Senate File 2380 - Reprinted SENATE FILE 2380 BY COMMITTEE ON WAYS AND MEANS (SUCCESSOR TO SSB 3250) (As Amended and Passed by the Senate March 17, 2010 ) A BILL FOR An Act relating to taxation, including the administration and 1 review of certain economic development programs and certain 2 tax incentive programs and the reenactment of the estate 3 tax and including effective date and retroactive and other 4 applicability provisions. 5 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 6 SF 2380 (4) 83 tw/sc/jh

S.F. 2380 DIVISION I 1 REVIEW AND REAUTHORIZATION OF PROGRAMS 2 Section 1. INTENT AND PURPOSE. 3 1. It is the intent of the general assembly that each tax 4 credit, withholding credit, and revenue division program should 5 effectuate the purposes for which it was enacted and that the 6 cost of such programs should be included more readily in the 7 yearly budgeting process. 8 2. The purposes of this Act are to provide for the regular 9 review of all tax credit, withholding credit, and revenue 10 division programs in order to facilitate the reauthorization 11 of successful programs and to do so at a cost that can be 12 accommodated by the state’s annual budget. 13 DIVISION II 14 LEGISLATIVE TAX EXPENDITURE COMMITTEE 15 Sec. 2. Section 2.45, Code Supplement 2009, is amended by 16 adding the following new subsection: 17 NEW SUBSECTION . 5. a. The legislative tax expenditure 18 committee which shall be composed of ten members of the general 19 assembly, consisting of five members from each house, to be 20 appointed by the legislative council. In appointing the five 21 members of each house to the committee, the council shall 22 appoint three members from the majority party and two members 23 from the minority party. 24 b. The legislative tax expenditure committee shall have the 25 powers and duties described in section 2.48. 26 Sec. 3. NEW SECTION . 2.48 Legislative tax expenditure 27 committee —— review of tax incentive programs. 28 1. Statement of principles of sound tax policy. The 29 legislative tax expenditure committee shall do all of the 30 following: 31 a. Issue a statement of principles of sound tax policy. 32 (1) In issuing the statement, the committee may consult with 33 the department of revenue, the legislative services agency, 34 and independent experts who have demonstrated expertise in 35 -1- SF 2380 (4) 83 tw/sc/jh 1/ 25

S.F. 2380 matters of tax policy, fiscal policy, and public finance such 1 as that typically found among tax attorneys, certified public 2 accountants, and faculty members at institutions of higher 3 learning in the state. 4 (2) The statement shall reflect to the extent practicable 5 the best practices of state and local taxation as recognized 6 by experts in the fields of economics, fiscal policy, law, 7 accounting, and public finance. 8 (3) The statement shall address issues of equity, 9 simplicity, competitiveness, public purpose, and adequacy as 10 those issues pertain to taxation in Iowa. 11 b. Evaluate any tax expenditure available under Iowa law 12 and assess its conformance with the statement of principles of 13 sound tax policy issued pursuant to paragraph “a” . For purposes 14 of this section, “tax expenditure” means an exclusion from 15 the operation or collection of a tax imposed in this state. 16 Tax expenditures include tax credits, exemptions, deductions, 17 and rebates. Tax expenditures also include sales tax refunds 18 issued pursuant to section 423.3 or section 423.4. 19 c. Establish and maintain a system for making available 20 to the public information about the amount and effectiveness 21 of tax expenditures, and the extent to which tax expenditures 22 comply with the statement of principles of sound tax policy. 23 2. Review of tax expenditures —— budget estimates. The 24 legislative tax expenditure committee shall do all of the 25 following: 26 a. Engage in the regular review of the state’s tax 27 expenditures. 28 (1) In reviewing tax expenditures, the committee may review 29 any tax expenditure at any time, but shall at a minimum perform 30 the reviews described in subsection 3. 31 (2) For each tax expenditure reviewed, the committee shall 32 submit a report to the legislative council containing the 33 results of the review. The report shall contain a statement 34 of the policy goals of the tax expenditure and a return on 35 -2- SF 2380 (4) 83 tw/sc/jh 2/ 25

