Bill Text: IA HF2435 | 2013-2014 | 85th General Assembly | Enrolled

NOTE: There are more recent revisions of this legislation. Read Latest Draft

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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-Enrolled.html

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House File 2435
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.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
DIVISION I
INTERNAL REVENUE CODE REFERENCES
Section 1. Section 15.335, subsection 7, paragraph b, Code
2014, is amended to read as follows:
b. For purposes of this section , “Internal Revenue Code”
means the Internal Revenue Code in effect on January 1, 2013,
and as amended by the American Taxpayer Relief Act of 2012 ,
Pub. L. No. 112-240 2014 .
Sec. 2. Section 422.3, subsection 5, Code 2014, is amended
to read as follows:
5. “Internal Revenue Code” means the Internal Revenue Code
of 1954, prior to the date of its redesignation as the Internal
Revenue Code of 1986 by the Tax Reform Act of 1986, or means
the Internal Revenue Code of 1986 as amended to and including
January 1, 2013, and as amended by the American Taxpayer Relief
Act of 2012 , Pub. L. No. 112-240 2014 .
Sec. 3. Section 422.10, subsection 3, paragraph b, Code
2014, is amended to read as follows:
b. For purposes of this section , “Internal Revenue Code”
means the Internal Revenue Code in effect on January 1, 2013,
and as amended by the American Taxpayer Relief Act of 2012 ,
Pub. L. No. 112-240 2014 .
Sec. 4. Section 422.32, subsection 1, paragraph g, Code

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2014, is amended to read as follows:
g. “Internal Revenue Code” means the Internal Revenue Code
of 1954, prior to the date of its redesignation as the Internal
Revenue Code of 1986 by the Tax Reform Act of 1986, or means
the Internal Revenue Code of 1986 as amended to and including
January 1, 2013, and as amended by the American Taxpayer Relief
Act of 2012 , Pub. L. No. 112-240 2014 .
Sec. 5. Section 422.33, subsection 5, paragraph e,
subparagraph (2), Code 2014, is amended to read as follows:
(2) For purposes of this subsection , “Internal Revenue Code”
means the Internal Revenue Code in effect on January 1, 2013,
and as amended by the American Taxpayer Relief Act of 2012,
Pub. L. No. 112-240 2014 .
Sec. 6. EFFECTIVE UPON ENACTMENT. This division of this
Act, being deemed of immediate importance, takes effect upon
enactment.
Sec. 7. RETROACTIVE APPLICABILITY. This division of this
Act applies retroactively to January 1, 2013, for tax years
beginning on or after that date.
DIVISION II
REPEAL OF GENERATION SKIPPING TRANSFER TAX AND IOWA ESTATE TAX
Sec. 8. Section 12.71, subsection 8, Code 2014, is amended
to read as follows:
8. Bonds issued under the provisions of this section are
declared to be issued for a general public and governmental
purpose and all bonds issued under this section shall be exempt
from taxation by the state of Iowa and the interest on the
bonds shall be exempt from the state income tax and the state
inheritance and estate tax.
Sec. 9. Section 12.80, subsection 3, Code 2014, is amended
to read as follows:
3. Bonds issued under this section are declared to be issued
for an essential public and governmental purpose and all bonds
issued under this section shall be exempt from taxation by the
state of Iowa and the interest on the bonds shall be exempt
from the state income tax and the state inheritance and estate
tax.
Sec. 10. Section 12.81, subsection 8, Code 2014, is amended
to read as follows:
8. Bonds issued under the provisions of this section are
declared to be issued for a general public and governmental
purpose and all bonds issued under this section shall be exempt
from taxation by the state of Iowa and the interest on the

