Senate Study Bill 3122 - Introduced SENATE FILE _____ BY (PROPOSED COMMITTEE ON VETERANS AFFAIRS BILL BY CHAIRPERSON BEALL) A BILL FOR An Act relating to property taxes of veterans by providing an 1 additional homestead credit for certain disabled veterans, 2 modifying the military service property tax exemption 3 and credit, making penalties applicable, and including 4 applicability provisions. 5 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 6 TLSB 5501XC (3) 85 md/sc

S.F. _____ Section 1. Section 425.15, Code 2014, 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 otherwise meets the service requirements 12 of section 35.1, subsection 2, paragraph “b” , subparagraph 13 (2) or (7), with a permanent and total service-connected 14 disability as certified by the United States department of 15 veterans affairs, the credit allowed on the homestead from 16 the homestead credit fund shall be the entire amount of the 17 tax levied on the homestead. The credit allowed shall be 18 continued to the estate of a veteran who is deceased or the 19 surviving spouse and any child, as defined in section 234.1 , 20 who are the beneficiaries of a deceased veteran, so long as 21 the surviving spouse remains unmarried. This section is not 22 applicable to the holder of title to any homestead whose annual 23 income, together with that of the titleholder’s spouse, if 24 any, for the last preceding twelve-month income tax accounting 25 period exceeds thirty-five thousand dollars. For the purpose 26 of this section “income” means taxable income for federal 27 income tax purposes plus income from securities of state and 28 other 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 5501XC (3) 85 md/sc 1/ 6

S.F. _____ requirements of this section . 1 Sec. 2. Section 426A.11, subsection 1, Code 2014, is amended 2 by striking the subsection. 3 Sec. 3. Section 426A.11, subsections 2 and 4, Code 2014, are 4 amended to read as follows: 5 2. The property, not to exceed one thousand eight hundred 6 fifty-two the lesser of ten percent of the taxable value or 7 fifteen thousand dollars in taxable value of an honorably 8 separated, retired, furloughed to a reserve, placed on inactive 9 status, or discharged veteran, as defined in section 35.1, 10 subsection 2 , paragraph “a” or “b” or subsections 3 and 4 of 11 this section . 12 4. For purposes of this chapter , unless the context 13 otherwise requires, “veteran” also means a any of the following: 14 a. A resident of this state who is a former member of the 15 armed forces of the United States and who served for a minimum 16 aggregate of eighteen months and who was discharged under 17 honorable conditions. However, “veteran” also means a 18 b. A resident of this state who is a former member of the 19 armed forces of the United States and who, after serving fewer 20 than eighteen months, was honorably discharged because of a 21 service-related injury sustained by the veteran. 22 c. A resident of this state who is a former member of the 23 national guard of any state who otherwise meets the service 24 requirements of section 35.1, subsection 2, paragraph “b” , 25 subparagraph (2) or (7). 26 Sec. 4. Section 426A.12, Code 2014, is amended to read as 27 follows: 28 426A.12 Exemptions to relatives. 29 1. In case any person in the foregoing classifications does 30 not claim the exemption from taxation, it shall be allowed in 31 the name of the person to the same extent on the property of any 32 one of the following persons in the order named: 33 a. The spouse, or surviving spouse remaining unmarried, 34 of a veteran, as defined in this chapter or in section 35.1, 35 -2- LSB 5501XC (3) 85 md/sc 2/ 6

S.F. _____ subsection 2 , paragraph “a” or “b” , where they are living 1 together or were living together at the time of the death of 2 the veteran. 3 b. The parent whose spouse is deceased and who remains 4 unmarried, of a veteran, as defined in this chapter or in 5 section 35.1, subsection 2 , paragraph “a” or “b” , whether living 6 or deceased, where the parent is, or was at the time of death of 7 the veteran, dependent on the veteran for support. 8 c. The minor child, or children owning property as tenants 9 in common, of a deceased veteran, as defined in this chapter or 10 in section 35.1, subsection 2 , paragraph “a” or “b” . 11 2. No more than one tax exemption shall be allowed under 12 this section or section 426A.11 in the name of a veteran, 13 as defined in this chapter or in section 35.1, subsection 2 , 14 paragraph “a” or “b” . 15 Sec. 5. Section 426A.13, unnumbered paragraphs 1 and 2, Code 16 2014, are amended to read as follows: 17 A person named in section 426A.11 , who is a resident of 18 and domiciled in the state of Iowa, shall receive a reduction 19 equal to the exemption, to be made from any property owned 20 by the person or owned by a family farm corporation of which 21 the person is a shareholder and occupant of the property and 22 so designated by proceeding as provided in the section. To 23 be eligible to receive the exemption, the person claiming it 24 shall have recorded in the office of the county recorder of 25 the county in which is located the property designated for the 26 exemption, evidence of property ownership by that person or the 27 family farm corporation of which the person is a shareholder 28 and the military certificate of satisfactory service, order 29 transferring to inactive status, reserve, retirement, order of 30 separation from service, honorable discharge or a copy of any 31 of these documents of the person claiming or through whom is 32 claimed the exemption. In the case of a person claiming the 33 exemption as a veteran described in section 35.1, subsection 34 2 , paragraph “b” , subparagraph (6) or (7), or under section 35 -3- LSB 5501XC (3) 85 md/sc 3/ 6

