HF 2589 (LSB 6674YH (2) 91)

HOUSE FILE 2589

BY  CROKEN

A BILL FOR

An Act relating to the taxation of religious institutions and societies.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

    Section 1.  Section 427.1, subsection 8, paragraph a, Code 2026, is amended to read as follows:
   a.  All grounds and buildings used or under construction by literary, scientific, charitable, benevolent, agricultural, and religious institutions and societies solely for their appropriate objects, not exceeding three hundred twenty acres in extent and not leased or otherwise used or under construction with a view to pecuniary profit. However, an organization mentioned in this subsection whose primary objective is to preserve land in its natural state may own or lease land not exceeding three hundred twenty acres in each county for its appropriate objects. For assessment years beginning on or after January 1, 2016, the exemption granted by this subsection shall also apply to grounds owned by a religious institution or society, not exceeding a total of fifty acres, if all monetary and in-kind profits of the religious institution or society resulting from use or lease of the grounds are used exclusively by the religious institution or society for the appropriate objects of the institution or society.  For assessment years beginning on or after January 1, 2027, a determination letter issued by the internal revenue service recognizing exemption of a religious institution or society under section 501(c)(3) of the Internal Revenue Code shall be conclusive evidence of eligibility for exemption under this subsection and such federal determination shall not be modified by the local assessor.
    Sec. 2.  Section 427.1, subsection 14, unnumbered paragraph 1, Code 2026, is amended to read as follows:
   A society or organization claiming an exemption under subsection 5, 8, or 33 shall file with the assessor not later than February 1 a statement upon forms to be prescribed by the director of revenue, describing the nature of the property upon which the exemption is claimed and setting out in detail any uses and income from the property derived from the rentals, leases, or other uses of the property not solely for the appropriate objects of the society or organization.  In addition, for statements filed on or after July 1, 2026, a religious institution or society may include a copy of the determination letter issued by the internal revenue service recognizing exemption of a religious institution or society under section 501(c)(3) of the Internal Revenue Code. For assessment years beginning on or after January 1, 2027, a determination letter issued by the internal revenue service recognizing exemption of a religious institution or society under section 501(c)(3) of the Internal Revenue Code shall be conclusive evidence of eligibility for exemption under subsection 8 and such federal determination shall not be modified by the local assessor. Upon the filing and allowance of the claim, the claim shall be allowed on the property for successive years without further filing as long as the property is used for the purposes specified in the original claim for exemption. When the property is sold or transferred, the county recorder shall provide notice of the transfer to the assessor. The notice shall describe the property transferred and the name of the person to whom title to the property is transferred.  A claim that has been allowed on property under subsection 8 shall be allowed after the transfer of the property if the property continues to be used for the purposes specified in the original claim for exemption. The county recorder shall notify both the transferor and the transferee before the termination of any exemption under subsection 8 and the filing requirements to continue the exemption on the property transferred.
EXPLANATION
The inclusion of this explanation does not constitute agreement with
the explanation’s substance by the members of the general assembly.
   Under current law, certain grounds used or under construction by a religious institution or society are exempt from property taxes. To claim such exemption, the religious institution or society must file a statement describing the nature of the property upon which the exemption is claimed and setting out in detail any uses and income from the property derived from the rentals, leases, or other uses of the property not solely for the appropriate objects of the religious institution or society. Once the claim has been allowed, and the exemption is applied to the property, the claim is allowed on the property for successive years without further filing as long as the property is used for the purposes specified in the original claim for exemption. When the property is sold or transferred, the county recorder shall provide notice of the transfer to the assessor. The notice shall describe the property transferred and the name of the person to whom title to the property is transferred.
   This bill provides that for assessment years beginning on or after January 1, 2027, a determination letter issued by the internal revenue service recognizing exemption of a religious institution or society under section 501(c)(3) of the Internal Revenue Code shall be conclusive evidence of eligibility for exemption of property taxes. A claim that has been allowed on property of a religious institution or society shall be allowed after the transfer of the property if the property continues to be used for the purposes specified in the original claim for exemption. The county recorder shall notify both the transferor and the transferee before the termination of any exemption of a religious institution or society and the filing requirements to continue the exemption on the property transferred.