House File 2435, p. 3
bonds shall be exempt from the state income tax and the state
inheritance and estate tax.
Sec. 11. Section 12.87, subsection 8, Code 2014, is amended
to read as follows:
8. Any bonds issued and sold under the provisions of this
section are declared to be issued and sold for an essential
public and governmental purpose, and all bonds issued and sold
under this section except as otherwise provided in any trust
indentures, resolutions, or other instruments authorizing their
issuance shall be exempt from taxation by the state of Iowa and
the interest on the bonds shall be exempt from the state income
tax and the state inheritance and estate tax.
Sec. 12. Section 12.91, subsection 9, Code 2014, is amended
to read as follows:
9. Bonds issued under the provisions of this section are
declared to be issued for a general public and governmental
purpose and all bonds issued under this section shall be exempt
from taxation by the state of Iowa and the interest on the
bonds shall be exempt from the state income tax and the state
inheritance and estate tax.
Sec. 13. Section 16.177, subsection 8, Code 2014, is amended
to read as follows:
8. Bonds issued under this section are declared to be issued
for an essential public and governmental purpose and all bonds
issued under this section shall be exempt from taxation by the
state of Iowa and the interest on the bonds shall be exempt
from the state income tax and the state inheritance and estate
tax.
Sec. 14. Section 321.47, subsection 2, Code 2014, is amended
to read as follows:
2. The persons entitled under the laws of descent and
distribution of an intestate’s property to the possession
and ownership of a vehicle owned in whole or in part by a
decedent, upon filing an affidavit stating the name and date of
death of the decedent, the right to possession and ownership
of the persons filing the affidavit, and that there has been
no administration of the decedent’s estate, which instrument
shall also contain an agreement to indemnify creditors of
the decedent who would be entitled to levy execution upon
the motor vehicle to the extent of the value of the motor
vehicle, are entitled upon fulfilling the other requirements of
this chapter , to the issuance of a registration card for the
interest of the decedent in the vehicle and a certificate of

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title to it. If a decedent dies testate, and either the will is
not probated or is admitted to probate without administration,
the persons entitled to the possession and ownership of a
vehicle owned in whole or in part by the decedent may file
an affidavit and, upon fulfilling the other requirements of
this chapter , are entitled to the issuance of a registration
card for the interest of the decedent in the vehicle and a
certificate of title to the vehicle. The affidavit shall
contain the same information and indemnity agreement as is
required in cases of intestacy pursuant to this section . A
requirement of chapter 450 or 451 shall not be considered
satisfied by the filing of the affidavit provided for in this
section . If, from the records in the office of the county
treasurer, there appear to be any liens on the vehicle, the
certificate of title shall contain a statement of the liens
unless the application is accompanied by proper evidence of
their satisfaction or extinction. Evidence of extinction
may consist of, but is not limited to, an affidavit of the
applicant stating that a security interest was foreclosed as
provided in chapter 554, article 9, part 6 . The department
shall waive the certificate of title fee and surcharge required
under sections 321.20 , 321.20A , 321.23 , 321.46 , 321.52 , and
321.52A if the person entitled to possession and ownership of
a vehicle, as provided in this subsection , is the surviving
spouse of a decedent.
Sec. 15. Section 421.60, subsection 2, paragraph c,
subparagraph (1), Code 2014, is amended to read as follows:
(1) If the notice of assessment or denial of a claim for
refund relates to a tax return filed pursuant to section 422.14
or chapter 450 , 450A , or 451 , by the taxpayer which designates
an individual as an authorized representative of the taxpayer
with respect to that return, or if a power of attorney has been
filed with the department by the taxpayer which designates an
individual as an authorized representative of the taxpayer with
respect to any tax that is included in the notice of assessment
or denial of a claim for refund, a copy of the notice together
with any additional information required to be sent to the
taxpayer shall be sent to the authorized representative as
well.
Sec. 16. Section 450.7, subsection 2, unnumbered paragraph
1, Code 2014, is amended to read as follows:
Notice of the lien is not required to be recorded. The
rights of the state under the lien have priority over all

