House Study Bill 98 - Introduced HOUSE FILE _____ BY (PROPOSED COMMITTEE ON VETERANS AFFAIRS BILL BY CHAIRPERSON ALONS) A BILL FOR An Act relating to property taxes of veterans and members of 1 the armed forces by modifying the military service property 2 tax exemption and credit, providing an additional homestead 3 credit for certain disabled veterans, making penalties 4 applicable, and including applicability provisions. 5 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 6 TLSB 1664YC (7) 85 md/sc

H.F. _____ Section 1. Section 425.15, Code 2013, is amended to read as 1 follows: 2 425.15 Disabled veteran tax credit. 3 If the owner of a homestead allowed a credit under this 4 chapter is a veteran of any of the military forces of the 5 United States, who acquired the homestead under 38 U.S.C. 6 § 21.801, 21.802, prior to August 6, 1991, or 38 U.S.C. 7 § 2101 , through 2102, who is a veteran as defined in section 8 35.1 with a permanent and total service-connected disability 9 as certified by the United States department of veterans 10 affairs, or who is a former member of the national guard 11 of any state who meets the service requirements of section 12 35.1, subsection 2, paragraph “b” , subparagraph (2) or (7), 13 with a permanent and total service-connected disability as 14 certified by the United States department of veterans affairs, 15 the credit allowed on the homestead from the homestead credit 16 fund shall be the entire amount of the tax levied on the 17 homestead. The credit allowed shall be continued to the 18 estate of a veteran who is deceased or the surviving spouse 19 and any child, as defined in section 234.1 , who are the 20 beneficiaries of a deceased veteran, so long as the surviving 21 spouse remains unmarried. This section is not applicable to 22 the holder of title to any homestead whose annual income, 23 together with that of the titleholder’s spouse, if any, for 24 the last preceding twelve-month income tax accounting period 25 exceeds thirty-five thousand dollars. For the purpose of 26 this section “income” means taxable income for federal income 27 tax purposes plus income from securities of state and other 28 political subdivisions exempt from federal income tax. A 29 veteran or a beneficiary of a veteran who elects to secure the 30 credit provided in this section is not eligible for any other 31 real property tax exemption provided by law for veterans of 32 military service. If a veteran acquires a different homestead, 33 the credit allowed under this section may be claimed on the 34 new homestead unless the veteran fails to meet the other 35 -1- LSB 1664YC (7) 85 md/sc 1/ 8

H.F. _____ requirements of this section . 1 Sec. 2. NEW SECTION . 425.15A Disabled veteran tax 2 limitation. 3 1. For purposes of this section, unless the context 4 otherwise requires: 5 a. “Base year” means the fiscal year immediately preceding 6 the first fiscal year in which the additional homestead 7 credit under this section is allowed on the disabled veteran’s 8 homestead. 9 b. “Disabled veteran” means a veteran, as defined in section 10 35.1, who has a service-connected disability rating of at least 11 fifty percent as certified by the United States department of 12 veterans affairs. “Disabled veteran” also means a former member 13 of the national guard of any state who otherwise meets the 14 service requirements of section 35.1, subsection 2, paragraph 15 “b” , subparagraph (2) or (7), who has a service-connected 16 disability rating of at least fifty percent as certified by the 17 United States department of veterans affairs. 18 2. A disabled veteran who is eligible for the credit allowed 19 under section 425.1 may claim an additional homestead credit 20 pursuant to this section. To claim the credit under this 21 section, the disabled veteran shall file on or before June 30 22 of the base year for which the veteran is first claiming the 23 credit. The amount of the credit equals the amount of property 24 taxes, less the regular homestead credit allowed under section 25 425.1, due and payable in the coming fiscal year that exceeds 26 the amount of property taxes, less the regular homestead credit 27 allowed under section 425.1, that were due and payable in the 28 base year. The credit under this section is payable from the 29 homestead credit fund created in section 425.1. 30 3. Upon the filing and allowance of the claim, the claim 31 shall be allowed on the disabled veteran’s homestead for 32 successive years without further filing as long as the property 33 is legally and equitably owned and used as a homestead by 34 the disabled veteran on July 1 of each of those successive 35 -2- LSB 1664YC (7) 85 md/sc 2/ 8

