HSB 98 (LSB 1664YC (7) 85)

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 the armed forces by modifying the military service property tax exemption and credit, providing an additional homestead credit for certain disabled veterans, making penalties applicable, and including applicability provisions.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

    Section 1.  Section 425.15, Code 2013, is amended to read as follows:
   425.15  Disabled veteran tax credit.
   If the owner of a homestead allowed a credit under this chapter is a veteran of any of the military forces of the United States, who acquired the homestead under 38 U.S.C. § 21.801, 21.802,
 
prior to August 6, 1991, or 38 U.S.C. § 2101,
 
through 2102,
 
who is a veteran as defined in section 35.1 with a permanent and total service-connected disability as certified by the United States department of veterans affairs, or who is a former member of the national guard of any state who meets the service requirements of section 35.1, subsection 2, paragraph “b”, subparagraph (2) or (7), with a permanent and total service-connected disability as certified by the United States department of veterans affairs, the credit allowed on the homestead from the homestead credit fund shall be the entire amount of the tax levied on the homestead. The credit allowed shall be continued to the estate of a veteran who is deceased or the surviving spouse and any child, as defined in section 234.1, who are the beneficiaries of a deceased veteran, so long as the surviving spouse remains unmarried. This section is not applicable to the holder of title to any homestead whose annual income, together with that of the titleholder’s spouse, if any, for the last preceding twelve-month income tax accounting period exceeds thirty-five thousand dollars. For the purpose of this section “income” means taxable income for federal income tax purposes plus income from securities of state and other political subdivisions exempt from federal income tax. A veteran or a beneficiary of a veteran who elects to secure the credit provided in this section is not eligible for any other real property tax exemption provided by law for veterans of military service. If a veteran acquires a different homestead, the credit allowed under this section may be claimed on the new homestead unless the veteran fails to meet the other requirements of this section.
    Sec. 2.  NEW SECTION.  425.15A  Disabled veteran tax limitation.  
   1.  For purposes of this section, unless the context otherwise requires:
   a.  “Base year” means the fiscal year immediately preceding the first fiscal year in which the additional homestead credit under this section is allowed on the disabled veteran’s homestead.
   b.  “Disabled veteran” means a veteran, as defined in section 35.1, who has a service-connected disability rating of at least fifty percent as certified by the United States department of veterans affairs. “Disabled veteran” also means a former member of the national guard of any state who otherwise meets the service requirements of section 35.1, subsection 2, paragraph “b”, subparagraph (2) or (7), who has a service-connected disability rating of at least fifty percent as certified by the United States department of veterans affairs.
   2.  A disabled veteran who is eligible for the credit allowed under section 425.1 may claim an additional homestead credit pursuant to this section. To claim the credit under this section, the disabled veteran shall file on or before June 30 of the base year for which the veteran is first claiming the credit. The amount of the credit equals the amount of property taxes, less the regular homestead credit allowed under section 425.1, due and payable in the coming fiscal year that exceeds the amount of property taxes, less the regular homestead credit allowed under section 425.1, that were due and payable in the base year. The credit under this section is payable from the homestead credit fund created in section 425.1.
   3.  Upon the filing and allowance of the claim, the claim shall be allowed on the disabled veteran’s homestead for successive years without further filing as long as the property is legally and equitably owned and used as a homestead by the disabled veteran on July 1 of each of those successive years. The credit allowed shall be continued to the estate of a veteran who is deceased or the surviving spouse and any child, as defined in section 234.1, who are the beneficiaries of a deceased veteran, so long as the surviving spouse remains unmarried.
    Sec. 3.  Section 426A.11, subsection 1, Code 2013, is amended by striking the subsection.
    Sec. 4.  Section 426A.11, subsections 2 and 4, Code 2013, are amended to read as follows:
   2.  The property, not to exceed one thousand eight hundred fifty-two
 
three thousand seven hundred five dollars in taxable value of an honorably separated, retired, furloughed to a reserve, placed on inactive status, or discharged veteran, as defined in section 35.1, subsection 2, paragraph “a” or “b”
 