S.F. _____ 426A.11, subsection 4, paragraph “c” , the person shall file the 1 statement required by section 35.2 . 2 The person shall file with the appropriate assessor on forms 3 obtained from the assessor the claim for exemption for the year 4 for which the person is first claiming the exemption. The 5 claim shall be filed not later than July 1 of the year for which 6 the person is claiming the exemption. The claim shall set out 7 the fact that the person is a resident of and domiciled in the 8 state of Iowa, and a person within the terms of section 426A.11 9 or section 426A.12 , and shall give the volume and page on which 10 the certificate of satisfactory service, order of separation, 11 retirement, furlough to reserve, inactive status, or honorable 12 discharge or certified copy thereof is recorded in the office 13 of the county recorder, and may include the designation of the 14 property from which the exemption is to be made, and shall 15 further state that the claimant is the equitable or legal owner 16 of the property designated or if the property is owned by a 17 family farm corporation, that the person is a shareholder of 18 that corporation and that the person occupies the property. 19 In the case of a person claiming the exemption as a veteran 20 described in section 35.1, subsection 2 , paragraph “b” , 21 subparagraph (6) or (7), or under section 426A.11, subsection 22 4, paragraph “c” , the person shall file the statement required 23 by section 35.2 . 24 Sec. 6. APPLICABILITY. This Act applies to property taxes 25 due and payable in fiscal years beginning on or after July 1, 26 2014. 27 EXPLANATION 28 The inclusion of this explanation does not constitute agreement with 29 the explanation’s substance by the members of the general assembly. 30 This bill relates to property taxes of veterans by providing 31 an additional homestead credit for certain disabled veterans 32 and by modifying the military service property tax exemption. 33 The disabled veterans tax credit under Code section 425.15 34 provides a credit on the homestead of an eligible veteran 35 -4- LSB 5501XC (3) 85 md/sc 4/ 6

S.F. _____ who acquired the homestead under specified federal programs 1 in an amount equal to the entire amount of the tax levied 2 on the homestead. The bill modifies the qualifications for 3 the disabled veterans tax credit by adding the following to 4 the list of veterans who are eligible for the credit: (1) a 5 veteran as defined in Code section 35.1 with a permanent and 6 total service-connected disability as certified by the United 7 States department of veterans affairs; and (2) a former member 8 of the national guard of any state who otherwise meets the 9 service requirements for Iowa national guard members under Code 10 section 35.1(2)(b), subparagraph (2) or (7), with a permanent 11 and total service-connected disability as certified by the 12 United States department of veterans affairs. The bill also 13 strikes the income limitation qualifications for the disabled 14 veteran tax credit. 15 Under current law, veterans of the First World War are 16 entitled to a property tax exemption of $2,778 in taxable value 17 and honorably discharged veterans who served during other 18 specific time periods are entitled to a property tax exemption 19 of $1,852 in taxable value. The bill removes the provision 20 relating to veterans of the First World War and increases the 21 exemption amount for all eligible veterans to 10 percent of the 22 taxable value of the veteran’s property or $15,000, whichever 23 is less. 24 The bill also modifies the qualifications for the military 25 service property tax exemption and credit by adding the 26 following to the list of veterans who are eligible for the 27 credit: (1) a resident of this state who is a current member of 28 the national guard, organized reserves, or regular component of 29 the armed forces of the United States; (2) a resident of this 30 state who is a former member of the national guard of any state 31 who otherwise meets the service requirements for members of the 32 Iowa national guard under Code section 35.1(2)(b), subparagraph 33 (2) or (7); and (3) a resident of this state who served on 34 federal active duty, other than training, in the armed forces 35 -5- LSB 5501XC (3) 85 md/sc 5/ 6

S.F. _____ of the United States and who was discharged under honorable 1 conditions. 2 Under current law, the state provides funding to local 3 governments for the military service property tax exemption and 4 credit up to $6.92 per $1,000 of assessed value of the exempt 5 property. Code section 25B.7 provides that for a property tax 6 credit or exemption enacted on or after January 1, 1997, if a 7 state appropriation made to fund the credit or exemption is not 8 sufficient to fully fund the credit or exemption, the political 9 subdivision shall be required to extend to the taxpayer only 10 that portion of the credit or exemption estimated by the 11 department of revenue to be funded by the state appropriation. 12 The provisions of Code section 25B.7 apply to the military 13 service property tax credit and exemption to the extent of 14 $6.92 per $1,000 of assessed value of the exempt property. 15 The bill applies to property taxes due and payable in fiscal 16 years beginning on or after July 1, 2014. 17 -6- LSB 5501XC (3) 85 md/sc 6/ 6