H.F. _____ years. The credit allowed shall be continued to the estate 1 of a veteran who is deceased or the surviving spouse and any 2 child, as defined in section 234.1, who are the beneficiaries 3 of a deceased veteran, so long as the surviving spouse remains 4 unmarried. 5 Sec. 3. Section 426A.11, subsection 1, Code 2013, is amended 6 by striking the subsection. 7 Sec. 4. Section 426A.11, subsections 2 and 4, Code 2013, are 8 amended to read as follows: 9 2. The property, not to exceed one thousand eight hundred 10 fifty-two three thousand seven hundred five dollars in taxable 11 value of an honorably separated, retired, furloughed to a 12 reserve, placed on inactive status, or discharged veteran, as 13 defined in section 35.1, subsection 2 , paragraph “a” or “b” or 14 subsections 3 and 4 of this section . 15 4. For purposes of this chapter , unless the context 16 otherwise requires, “veteran” also means a any of the following: 17 a. A resident of this state who is a former member of the 18 armed forces of the United States and who served for a minimum 19 aggregate of eighteen months and who was discharged under 20 honorable conditions. However, “veteran” also means a 21 b. A resident of this state who is a former member of the 22 armed forces of the United States and who, after serving fewer 23 than eighteen months, was honorably discharged because of a 24 service-related injury sustained by the veteran. 25 c. A resident of this state who is a current member of the 26 national guard, organized reserves, or regular component of the 27 armed forces of the United States. 28 d. A resident of this state who is a former member of the 29 national guard of any state who otherwise meets the service 30 requirements of section 35.1, subsection 2, paragraph “b” , 31 subparagraph (2) or (7). 32 Sec. 5. Section 426A.12, Code 2013, is amended to read as 33 follows: 34 426A.12 Exemptions to relatives. 35 -3- LSB 1664YC (7) 85 md/sc 3/ 8

H.F. _____ 1. In case any person in the foregoing classifications does 1 not claim the exemption from taxation or for any member of the 2 national guard, organized reserves, or a regular component of 3 the armed forces of the United States whose death occurred in 4 the line of duty , it shall be allowed in the name of the person 5 to the same extent on the property of any one of the following 6 persons in the order named: 7 a. The spouse, or surviving spouse remaining unmarried, 8 of a veteran, as defined in this chapter or in section 35.1, 9 subsection 2 , paragraph “a” or “b” , or of a person whose death 10 occurred in the line of duty where they are living together or 11 were living together at the time of the death of the veteran or 12 person . 13 b. The parent whose spouse is deceased and who remains 14 unmarried, of a veteran, as defined in this chapter or in 15 section 35.1, subsection 2 , paragraph “a” or “b” , or of a person 16 whose death occurred in the line of duty whether living or 17 deceased, where the parent is, or was at the time of death of 18 the veteran or person , dependent on the veteran or person for 19 support. 20 c. The minor child, or children owning property as tenants 21 in common, of a deceased veteran, as defined in this chapter 22 or in section 35.1, subsection 2 , paragraph “a” or “b” or of a 23 person whose death occurred in the line of duty . 24 2. No more than one tax exemption shall be allowed under 25 this section or section 426A.11 in the name of a veteran, 26 as defined in this chapter or in section 35.1, subsection 2 , 27 paragraph “a” or “b” or of a person whose death occurred in the 28 line of duty . 29 Sec. 6. Section 426A.13, unnumbered paragraphs 1 and 2, Code 30 2013, are amended to read as follows: 31 A person named in section 426A.11 , who is a resident of 32 and domiciled in the state of Iowa, shall receive a reduction 33 equal to the exemption, to be made from any property owned 34 by the person or owned by a family farm corporation of which 35 -4- LSB 1664YC (7) 85 md/sc 4/ 8

H.F. _____ the person is a shareholder and occupant of the property and 1 so designated by proceeding as provided in the section. To 2 be eligible to receive the exemption, the person claiming it 3 shall have recorded in the office of the county recorder of 4 the county in which is located the property designated for the 5 exemption, evidence of property ownership by that person or the 6 family farm corporation of which the person is a shareholder 7 and the military certificate of satisfactory service, order 8 transferring to inactive status, reserve, retirement, order of 9 separation from service, honorable discharge or a copy of any 10 of these documents of the person claiming or through whom is 11 claimed the exemption. In the case of a person claiming the 12 exemption as a veteran described in section 35.1, subsection 13 2 , paragraph “b” , subparagraph (6) or (7), or under section 14 426A.11, subsection 4, paragraph “d” , the person shall file the 15 statement required by section 35.2 . 16 The person shall file with the appropriate assessor on forms 17 obtained from the assessor the claim for exemption for the year 18 for which the person is first claiming the exemption. The 19 claim shall be filed not later than July 1 of the year for which 20 the person is claiming the exemption. The claim shall set out 21 the fact that the person is a resident of and domiciled in the 22 state of Iowa, and a person within the terms of section 426A.11 23 or section 426A.12 , and shall give the volume and page on which 24 the certificate of satisfactory service, order of separation, 25 retirement, furlough to reserve, inactive status, or honorable 26 discharge or certified copy thereof is recorded in the office 27 of the county recorder, and may include the designation of the 28 property from which the exemption is to be made, and shall 29 further state that the claimant is the equitable or legal owner 30 of the property designated or if the property is owned by a 31 family farm corporation, that the person is a shareholder of 32 that corporation and that the person occupies the property. 33 In the case of a person claiming the exemption as a veteran 34 described in section 35.1, subsection 2 , paragraph “b” , 35 -5- LSB 1664YC (7) 85 md/sc 5/ 8