S.F. 2380 investment calculation for the tax expenditure. For purposes 1 of this subparagraph, “return on investment calculation” 2 means analyzing the cost to the state of providing the tax 3 expenditure, analyzing the benefits realized by the state from 4 providing the tax expenditure, and reaching a conclusion as to 5 whether the benefits of the tax expenditure are worth the cost 6 to the state of providing the tax expenditure. 7 (3) The report described in subparagraph (2) may include 8 recommendations for better aligning tax expenditures with the 9 principles of sound tax policy issued pursuant to subsection 1. 10 b. (1) Estimate for each fiscal year, in conjunction with 11 the legislative services agency and the department of revenue, 12 the cost of each individual tax expenditure and the total cost 13 of all tax expenditures, and by December 15 provide those 14 estimates to the governor for use in the preparation of the 15 budget message under section 8.22 and to the general assembly 16 to be used in the budget process. 17 (2) The estimates provided pursuant to subparagraph (1) may 18 include the committee’s recommendations for the imposition of a 19 limitation on a specified tax expenditure, a limitation on the 20 total amount of tax expenditures, or any other recommendation 21 for a specific tax expenditure or the program under which the 22 tax expenditure is provided. 23 3. Schedule of review of certain tax expenditures. The 24 committee shall review the following tax expenditures and 25 incentives according to the following schedule: 26 a. In 2011: 27 (1) The high quality jobs program under chapter 15, 28 subchapter II, part 13. 29 (2) The tax credits for increasing research activities 30 available under sections 15.335, 15A.9, 422.10, and 422.33. 31 b. In 2012: 32 (1) The Iowa fund of funds program in chapter 15E, division 33 VII. 34 (2) Property tax revenue divisions for urban renewal areas 35 -3- SF 2380 (4) 83 tw/sc/jh 3/ 25

S.F. 2380 under section 403.19. 1 (3) The targeted jobs withholding credits available under 2 section 403.19A. 3 (4) Funding of urban renewal projects with increased local 4 sales and services tax revenues under section 423B.10. 5 (5) School tuition organization tax credits under sections 6 422.11S and 422.33. 7 (6) Tuition and textbook tax credits under section 422.12. 8 c. In 2013: 9 (1) The child and dependent care and early childhood 10 development tax credits under section 422.12C. 11 (2) The endow Iowa tax credits authorized under section 12 15E.305. 13 d. In 2014: 14 (1) Tax credits for investments in qualifying businesses 15 and community-based seed capital funds under chapter 15E, 16 division V. 17 (2) Historic preservation and cultural and entertainment 18 district tax credits under chapter 404A. 19 (3) Wind energy production tax credits under chapter 476B. 20 (4) Renewable energy tax credits under chapter 476C. 21 e. In 2015: 22 (1) The agricultural assets transfer tax credit under 23 section 175.37. 24 (2) The claim of right tax credit under section 422.5. 25 (3) The reduction in allocating income to Iowa by S 26 corporation shareholders under section 422.8. 27 (4) The minimum tax credit under sections 422.11B, 422.33, 28 and 422.60. 29 (5) The assistive device corporate tax credit under section 30 422.33. 31 (6) The charitable conservation contribution tax credit 32 under sections 422.11W and 422.33. 33 (7) The motor vehicle fuel tax credit under section 422.110. 34 4. A tax expenditure or incentive reviewed pursuant to 35 -4- SF 2380 (4) 83 tw/sc/jh 4/ 25

S.F. 2380 subsection 3 shall be reviewed again not more than five years 1 after the tax expenditure or incentive was most recently 2 reviewed. 3 DIVISION III 4 MAXIMUM AGGREGATE TAX CREDIT LIMIT FOR CERTAIN ECONOMIC 5 DEVELOPMENT PROGRAMS 6 Sec. 4. Section 15.119, subsection 1, Code Supplement 2009, 7 is amended by striking the subsection and inserting in lieu 8 thereof the following: 9 1. a. Notwithstanding any provision to the contrary in any 10 of the programs listed in subsection 2, the department, except 11 as provided in paragraph “b” , shall not authorize for any one 12 fiscal year an amount of tax credits for the programs specified 13 in subsection 2 that is in excess of one hundred twenty million 14 dollars. 15 b. The department may authorize an amount of tax credits 16 during a fiscal year that is in excess of the amount specified 17 in paragraph “a” , but the amount of such excess shall be counted 18 against the total amount of tax credits that may be authorized 19 for the next fiscal year. 20 DIVISION IV 21 FILM PROGRAM SUSPENSION 22 Sec. 5. Section 15.393, Code Supplement 2009, is amended by 23 adding the following new subsection: 24 NEW SUBSECTION . 5. The department shall not register a new 25 project pursuant to this section until July 1, 2012. 26 Sec. 6. EFFECTIVE UPON ENACTMENT. This division of this 27 Act, being deemed of immediate importance, takes effect upon 28 enactment. 29 DIVISION V 30 SUPPLEMENTAL RESEARCH ACTIVITIES CREDIT 31 Sec. 7. Section 15.335, Code Supplement 2009, is amended to 32 read as follows: 33 15.335 Research activities credit. 34 1. a. An eligible business may claim a corporate tax credit 35 -5- SF 2380 (4) 83 tw/sc/jh 5/ 25