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subsequent mortgages, purchases, or judgment creditors; and a
conveyance after the decedent’s death of the property subject
to a lien does not discharge the property except as otherwise
provided in this chapter . However, if additional tax is
determined to be owing under this chapter or chapter 451 after
the lien has been released under paragraph “a” or “b” , the lien
does not have priority over subsequent mortgages, purchases,
or judgment creditors unless notice of the lien is recorded in
the office of the recorder of the county where the estate is
probated, or where the property is located if the estate has
not been administered. The department of revenue may release
the lien by filing in the office of the clerk of the court in
the county where the property is located, the decedent owner
died, or the estate is pending or was administered, one of the
following:
Sec. 17. Section 450.68, subsection 1, paragraph b, Code
2014, is amended to read as follows:
b. Federal tax returns, copies of returns, return
information as defined in section 6103(b) of the Internal
Revenue Code, and state inheritance tax returns, which are
required to be filed with the department for the enforcement
of the inheritance and estate tax laws of this state, shall be
deemed and held as confidential by the department. However,
such returns or return information may be disclosed by the
director to officers or employees of other state agencies,
subject to the same confidentiality restrictions imposed on the
officers and employees of the department.
Sec. 18. Section 455G.6, subsection 14, Code 2014, is
amended to read as follows:
14. Bonds issued under the provisions of this section are
declared to be issued for an essential public and governmental
purpose and all bonds issued under this subchapter shall be
exempt from taxation by the state of Iowa and the interest on
the bonds shall be exempt from the state income tax and the
state inheritance and estate tax.
Sec. 19. Section 463C.12, subsection 8, Code 2014, is
amended to read as follows:
8. Tax-exempt bonds issued by the authority in connection
with the program, which are exempt from taxation for federal
tax purposes, are also exempt from taxation by the state of
Iowa and the interest on these bonds is exempt from state
income taxes and state inheritance and estate taxes.
Sec. 20. Section 524.1406, subsection 3, paragraph a, Code

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2014, is amended to read as follows:
a. Notwithstanding any contrary provision in chapter
490, division XIII , in determining the fair value of the
shareholder’s shares of a bank organized under this chapter
or a bank holding company as defined in section 524.1801 in a
transaction or event in which the shareholder is entitled to
appraisal rights, due consideration shall be given to valuation
factors recognized for federal and state estate tax purposes,
including discounts for minority interests and discounts
for lack of marketability. However, any payment made to
shareholders under section 490.1324 shall be in an amount not
less than the stockholders’ equity in the bank disclosed in its
last statement of condition filed under section 524.220 or the
total equity capital of the bank holding company disclosed in
the most recent report filed by the bank holding company with
the board of governors of the federal reserve system, divided
by the number of shares outstanding.
Sec. 21. Section 633.3, subsections 4 and 8, Code 2014, are
amended to read as follows:
4. Charges —— includes costs of administration, funeral
expenses, cost of monument, and federal and state estate taxes.
8. Costs of administration —— includes court costs,
fiduciary’s fees, attorney fees, all appraisers’ fees, premiums
on corporate surety bonds, statutory allowance for support
of surviving spouse and children, cost of continuation of
abstracts of title, recording fees, transfer fees, transfer
taxes, agents’ fees allowed by order of court, interest
expense, including but not limited to interest payable on
extension of federal and state estate tax, and all other fees
and expenses allowed by order of court in connection with
the administration of the estate. Court costs shall include
expenses of selling property.
Sec. 22. Section 633.436, subsection 1, unnumbered
paragraph 1, Code 2014, is amended to read as follows:
Except as provided in sections 633.211 and 633.212 , shares
of the distributees shall abate, for the payment of debts and
charges, federal and state estate taxes, legacies, the shares
of children born or adopted after the making of a will, or the
share of the surviving spouse who elects to take against the
will, without any preference or priority as between real and
personal property, in the following order:
Sec. 23. Section 633.449, Code 2014, is amended to read as
follows:

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633.449 Payment of federal estate taxes.
All federal estate taxes, distinguished from state
inheritance and estate taxes, owing by the estate of a decedent
shall be paid from the property of the estate, unless the will
of the decedent, or other trust instrument, provides expressly
to the contrary.
Sec. 24. Section 633A.4703, unnumbered paragraph 1, Code
2014, is amended to read as follows:
Except as otherwise provided by the governing instrument,
where necessary to abate shares of the beneficiaries of a trust
for the payment of debts and charges, federal and state estate
taxes, bequests, the share of the surviving spouse who takes
an elective share, and the shares of children born or adopted
after the execution of the trust, abatement shall occur in the
following order:
Sec. 25. REPEAL. Chapters 450A and 451, Code 2014, are
repealed.
______________________________
KRAIG PAULSEN
Speaker of the House
______________________________
PAM JOCHUM
President of the Senate
I hereby certify that this bill originated in the House and
is known as House File 2435, Eighty-fifth General Assembly.
______________________________
CARMINE BOAL
Chief Clerk of the House
Approved _______________, 2014
______________________________
TERRY E. BRANSTAD
Governor