H.F. _____ subparagraph (6) or (7), or under section 426A.11, subsection 1 4, paragraph “d” , the person shall file the statement required 2 by section 35.2 . 3 Sec. 7. IMPLEMENTATION. Section 25B.7 shall not apply to 4 the credits or exemptions in this Act except to the extent 5 provided in section 25B.7, subsection 2, paragraph “c”. 6 Sec. 8. APPLICABILITY. This Act applies to property taxes 7 due and payable in fiscal years beginning on or after July 1, 8 2014. 9 EXPLANATION 10 This bill relates to property taxes of veterans and members 11 of the armed forces. 12 The disabled veterans tax credit under Code section 425.15 13 provides a credit on the homestead of an eligible veteran 14 who acquired the homestead under specified federal programs 15 in an amount equal to the entire amount of the tax levied on 16 the homestead. This bill modifies the qualifications for the 17 disabled veterans tax credit by adding to the list of veterans 18 who are eligible for the credit, the following: (1) a veteran 19 as defined in Code section 35.1 with a permanent and total 20 service-connected disability as certified by the United States 21 department of veterans affairs; and (2) a former member of the 22 national guard of any state who otherwise meets the service 23 requirements for Iowa national guard members under Code section 24 35.1(2)(b), subparagraph (2) or (7), with a permanent and total 25 service-connected disability as certified by the United States 26 department of veterans affairs. The bill also strikes the 27 income limitation qualifications for the disabled veteran tax 28 credit. 29 The bill enacts new Code section 425.15A, which provides 30 that the property tax on a disabled veteran’s homestead shall 31 not increase from year to year. To receive this credit, the 32 veteran must file on or before June 30 in a manner similar 33 to filing for the regular homestead credit. Once the claim 34 is filed and allowed, the veteran does not have to file for 35 -6- LSB 1664YC (7) 85 md/sc 6/ 8

H.F. _____ successive years so long as the property is still owned and 1 used by the veteran as a homestead. 2 The bill defines “disabled veteran” for the purposes of new 3 Code section 425.15A to be a veteran as defined in Code section 4 35.1, and specified former members of the national guard of 5 any state who have a service-connected disability rating of at 6 least 50 percent as certified by the United States department 7 of veterans affairs. 8 Under current law, veterans of the First World War are 9 entitled to a property tax exemption of $2,778 in taxable value 10 and honorably discharged veterans who served during other 11 specific time periods are entitled to a property tax exemption 12 of $1,852 in taxable value. The bill removes the provision 13 relating to veterans of the first World War and increases the 14 exemption amount for all eligible veterans to $3,705. 15 The bill also modifies the qualifications for the military 16 service property tax exemption and credit by adding to the list 17 of veterans who are eligible for the credit, the following: 18 (1) a resident of this state who is a current member of the 19 national guard, organized reserves, or regular component of the 20 armed forces of the United States; (2) a resident of this state 21 who is a former member of the national guard of any state who 22 otherwise meets the service requirements for members of the 23 Iowa national guard under Code section 35.1(2)(b), subparagraph 24 (2) or (7); and (3) a resident of this state who served on 25 federal active duty, other than training, in the armed forces 26 of the United States and who was discharged under honorable 27 conditions. 28 The bill also amends Code section 426A.12 relating to the 29 ability of relatives to claim the exemption and credit of a 30 veteran to add relatives of a member of the national guard, 31 organized reserves, or a regular component of the armed forces 32 of the United States whose death occurred in the line of duty. 33 Under current law, the state provides funding to local 34 governments for the military service property tax exemption and 35 -7- LSB 1664YC (7) 85 md/sc 7/ 8

H.F. _____ credit up to $6.92 per $1,000 of assessed value of the exempt 1 property. Code section 25B.7 provides that for a property tax 2 credit or exemption enacted on or after January 1, 1997, if a 3 state appropriation made to fund the credit or exemption is not 4 sufficient to fully fund the credit or exemption, the political 5 subdivision shall be required to extend to the taxpayer only 6 that portion of the credit or exemption estimated by the 7 department of revenue to be funded by the state appropriation. 8 The provisions of Code section 25B.7 apply to the military 9 service property tax credit and exemption to the extent of 10 $6.92 per $1,000 of assessed value of the exempt property. 11 The bill provides that Code section 25B.7 does not apply to 12 the credits or exemptions in the bill except to the extent of 13 $6.92 per $1,000 of assessed value of the exempt property for 14 the military service property tax exemption and credit. 15 The bill applies to property taxes due and payable in fiscal 16 years beginning on or after July 1, 2014. 17 -8- LSB 1664YC (7) 85 md/sc 8/ 8