S.F. 2380 for increasing research activities in this state during the 1 period the eligible business is participating in the program. 2 b. For purposes of this section, “research activities” 3 includes the development and deployment of innovative renewable 4 energy generation components manufactured or assembled in this 5 state. For purposes of this section, “innovative renewable 6 energy generation components” does not include a component 7 with more than two hundred megawatts of installed effective 8 nameplate capacity. 9 c. The tax credits for innovative renewable energy 10 generation components shall not exceed two million dollars. 11 2. a. (1) The In the case of an eligible business whose 12 gross revenues do not exceed twenty million dollars per year, 13 the credit equals the sum of the following: 14 (a) (1) Six and one-half Ten percent of the excess of 15 qualified research expenses during the tax year over the base 16 amount for the tax year based upon the state’s apportioned 17 share of the qualifying expenditures for increasing research 18 activities. 19 (b) (2) Six and one-half Ten percent of the basic research 20 payments determined under section 41(e)(1)(A) of the Internal 21 Revenue Code during the tax year based upon the state’s 22 apportioned share of the qualifying expenditures for increasing 23 research activities. 24 b. In the case of an eligible business whose gross revenues 25 exceed twenty million dollars per year, the credit equals the 26 sum of the following: 27 (1) Three percent of the excess of qualified research 28 expenses during the tax year over the base amount for the tax 29 year based upon the state’s apportioned share of the qualifying 30 expenditures for increasing research activities. 31 (2) Three percent of the basic research payments determined 32 under section 41(e)(1)(A) of the Internal Revenue Code during 33 the tax year based upon the state’s apportioned share of the 34 qualifying expenditures for increasing research activities. 35 -6- SF 2380 (4) 83 tw/sc/jh 6/ 25

S.F. 2380 (2) 3. The For purposes of subsection 2, the state’s 1 apportioned share of the qualifying expenditures for increasing 2 research activities is a percent equal to the ratio of 3 qualified research expenditures in this state to total 4 qualified research expenditures. 5 b. 4. a. In lieu of the credit amount computed in 6 paragraph “a” , subparagraph (1) subsection 2 , an eligible 7 business may elect to compute the credit amount for qualified 8 research expenses incurred in this state in a manner consistent 9 with the alternative incremental credit described in section 10 41(c)(4) of the Internal Revenue Code. The taxpayer may make 11 this election regardless of the method used for the taxpayer’s 12 federal income tax. The election made under this paragraph is 13 for the tax year and the taxpayer may use another or the same 14 method for any subsequent year. 15 c. b. For purposes of the alternate credit computation 16 method in paragraph “b” “a” , the credit percentages applicable 17 to qualified research expenses described in clauses (i), (ii), 18 and (iii) of section 41(c)(4)(A) of the Internal Revenue Code 19 are one and sixty-five hundredths percent, two and twenty 20 hundredths percent, and two and seventy-five hundredths 21 percent, respectively. as follows: 22 (1) In the case of an eligible business whose gross revenues 23 do not exceed twenty million dollars per year, the credit 24 percentages are two and fifty-four hundredths percent, three 25 and thirty-eight hundredths percent, and four and twenty-three 26 hundredths percent, respectively. 27 (2) In the case of an eligible business whose gross revenues 28 exceed twenty million dollars per year, the credit percentages 29 are seventy-six hundredths percent, one and two hundredths 30 percent, and one and twenty-seven hundredths percent, 31 respectively. 32 2. 5. The credit allowed in this section is in addition 33 to the credit authorized in section 422.10 and section 422.33, 34 subsection 5. However, if the alternative credit computation 35 -7- SF 2380 (4) 83 tw/sc/jh 7/ 25

