall
occur
in
the
7
following
order:
8
Sec.
25.
REPEAL.
Chapters
450A
and
451,
Code
2014,
are
9
repealed.
10
EXPLANATION
11
The
inclusion
of
this
explanation
does
not
constitute
agreement
with
12
the
explanation’s
substance
by
the
members
of
the
general
assembly.
13
This
bill
updates
the
Iowa
Code
references
to
the
Internal
14
Revenue
Code
to
make
federal
income
tax
revisions
enacted
by
15
Congress
in
2013
applicable
for
Iowa
income
tax
purposes,
and
16
repeals
the
generation
skipping
transfer
tax
and
the
Iowa
17
estate
tax.
18
DIVISION
I
——
INTERNAL
REVENUE
CODE
REFERENCES.
The
19
division
amends
Code
sections
422.3
and
422.32,
general
20
definition
sections
in
the
chapter
of
the
Code
that
governs
21
corporate
and
individual
income
tax
and
the
franchise
tax
22
on
financial
institutions,
to
update
the
references
to
the
23
Internal
Revenue
Code.
24
The
division
amends
Code
sections
15.335,
422.10,
and
422.33
25
to
update
the
references
to
the
Internal
Revenue
Code
for
the
26
state
research
activities
credit
for
individuals,
corporations,
27
and
corporations
in
economic
development
areas
to
include
the
28
federal
changes
to
the
research
activities
credit
and
the
29
alternative
simplified
research
activities
credit.
30
Division
I
takes
effect
upon
enactment
and
applies
31
retroactively
to
January
1,
2013,
for
tax
years
beginning
on
32
or
after
that
date.
33
DIVISION
II
——
REPEAL
OF
GENERATION
SKIPPING
TRANSFER
TAX
34
AND
IOWA
ESTATE
TAX.
The
division
repeals
the
generation
35
-8-
LSB
5297HV
(1)
85
mm/sc
8/
9
H.F.
2435
skipping
transfer
tax
and
Iowa
estate
tax.
Iowa
once
had
an
1
estate
tax
equal
to
the
federal
estate
tax
credit
for
state
2
inheritance
and
estate
taxes
paid.
This
type
of
tax
was
3
referred
to
as
a
“pick-up
tax”
because
it
levied
an
amount
4
of
tax
equal
to
the
credit
against
federal
estate
taxes,
5
thereby
allowing
the
state
to
collect
estate
tax
revenue
6
without
increasing
the
total
amount
of
tax
due
from
the
estate.
7
Similarly,
Iowa
has
a
generation
skipping
transfer
tax
based
on
8
the
same
concept
and
equal
to
the
federal
generation
skipping
9
transfer
tax
credit
for
state
generation
skipping
transfer
tax
10
paid.
11
In
2001,
Congress
enacted
the
Economic
Growth
and
Tax
Relief
12
Reconciliation
Act
which
temporarily
phased
out
these
two
13
federal
tax
credits
and
replaced
them
with
reduced
federal
14
estate
tax
rates
and
an
increased
exemption
level
for
estates.
15
These
federal
tax
credits
were
fully
phased
out
in
2005.
16
Therefore,
Iowa
has
not
collected
any
estate
tax
or
generation
17
skipping
transfer
tax
for
estates
of
decedents
dying,
nor
for
18
generation
skipping
transfers
occurring,
after
December
31,
19
2004.
20
Iowa’s
estate
tax
was
repealed
in
2008
and
then
reenacted
21
in
2010,
but
its
implementation
was
contingent
on
the
22
reimplementation
of
the
federal
tax
credits.
However,
in
23
2013
Congress
enacted
the
American
Taxpayer
Relief
Act
which
24
permanently
eliminated
the
federal
estate
tax
and
generation
25
skipping
transfer
tax
credits.
26
The
division
also
makes
conforming
changes
to
remove
27
references
in
the
Iowa
Code
to
the
Iowa
estate
tax
and
to
Code
28
chapters
450A
and
451.
29
-9-
LSB
5297HV
(1)
85
mm/sc
9/
9