or subsections 3 and 4 of this section.
   4.  For purposes of this chapter, unless the context otherwise requires, “veteran” also means a
 
any of the following:
   a.  A resident of this state who is a former member of the armed forces of the United States and who served for a minimum aggregate of eighteen months and who was discharged under honorable conditions. However, “veteran” also means a
   b.  A
 
resident of this state who is a former member of the armed forces of the United States and who, after serving fewer than eighteen months, was honorably discharged because of a service-related injury sustained by the veteran.
   c.  A resident of this state who is a current member of the national guard, organized reserves, or regular component of the armed forces of the United States.
   d.  A resident of this state who is a former member of the national guard of any state who otherwise meets the service requirements of section 35.1, subsection 2, paragraph “b”, subparagraph (2) or (7).
    Sec. 5.  Section 426A.12, Code 2013, is amended to read as follows:
   426A.12  Exemptions to relatives.

   1.  In case any person in the foregoing classifications does not claim the exemption from taxation
 
or for any member of the national guard, organized reserves, or a regular component of the armed forces of the United States whose death occurred in the line of duty, it shall be allowed in the name of the person to the same extent on the property of any one of the following persons in the order named:
   a.  The spouse, or surviving spouse remaining unmarried, of a veteran, as defined in this chapter or in section 35.1, subsection 2, paragraph “a” or “b”,
 
or of a person whose death occurred in the line of duty where they are living together or were living together at the time of the death of the veteran
 
or person.
   b.  The parent whose spouse is deceased and who remains unmarried, of a veteran, as defined in this chapter or in section 35.1, subsection 2, paragraph “a” or “b”,
 
or of a person whose death occurred in the line of duty whether living or deceased, where the parent is, or was at the time of death of the veteran
 
or person, dependent on the veteran
 
or person for support.
   c.  The minor child, or children owning property as tenants in common, of a deceased veteran, as defined in this chapter or in section 35.1, subsection 2, paragraph “a” or “b”
 
or of a person whose death occurred in the line of duty.
   2.  No more than one tax exemption shall be allowed under this section or section 426A.11 in the name of a veteran, as defined in this chapter or in section 35.1, subsection 2, paragraph “a” or “b”
 
or of a person whose death occurred in the line of duty.
    Sec. 6.  Section 426A.13, unnumbered paragraphs 1 and 2, Code 2013, are amended to read as follows:
   A person named in section 426A.11, who is a resident of and domiciled in the state of Iowa, shall receive a reduction equal to the exemption, to be made from any property owned by the person or owned by a family farm corporation of which the person is a shareholder and occupant of the property and so designated by proceeding as provided in the section. To be eligible to receive the exemption, the person claiming it shall have recorded in the office of the county recorder of the county in which is located the property designated for the exemption, evidence of property ownership by that person or the family farm corporation of which the person is a shareholder and the military certificate of satisfactory service, order transferring to inactive status, reserve, retirement, order of separation from service, honorable discharge or a copy of any of these documents of the person claiming or through whom is claimed the exemption. In the case of a person claiming the exemption as a veteran described in section 35.1, subsection 2, paragraph “b”, subparagraph (6) or (7),
 
or under section 426A.11, subsection 4, paragraph “d”, the person shall file the statement required by section 35.2.
   The person shall file with the appropriate assessor on forms obtained from the assessor the claim for exemption for the year for which the person is first claiming the exemption. The claim shall be filed not later than July 1 of the year for which the person is claiming the exemption. The claim shall set out the fact that the person is a resident of and domiciled in the state of Iowa, and a person within the terms of section 426A.11
 
or section 426A.12, and shall give the volume and page on which the certificate of satisfactory service, order of separation, retirement, furlough to reserve, inactive status, or honorable discharge or certified copy thereof is recorded in the office of the county recorder, and may include the designation of the property from which the exemption is to be made, and shall further state that the claimant is the equitable or legal owner of the property designated or if the property is owned by a family farm corporation, that the person is a shareholder of that corporation and that the person occupies the property. In the case of a person claiming the exemption as a veteran described in section 35.1, subsection 2, paragraph “b”, subparagraph (6) or (7),
 