S.F. 2380 method is used in section 422.10 or section 422.33, subsection 1 5, the credit allowed in this section shall also be computed 2 using that method. 3 3. 6. If the eligible business is a partnership, S 4 corporation, limited liability company, or estate or trust 5 electing to have the income taxed directly to the individual, 6 an individual may claim the tax credit allowed. The amount 7 claimed by the individual shall be based upon the pro rata 8 share of the individual’s earnings of the partnership, S 9 corporation, limited liability company, or estate or trust. 10 4. 7. a. For purposes of this section, “base amount” , 11 “basic research payment” , and “qualified research expense” mean 12 the same as defined for the federal credit for increasing 13 research activities under section 41 of the Internal Revenue 14 Code, except that for the alternative incremental credit such 15 amounts are for research conducted within this state. 16 b. For purposes of this section, “Internal Revenue Code” 17 means the Internal Revenue Code in effect on January 1, 2009. 18 5. 8. Any credit in excess of the tax liability for the 19 taxable year shall be refunded with interest computed under 20 section 422.25. In lieu of claiming a refund, a taxpayer may 21 elect to have the overpayment shown on its final, completed 22 return credited to the tax liability for the following year. 23 6. 9. The department of revenue shall by February 15 24 of each year issue an annual report to the general assembly 25 containing the total amount of all claims made by employers 26 under this section, and the portion of the claims issued as 27 refunds, for all claims processed during the previous calendar 28 year. The report shall contain the name of each claimant for 29 whom a tax credit in excess of five hundred thousand dollars 30 was issued and the amount of the credit received. 31 Sec. 8. APPLICABILITY. This division of this Act applies 32 to tax credits awarded under section 15.335 on or after July 33 1, 2010. 34 DIVISION VI 35 -8- SF 2380 (4) 83 tw/sc/jh 8/ 25

S.F. 2380 MAXIMUM AMOUNT OF ACCELERATED CAREER EDUCATION JOB CREDITS 1 Sec. 9. Section 260G.4B, subsection 1, Code 2009, is amended 2 to read as follows: 3 1. The total amount of program job credits from all 4 employers which shall be allocated for all accelerated career 5 education programs in the state in any one fiscal year shall 6 not exceed the sum of three million dollars in the fiscal 7 year beginning July 1, 2000, three million dollars in the 8 fiscal year beginning July 1, 2001, three million dollars 9 in the fiscal year beginning July 1, 2002, four million 10 dollars in the fiscal year beginning July 1, 2003, and six 11 million dollars in the fiscal year beginning July 1, 2004, 12 and every fiscal year thereafter five million four hundred 13 thousand dollars . Any increase in program job credits above 14 the six-million-dollar limitation per fiscal year shall be 15 developed, based on recommendations in a study conducted by 16 the department of economic development, pursuant to this 17 section , Code Supplement 2003, of the needs and performance of 18 approved programs in the fiscal years beginning July 1, 2000, 19 and July 1, 2001. A community college shall file a copy of 20 each agreement with the department of economic development. 21 The department shall maintain an annual record of the proposed 22 program job credits under each agreement for each fiscal year. 23 Upon receiving a copy of an agreement, the department shall 24 allocate any available amount of program job credits to the 25 community college according to the agreement sufficient for 26 the fiscal year and for the term of the agreement. When the 27 total available program job credits are allocated for a fiscal 28 year, the department shall notify all community colleges that 29 the maximum amount has been allocated and that further program 30 job credits will not be available for the remainder of the 31 fiscal year. Once program job credits have been allocated to 32 a community college, the full allocation shall be received by 33 the community college throughout the fiscal year and for the 34 term of the agreement even if the statewide program job credit 35 -9- SF 2380 (4) 83 tw/sc/jh 9/ 25

S.F. 2380 maximum amount is subsequently allocated and used. 1 DIVISION VII 2 MAXIMUM AMOUNT OF AGRICULTURAL ASSET TRANSFER TAX CREDITS 3 Sec. 10. Section 175.37, subsection 10, Code Supplement 4 2009, is amended to read as follows: 5 10. The amount of tax credit certificates that may be issued 6 pursuant to this section shall not exceed six three million 7 dollars in any fiscal year. The authority shall issue the tax 8 credit certificates on a first-come, first-served basis. 9 DIVISION VIII 10 ECONOMIC DEVELOPMENT REGION REVOLVING LOAN FUND TAX CREDIT 11 Sec. 11. Section 15E.231, subsection 2, Code Supplement 12 2009, is amended by striking the subsection. 13 Sec. 12. Section 15E.232, subsections 1 and 2, Code 2009, 14 are amended by striking the subsections. 15 Sec. 13. Section 422.33, subsection 17, Code Supplement 16 2009, is amended by striking the subsection. 17 Sec. 14. Section 422.60, subsection 9, Code Supplement 18 2009, is amended by striking the subsection. 19 Sec. 15. Section 533.329, subsection 2, paragraph k, Code 20 Supplement 2009, is amended by striking the paragraph. 21 Sec. 16. REPEAL. Sections 422.11K and 432.12F, Code 2009, 22 are repealed. 23 Sec. 17. RETROACTIVE APPLICABILITY. This division of this 24 Act applies retroactively to January 1, 2010, for tax years 25 beginning on or after that date. 26 DIVISION IX 27 MAXIMUM AMOUNT OF ENDOW IOWA TAX CREDITS 28 Sec. 18. Section 15E.305, subsection 2, unnumbered 29 paragraph 1, Code Supplement 2009, is amended to read as 30 follows: 31 The aggregate amount of tax credits authorized pursuant to 32 this section shall not exceed a total of three two million 33 seven hundred thousand dollars plus such additional credit 34 amount as provided by this section annually. The maximum 35 -10- SF 2380 (4) 83 tw/sc/jh 10/ 25

