Bill Text: IA SF2303 | 2017-2018 | 87th General Assembly | Introduced

Iowa Senate Bill 2303 (Prior Session Legislation)

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

Bill Title: A bill for an act relating to the inheritance tax by modifying the requirements to qualify for a deferment of tax payment under certain circumstances in the case of estates with a deferred estate or remainder interest, and including applicability provisions. (Formerly SSB 3015.) Effective 7-1-18.

Spectrum: Committee Bill

Status: (Passed) 2018-05-04 - Signed by Governor. S.J. 1059. [SF2303 Detail]

Download: Iowa-2017-SF2303-Introduced.html


Senate File 2303 - Introduced




                                 SENATE FILE       
                                 BY  COMMITTEE ON JUDICIARY

                                 (SUCCESSOR TO SSB
                                     3015)

                                      A BILL FOR

  1 An Act relating to the inheritance tax by modifying the
  2    requirements to qualify for a deferment of tax payment under
  3    certain circumstances in the case of estates with a deferred
  4    estate or remainder interest, and including applicability
  5    provisions.
  6 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
    TLSB 5190SV (1) 87
    mm/jh

PAG LIN



  1  1    Section 1.  Section 450.20, Code 2018, is amended to read as
  1  2 follows:
  1  3    450.20  Record of deferred estates.
  1  4    The department of revenue shall keep a separate record of
  1  5 any deferred estate upon which the tax due is not paid on or
  1  6 before the last day of the ninth month after the death of the
  1  7 decedent, showing substantially the same facts as are required
  1  8 in other cases, and also showing:
  1  9    1.  The date and amount of all bonds given to secure the
  1 10 payment of the tax with a list of the sureties thereon.
  1 11    2.  The type and amount of any security, other than a bond,
  1 12 given to secure the payment of the tax.
  1 13    2.  3.  The name of the person beneficially entitled to such
  1 14 estate or interest, with place of residence.
  1 15    3.  4.  A description of the property or a statement of
  1 16 conditions upon which such deferred estate is based or limited.
  1 17    Sec. 2.  Section 450.47, Code 2018, is amended to read as
  1 18 follows:
  1 19    450.47  Life and term estates in personal property.
  1 20    If an estate or interest for life or term of years in
  1 21 personal property is given to one or more persons other than
  1 22 those exempt by this chapter and the remainder or deferred
  1 23 estate to others, the property devised or conveyed shall be
  1 24 valued under section 450.37 as provided in ordinary estates
  1 25 and the value of the estates or interests devised or conveyed
  1 26 shall be determined as provided in section 450.51, and the
  1 27 tax upon the estates or interests liable for the tax shall be
  1 28 paid to the department of revenue from the property valued
  1 29 or by the persons entitled to the estate or interest on or
  1 30 before the last day of the ninth month after the death of the
  1 31 testator, grantor, or donor. However, payment of the tax upon
  1 32 a deferred estate or remainder interest may be deferred until
  1 33 the determination of the prior estate by the giving of a good
  1 34 and sufficient bond as provided in section 450.48.
  1 35    Sec. 3.  Section 450.48, Code 2018, is amended to read as
  2  1 follows:
  2  2    450.48  Payment deferred == bond ==== exceptions.
  2  3    1.  When Except as provided in subsection 2, when in case of
  2  4 deferred estates or remainder interests in personal property or
  2  5 in the proceeds of any real estate that may be sold during the
  2  6 time of a life, term, or prior estate, the persons interested
  2  7 who may desire to defer the payment of the tax until the
  2  8 determination of the prior estate, shall file with the clerk
  2  9 of the proper district court a bond as provided herein in
  2 10 other cases, such bond to be renewed every two years until the
  2 11 tax upon such deferred estate is paid. If at the end of any
  2 12 two=year period the bond is not promptly renewed as herein
  2 13 provided and the tax has not been paid, the bond shall be
  2 14 declared forfeited, and the amount thereof forthwith collected.
  2 15    2.  When the estate of a decedent consists in part of real