or under section 426A.11, subsection 4, paragraph “d”, the person shall file the statement required by section 35.2.
    Sec. 7.  IMPLEMENTATION.  Section 25B.7 shall not apply to the credits or exemptions in this Act except to the extent provided in section 25B.7, subsection 2, paragraph “c”.
    Sec. 8.  APPLICABILITY.  This Act applies to property taxes due and payable in fiscal years beginning on or after July 1, 2014.
EXPLANATION
   This bill relates to property taxes of veterans and members of the armed forces.
   The disabled veterans tax credit under Code section 425.15 provides a credit on the homestead of an eligible veteran who acquired the homestead under specified federal programs in an amount equal to the entire amount of the tax levied on the homestead. This bill modifies the qualifications for the disabled veterans tax credit by adding to the list of veterans who are eligible for the credit, the following: (1) a veteran as defined in Code section 35.1 with a permanent and total service-connected disability as certified by the United States department of veterans affairs; and (2) a former member of the national guard of any state who otherwise meets the service requirements for Iowa national guard members under Code section 35.1(2)(b), subparagraph (2) or (7), with a permanent and total service-connected disability as certified by the United States department of veterans affairs. The bill also strikes the income limitation qualifications for the disabled veteran tax credit.
   The bill enacts new Code section 425.15A, which provides that the property tax on a disabled veteran’s homestead shall not increase from year to year. To receive this credit, the veteran must file on or before June 30 in a manner similar to filing for the regular homestead credit. Once the claim is filed and allowed, the veteran does not have to file for successive years so long as the property is still owned and used by the veteran as a homestead.
   The bill defines “disabled veteran” for the purposes of new Code section 425.15A to be a veteran as defined in Code section 35.1, and specified former members of the national guard of any state who have a service-connected disability rating of at least 50 percent as certified by the United States department of veterans affairs.
   Under current law, veterans of the First World War are entitled to a property tax exemption of $2,778 in taxable value and honorably discharged veterans who served during other specific time periods are entitled to a property tax exemption of $1,852 in taxable value. The bill removes the provision relating to veterans of the first World War and increases the exemption amount for all eligible veterans to $3,705.
   The bill also modifies the qualifications for the military service property tax exemption and credit by adding to the list of veterans who are eligible for the credit, the following: (1) a resident of this state who is a current member of the national guard, organized reserves, or regular component of the armed forces of the United States; (2) a resident of this state who is a former member of the national guard of any state who otherwise meets the service requirements for members of the Iowa national guard under Code section 35.1(2)(b), subparagraph (2) or (7); and (3) a resident of this state who served on federal active duty, other than training, in the armed forces of the United States and who was discharged under honorable conditions.
   The bill also amends Code section 426A.12 relating to the ability of relatives to claim the exemption and credit of a veteran to add relatives of a member of the national guard, organized reserves, or a regular component of the armed forces of the United States whose death occurred in the line of duty.
   Under current law, the state provides funding to local governments for the military service property tax exemption and credit up to $6.92 per $1,000 of assessed value of the exempt property. Code section 25B.7 provides that for a property tax credit or exemption enacted on or after January 1, 1997, if a state appropriation made to fund the credit or exemption is not sufficient to fully fund the credit or exemption, the political subdivision shall be required to extend to the taxpayer only that portion of the credit or exemption estimated by the department of revenue to be funded by the state appropriation. The provisions of Code section 25B.7 apply to the military service property tax credit and exemption to the extent of $6.92 per $1,000 of assessed value of the exempt property.
   The bill provides that Code section 25B.7 does not apply to the credits or exemptions in the bill except to the extent of $6.92 per $1,000 of assessed value of the exempt property for the military service property tax exemption and credit.
   The bill applies to property taxes due and payable in fiscal years beginning on or after July 1, 2014.