S.F. 2380 amount of tax credits granted to a taxpayer shall not exceed 1 five percent of the aggregate amount of tax credits authorized. 2 Sec. 19. EFFECTIVE UPON ENACTMENT. This division of this 3 Act, being deemed of immediate importance, takes effect upon 4 enactment. 5 Sec. 20. RETROACTIVE APPLICABILITY. This division of this 6 Act applies retroactively to January 1, 2010, for endow Iowa 7 tax credits authorized on or after that date. 8 DIVISION X 9 MAXIMUM AMOUNT OF SCHOOL TUITION ORGANIZATION TAX CREDITS 10 Sec. 21. Section 422.11S, subsection 7, paragraph a, 11 subparagraph (2), Code 2009, is amended to read as follows: 12 (2) “Total approved tax credits” means for the tax year 13 beginning in the 2006 calendar year, two million five hundred 14 thousand dollars, for the tax year beginning in the 2007 15 calendar year, five million dollars, and for tax years 16 beginning on or after January 1, 2008, seven 2011, six million 17 five seven hundred fifty thousand dollars. 18 DIVISION XI 19 VENTURE CAPITAL —— IOWA FUND OF FUNDS 20 Sec. 22. Section 15E.66, subsections 1 and 7, Code 2009, are 21 amended to read as follows: 22 1. The board may issue certificates and related tax 23 credits to designated investors which, if redeemed for the 24 maximum possible amount, shall not exceed a total aggregate 25 of one hundred sixty million dollars of tax credits. The 26 certificates shall be issued contemporaneously with a 27 commitment to invest in the Iowa fund of funds by a designated 28 investor. A certificate issued by the board shall have a 29 specific maturity date or dates designated by the board and 30 shall be redeemable only in accordance with the contingencies 31 reflected on the certificate or incorporated therein by 32 reference. A certificate and the related tax credit shall be 33 transferable by the designated investor. A tax credit shall 34 not be claimed or redeemed except by a designated investor or 35 -11- SF 2380 (4) 83 tw/sc/jh 11/ 25

S.F. 2380 transferee in accordance with the terms of a certificate from 1 the board. A tax credit shall not be claimed for a tax year 2 that begins earlier than the maturity date or dates stated 3 on the certificate. An individual may claim the credit of a 4 partnership, limited liability company, S corporation, estate, 5 or trust electing to have the income taxed directly to the 6 individual. The amount claimed by the individual shall be 7 based upon the pro rata share of the individual’s earnings from 8 the partnership, limited liability company, S corporation, 9 estate, or trust. Any tax credit in excess of the taxpayer’s 10 tax liability for the tax year may be credited to the tax 11 liability for the following seven years, or until depleted, 12 whichever is earlier. 13 7. In determining the one hundred million dollar maximum 14 aggregate limit in subsection 1 and the twenty million 15 dollar fiscal year limitation in subsection 5, the board shall 16 use the cumulative amount of scheduled aggregate returns on 17 certificates issued by the board to designated investors. 18 However, certificates and related tax credits which have 19 expired shall not be included and certificates and related tax 20 credits which have been redeemed shall be included only to the 21 extent of tax credits actually allowed. 22 Sec. 23. EFFECTIVE UPON ENACTMENT. This division of this 23 Act, being deemed of immediate importance, takes effect upon 24 enactment. 25 DIVISION XII 26 VENTURE CAPITAL —— INVESTMENT TAX CREDIT 27 Sec. 24. Section 422.33, subsection 13, Code Supplement 28 2009, is amended by striking the subsection. 29 Sec. 25. Section 422.60, subsection 6, Code Supplement 30 2009, is amended by striking the subsection. 31 Sec. 26. Section 533.329, subsection 2, paragraph i, Code 32 Supplement 2009, is amended by striking the paragraph. 33 Sec. 27. REPEAL. Sections 15E.51, 422.11G, and 432.12B, 34 Code 2009, are repealed. 35 -12- SF 2380 (4) 83 tw/sc/jh 12/ 25