  2 16 and in part of personal property, and there be includes an
  2 17 estate for life or for a term of years to one or more persons
  2 18 and a deferred or remainder estate to others, and such deferred
  2 19 or remainder estate is in whole or in part subject to the tax
  2 20 imposed by this chapter, if the then payment of the tax upon
  2 21 such deferred or remainder estates may be postponed until the
  2 22 determination of the prior estate without giving bond to secure
  2 23 payment of such tax as required under subsection 1 if one of
  2 24 the following requirements is satisfied:
  2 25    a.  The deferred or remainder estates or interests are so
  2 26 disposed that good and sufficient security for the payment of
  2 27 the tax for which such deferred or remainder estates may be
  2 28 liable can be had because of the lien imposed by this chapter
  2 29 upon the real property of such estate, then payment of the tax
  2 30 upon such deferred or remainder estates may be postponed until
  2 31 the determination of the prior estate without giving bond as
  2 32 herein required to secure payment of such tax, and but the tax
  2 33 shall remain a lien upon such real estate until the tax upon
  2 34 such deferred estate or interest is paid.
  2 35    b.  Security satisfactory to the department of revenue has
  3  1 been provided, which security includes but is not limited to a
  3  2 bank or securities account with an irrevocable pay on death or
  3  3 transfer on death provision naming the department of revenue
  3  4 as beneficiary, or an escrow agreement with the department of
  3  5 revenue under which a private attorney will act as escrow agent
  3  6 and hold the escrow funds in the attorney's trust account.
  3  7    Sec. 4.  APPLICABILITY.  This Act applies to estates of
  3  8 decedents that include a deferred estate or remainder interest
  3  9 and that have not, on or before July 1, 2018, received approval
  3 10 from the department of revenue to defer payment of tax pursuant
  3 11 to sections 450.44 through 450.49.
  3 12                           EXPLANATION
  3 13 The inclusion of this explanation does not constitute agreement with
  3 14 the explanation's substance by the members of the general assembly.
  3 15    This bill relates to the inheritance tax.  An estate
  3 16 subject to the inheritance tax may contain a deferred estate
  3 17 or remainder interest, which generally occurs when property is
  3 18 transferred to a person for a certain period of time, and then
  3 19 to a different person (remainderman) at the expiration of that
  3 20 time.  Under Iowa law, the inheritance tax accrues at the date
  3 21 of death of the decedent and is due on or before the last day of
  3 22 the ninth month following that date.  However, the payment of
  3 23 inheritance tax may be deferred for a remainderman until such
  3 24 time as the property actually passes to that person.
  3 25    When inheritance tax deferral is elected, Iowa law requires
  3 26 that a bond be given to secure the payment of the tax unless the
  3 27 estate contains real property and the automatic lien on such
  3 28 real property is sufficient to secure payment of the deferred
  3 29 tax.
  3 30    The bill provides that, in lieu of a bond, an estate
  3 31 containing personal property, real property, or a mix of
  3 32 both, may provide other security to secure payment of the
  3 33 deferred tax.  The bill provides that the other security must
  3 34 be satisfactory to the department of revenue (DOR).  The bill
  3 35 includes as examples of other security a bank or securities
  4  1 account with an irrevocable pay=on=death or transfer=on=death
  4  2 provision naming DOR as beneficiary, or an escrow agreement
  4  3 with DOR under which a private attorney will act as escrow
  4  4 agent and hold the escrow funds in the attorney's trust
  4  5 account.
  4  6    The bill requires that a description of the type and amount
  4  7 of the other security be added to the record of the deferred
  4  8 estate required to be kept under Code section 450.20.
  4  9    The bill applies to estates of decedents that include a
  4 10 deferred estate or remainder interest and that have not, on
  4 11 or before July 1, 2018, received approval from DOR to defer
  4 12 payment of the inheritance tax.
       LSB 5190SV (1) 87
       mm/jh