S.F. 2380 Sec. 28. TAX CREDIT CERTIFICATE VALIDITY. Tax credit 1 certificates issued for future tax years for investments made 2 on or before July 1, 2010, under the provisions repealed in 3 this division of this Act are valid and may be claimed by a 4 taxpayer after the effective date of this division of this Act 5 in the tax year stated on the certificate. 6 DIVISION XIII 7 REFUNDABLE INVESTMENT TAX CREDITS FOR VALUE-ADDED AGRICULTURAL 8 PRODUCTS 9 Sec. 29. Section 15.333, subsection 3, Code Supplement 10 2009, is amended by striking the subsection. 11 Sec. 30. EFFECTIVE UPON ENACTMENT. This division of this 12 Act, being deemed of immediate importance, takes effect upon 13 enactment. 14 DIVISION XIV 15 MAXIMUM AMOUNT OF HISTORIC TAX CREDITS 16 Sec. 31. Section 404A.4, subsection 2, Code Supplement 17 2009, is amended by adding the following new paragraph: 18 NEW PARAGRAPH . d. For the fiscal year beginning July 1, 19 2012, and for each fiscal year thereafter, the department shall 20 reserve not more than forty-five million dollars worth of tax 21 credits for any one taxable year. 22 Sec. 32. Section 404A.4, subsection 4, paragraph a, Code 23 Supplement 2009, is amended to read as follows: 24 a. The total amount of tax credits that may be approved 25 for a fiscal year prior to the fiscal year beginning July 26 1, 2012, under this chapter shall not exceed fifty million 27 dollars. The total amount of tax credits that may be approved 28 for a fiscal year beginning on or after July 1, 2012, shall not 29 exceed forty-five million dollars. 30 DIVISION XV 31 ESTATE TAX REENACTED 32 Sec. 33. NEW SECTION . 451.1 Definitions. 33 As used in this chapter, unless the context otherwise 34 requires: 35 -13- SF 2380 (4) 83 tw/sc/jh 13/ 25

S.F. 2380 1. “Adjusted taxable estate” means the taxable estate 1 computed for federal estate tax purposes reduced by sixty 2 thousand dollars. 3 2. “Federal estate tax” means the tax imposed by the 4 provisions of the Federal Estate Tax Act. 5 3. “Federal Estate Tax Act” and all such similar terms, 6 means Title III of chapter 27 of the Acts of the Sixty-ninth 7 Congress of the United States, first session, appearing in 8 44 Statutes at Large, chapter 27, as of January 1, 2000, as 9 amended. 10 4. “Gross estate” means the gross estate as determined under 11 section 451.3. 12 5. “Internal Revenue Code” means the Internal Revenue Code 13 as of the implementation date of this chapter, as specified in 14 section 451.13. 15 6. “Iowa estate tax” means the tax imposed by this chapter. 16 7. “Month” means a calendar month. 17 8. “Net estate” means the net estate as determined under the 18 provisions of section 451.3. 19 9. “Personal representative” means the executor of the will 20 or administrator of the estate of the decedent, or if there 21 is no such executor or administrator appointed, qualified and 22 acting, then any person in actual or constructive possession of 23 any property included in the gross estate of the decedent. 24 Sec. 34. NEW SECTION . 451.2 Additional tax. 25 1. An amount equal to the federal estate tax credit for 26 state inheritance and estate taxes as allowed in the Internal 27 Revenue Code is imposed upon every transfer of the net estate 28 of every decedent being a resident of, or owning property in, 29 this state. 30 2. If the decedent is a resident of Iowa and all property 31 is located in Iowa, or is subject to the jurisdiction of the 32 courts of Iowa, an amount equal to the tax imposed under 33 subsection 1 shall be paid to the state of Iowa. If the 34 decedent is a nonresident or if property is located outside the 35 -14- SF 2380 (4) 83 tw/sc/jh 14/ 25

S.F. 2380 state of Iowa and not subject to jurisdiction of Iowa courts, 1 the tax shall be prorated on the basis that the Iowa property 2 bears to the total gross estate for federal tax purposes. 3 3. The total tax or the Iowa share of the total tax shall be 4 credited with the amount of any inheritance tax due the state 5 of Iowa as provided in chapter 450. 6 Sec. 35. NEW SECTION . 451.3 Gross and net estate. 7 The gross estate shall be the same as finally determined for 8 federal estate tax and the net estate shall be the gross estate 9 less deductions as permitted by federal law, in arriving at the 10 net taxable federal estate, all determined as provided in the 11 Internal Revenue Code. 12 Sec. 36. NEW SECTION . 451.4 Tax on net estate. 13 The tax imposed by this chapter shall be upon the transfer 14 of the total net estate of every decedent dying after the 15 implementation date of this chapter as provided in section 16 451.13. 17 Sec. 37. NEW SECTION . 451.5 Duty of personal 18 representative. 19 The personal representative of a decedent whose estate may 20 be subject to the tax imposed by this chapter, shall file 21 in the office of the director of revenue, on or before the 22 last day of the ninth month after the death of the decedent, 23 duplicate copies of the estate tax return provided for in the 24 Federal Estate Tax Act, and in like manner, duplicate copies 25 of all supplemental or amended returns. The values of all 26 items included in the gross estate, as shown by those returns, 27 or supplemental or amended returns, shall be considered as 28 the values of those items for the purposes of this chapter. 29 In case of revaluation or correction of valuation of any of 30 those items, either by supplemental or amended returns, or 31 by the federal commissioner of internal revenue, or by an 32 appellate tribunal by which the value is finally determined, 33 the corrected values shall be considered as the values of those 34 items for the purposes of this chapter. 35 -15- SF 2380 (4) 83 tw/sc/jh 15/ 25

S.F. 2380 Sec. 38. NEW SECTION . 451.6 Payment of tax. 1 The tax imposed by this chapter shall be paid by the personal 2 representative to the department of revenue on or before the 3 last day of the ninth month after the death of the decedent. 4 Sec. 39. NEW SECTION . 451.7 Disposal of tax. 5 The proceeds of this tax shall be paid into the general fund 6 of the state. 7 Sec. 40. NEW SECTION . 451.8 Claim for credit or refund. 8 If the personal representative of a resident decedent 9 shall have paid to the treasurer of the United States or 10 to a collector of internal revenue an estate tax under the 11 provisions of the Federal Estate Tax Act in respect of property 12 included in the gross estate, determined as herein provided, 13 and shall have claimed as credits or deductions against the 14 federal estate tax a sum less than the maximum credits or 15 deductions allowed by the provisions of the Federal Estate Tax 16 Act for any estate, inheritance, legacy or succession taxes 17 actually paid to any state or territory of the United States, 18 or to the District of Columbia, it shall be the personal 19 representative’s duty, with due diligence, to file in the 20 bureau of internal revenue a claim for credit or refund for 21 such amount, if any, as such estate shall be properly entitled 22 to receive under the provisions of the Federal Estate Tax Act 23 and of this chapter. 24 Sec. 41. NEW SECTION . 451.9 Appeal. 25 If any claim for refund or credit, or any part thereof, 26 shall be denied or disallowed by the commissioner of internal 27 revenue, the personal representative, the director of revenue, 28 or any person having an interest in said estate which may be 29 adversely affected by such denial or disallowance, may apply 30 to the judge of the court having jurisdiction of such estate, 31 for an order directing such personal representative to take, 32 perfect, and prosecute an appeal from the decision of the 33 commissioner of internal revenue to such court or tribunal as 34 may have jurisdiction of such matter, and, upon the granting 35 -16- SF 2380 (4) 83 tw/sc/jh 16/ 25

S.F. 2380 of such order, the director of revenue may assist in the 1 prosecution of such appeal. The judge of the court granting 2 such order may make a reasonable allowance for attorney fees 3 for the prosecution of such appeal, and direct the manner in 4 which the same, together with any other costs or expenses which 5 may be allowed by said court in connection therewith, shall be 6 paid. 7 Sec. 42. NEW SECTION . 451.10 Effect of allowance. 8 If any claim for credit or refund, or any part thereof, shall 9 be finally determined in favor of such personal representative, 10 any amount refunded or credited thereon shall inure to the 11 benefit of such estate. 12 Sec. 43. NEW SECTION . 451.11 Effect of disallowance. 13 If any claim for credit or refund or any part thereof, 14 shall be finally determined adversely to such personal 15 representative, for any reason other than lack of diligence or 16 other failure of duty on the personal representative’s part, 17 the amount so denied or disallowed, or so much thereof as 18 shall have been paid to the department of revenue under the 19 provisions of this chapter, shall, upon a claim duly filed 20 with, and proper showing made to, the director of revenue, 21 be refunded by the department of revenue to such personal 22 representative, and shall inure to the benefit of such estate. 23 Sec. 44. NEW SECTION . 451.12 Applicable statutes 24 penalties. 25 All the provisions of chapter 450 with respect to the lien 26 provisions of section 450.7, and the determination, imposition, 27 payment, and collection of the tax imposed under that chapter, 28 including penalty and interest upon delinquent taxes and the 29 confidentiality of the tax return, are applicable to this 30 chapter, except as they are in conflict with this chapter. The 31 exceptions to the lien provisions found in section 450.7 do 32 not apply to this chapter. The penalty provisions set out in 33 section 450.53 shall apply to a person in possession of assets 34 to be reported for purposes of taxation who willfully makes a 35 -17- SF 2380 (4) 83 tw/sc/jh 17/ 25

S.F. 2380 false or fraudulent return or willfully fails to pay the tax, 1 supply the information, make, sign, or file the required return 2 within the time required by law or a person who willfully 3 attempts in any manner to evade taxes imposed by this chapter 4 or avoid payment of the tax. The director of revenue shall 5 adopt rules necessary for the enforcement of this chapter. 6 Sec. 45. NEW SECTION . 451.13 Contingent implementation 7 —— applicability. 8 1. This chapter shall be implemented as of the date on 9 which a provision of the Internal Revenue Code providing for 10 a credit against federal estate taxes owed for the amount of 11 state inheritance and estate taxes paid, pursuant to chapter 12 450 and this chapter, is applicable. 13 2. This chapter applies to the estates of persons dying on 14 or after the implementation date specified in subsection 1. 15 CONFORMING AMENDMENTS 16 Sec. 46. Section 12.71, subsection 8, Code 2009, is amended 17 to read as follows: 18 8. Bonds issued under the provisions of this section are 19 declared to be issued for a general public and governmental 20 purpose and all bonds issued under this section shall be exempt 21 from taxation by the state of Iowa and the interest on the 22 bonds shall be exempt from the state income tax and the state 23 inheritance and estate tax. 24 Sec. 47. Section 12.80, subsection 3, Code 2009, is amended 25 to read as follows: 26 3. Bonds issued under this section are declared to be 27 issued for an essential public and governmental purpose and all 28 bonds issued under this section shall be exempt from taxation 29 by the state of Iowa and the interest on the bonds shall be 30 exempt from the state income tax and the state inheritance and 31 estate tax. 32 Sec. 48. Section 12.81, subsection 8, Code 2009, is amended 33 to read as follows: 34 8. Bonds issued under the provisions of this section are 35 -18- SF 2380 (4) 83 tw/sc/jh 18/ 25

S.F. 2380 declared to be issued for a general public and governmental 1 purpose and all bonds issued under this section shall be exempt 2 from taxation by the state of Iowa and the interest on the 3 bonds shall be exempt from the state income tax and the state 4 inheritance and estate tax. 5 Sec. 49. Section 12.87, subsection 8, Code Supplement 2009, 6 is amended to read as follows: 7 8. Any bonds issued and sold under the provisions of this 8 section are declared to be issued and sold for an essential 9 public and governmental purpose, and all bonds issued and sold 10 under this section except as otherwise provided in any trust 11 indentures, resolutions, or other instruments authorizing their 12 issuance shall be exempt from taxation by the state of Iowa and 13 the interest on the bonds shall be exempt from the state income 14 tax and the state inheritance and estate tax. 15 Sec. 50. Section 12.90A, subsection 9, Code Supplement 16 2009, is amended to read as follows: 17 9. Annual appropriation bonds issued under this section are 18 declared to be issued for an essential public and governmental 19 purpose and all annual appropriation bonds issued under this 20 section shall be exempt from taxation by the state of Iowa 21 and the interest on the annual appropriation bonds shall be 22 exempt from the state income tax and the state inheritance and 23 estate tax. 24 Sec. 51. Section 12.91, subsection 9, Code 2009, is amended 25 to read as follows: 26 9. Bonds issued under the provisions of this section are 27 declared to be issued for a general public and governmental 28 purpose and all bonds issued under this section shall be exempt 29 from taxation by the state of Iowa and the interest on the 30 bonds shall be exempt from the state income tax and the state 31 inheritance and estate tax. 32 Sec. 52. Section 16.177, subsection 8, Code 2009, is amended 33 to read as follows: 34 8. Bonds issued under this section are declared to be 35 -19- SF 2380 (4) 83 tw/sc/jh 19/ 25