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Senate File 2396 - IntroducedA Bill ForAn Act 1relating to state taxation by modifying lottery and
2alcoholic beverages provisions under the purview of the
3department of revenue, changing the taxation of lump sum
4distributions of retirement income, increasing estimated tax
5thresholds, making appropriations, and including effective
6date and retroactive applicability provisions.
7BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
1DIVISION I
2DISCLOSURE OF TAX INFORMATION
3 Section 1. Section 421.19, subsection 2, Code 2024, is
4amended by striking the subsection and inserting in lieu
5thereof the following:
62. The department may notify federal, state, or local
7law enforcement agencies, and may disclose state returns,
8state return information, state investigative information or
9audit information, or any other state information, to such law
10enforcement agencies, if the department has information that
11indicates any of the following:
12a. A person intentionally filed a false claim, affidavit,
13return, or other information with intent to evade tax or obtain
14a refund, credit, or other benefit from the department.
15b. A person failed to file a return with intent to evade a
16tax or filing requirement.
17c. A person failed to pay with the intent to evade tax.
18d. A person committed any act or omission that is a criminal
19offense under a provision of this title administered by the
20department.
21 Sec. 2. Section 421.19, subsection 3, Code 2024, is amended
22to read as follows:
233. Notwithstanding sections 422.20 and 422.72, the
24department may disclose state returns, state return
25information, state investigative or audit information, or any
26other state information as provided under this section.
27 Sec. 3. EFFECTIVE DATE. This division of this Act, being
28deemed of immediate importance, takes effect upon enactment.
29DIVISION II
30ANNUAL REPORTING
31 Sec. 4. Section 421.60, subsection 2, paragraph k, Code
322024, is amended by striking the paragraph.
33 Sec. 5. Section 422.75, Code 2024, is amended to read as
34follows:
35422.75 Statistics — publication.
-1- 1The department shall prepare and publish an annual report
2which shall include statistics reasonably available, with
3respect to the operation of this chapter, including amounts
4collected, classification of taxpayers, and such other facts
5as are deemed pertinent and valuable. The annual report shall
6also include the reports and information required pursuant to
7section 421.60, subsection 2, paragraph “k”.
8DIVISION III
9PROPERTY TAX — EXTENSIONS
10 Sec. 6. Section 425.20, subsection 3, Code 2024, is amended
11to read as follows:
123. In case of sickness, absence, or other disability of
13the claimant or if, in the judgment of the director of revenue
14or the director of health and human services, as applicable,
15 good cause exists and the claimant requests an extension, the
16director of health and human services may extend the time for
17filing a claim for reimbursement and the director of revenue
18may extend the time for filing a claim for credit. However,
19any further time granted shall not extend beyond December 31
20of the year following the year in which the claim was required
21to be filed. Claims filed as a result of this subsection shall
22be filed with the director of health and human services or the
23director of revenue, as applicable, who shall provide for the
24reimbursement of the claim to the claimant.
25DIVISION IV
26FARM TENANCY INCOME TAX EXCLUSION
27 Sec. 7. Section 422.7, subsection 14, paragraph a, Code
282024, is amended to read as follows:
29a. Subtract, to the extent included, net income received
30by an eligible individual pursuant to a farm tenancy agreement
31covering real property held by the eligible individual for
32ten or more years, if the eligible individual materially
33participated in a farming business for ten or more years in the
34aggregate.
35 Sec. 8. Section 422.7, subsection 14, paragraph f, Code
-2-12024, is amended by adding the following new subparagraph:
2 NEW SUBPARAGRAPH. (04) “Held” shall be determined with
3reference to the holding period provisions of section 1223 of
4the Internal Revenue Code and the federal regulations pursuant
5thereto.
6DIVISION V
7PASS-THROUGH ENTITIES
8 Sec. 9. Section 422.25C, subsection 2, Code 2024, is amended
9to read as follows:
102. For tax years beginning on or after January 1, 2020, any
11adjustments to a partnership’s or pass-through entity’s items
12of income, gain, loss, expense, or credit, or an adjustment to
13such items allocated to a partner that holds an interest in a
14partnership or pass-through entity for the reviewed year by
15the department as a result of a state partnership audit, shall
16be determined at the partnership level or pass-through entity
17level in the same manner as provided by section 6221(a) of the
18Internal Revenue Code and the regulations thereunder unless a
19different treatment is specifically provided in this title.
20The provisions of sections 6222, 6223, and 6227 of the Internal
21Revenue Code and the regulations thereunder shall also apply to
22a partnership or pass-through entity and its direct or indirect
23partners in the same manner as provided in such sections unless
24a different treatment is specifically provided in this title.
25For purposes of applying such sections, due account shall be
26made for differences in federal and Iowa terminology. The
27adjustment provided by section 6221(a) of the Internal Revenue
28Code shall be determined as provided in such section but shall
29be based on Iowa taxable income or other tax attributes of
30the partnership or pass-through entity as determined pursuant
31to this chapter for the reviewed year. The department shall
32issue a notice of adjustment to the partnership or pass-through
33entity. Such notice shall be treated as an assessment for the
34purposes of section 422.25, and the notice shall be appealable,
35except as provided in section 422.25, by the partnership or
-3-1pass-through entity pursuant to sections 422.28 and 422.29 and
2shall be issued within the time period provided by section
3422.25. Once the adjustments to partnership-related or
4pass-through entity-related items or reallocations of income,
5gains, losses, expenses, credits, and other attributes among
6such partners for the reviewed year are finally determined,
7the partnership or pass-through entity and any direct partners
8or indirect partners shall then be subject to the provisions
9of section 422.25, subsection 1, paragraph “e”, and section
10422.25A in the same manner as if the state partnership audit
11were a federal partnership level audit, and as if the final
12state partnership audit adjustment were a final federal
13partnership adjustment. The penalty exceptions in section
14421.27, subsection 2, paragraphs “b” and “c”, shall not apply
15to a state partnership audit.
16 Sec. 10. EFFECTIVE DATE. This division of this Act, being
17deemed of immediate importance, takes effect upon enactment.
18 Sec. 11. RETROACTIVE APPLICABILITY. This division of this
19Act applies retroactively to January 1, 2024.
20DIVISION VI
21SALES TAX CHANGES
22 Sec. 12. Section 423.36, subsection 9, paragraph a, Code
232024, is amended to read as follows:
24a. Except as provided in paragraph “b”, purchasers, users,
25and consumers of tangible personal property, specified digital
26products, or enumerated services taxed pursuant to subchapter
27II or III of this chapter or chapter 423B may be authorized,
28pursuant to rules adopted by the director, to remit tax owed
29directly to the department instead of the tax being collected
30and paid by the seller. To qualify for a direct pay tax permit,
31the purchaser, user, or consumer must accrue a tax liability of
32more than four eight thousand dollars in tax under subchapters
33II and III in a semimonthly monthly period and make deposits
34and file returns pursuant to section 423.31. This authority
35shall not be granted or exercised except upon application to
-4-1the director and then only after issuance by the director of a
2direct pay tax permit.
3 Sec. 13. Section 423.37, subsection 1, paragraph a, Code
42024, is amended to read as follows:
5a. As soon as practicable after a return is filed and
6within three years after the return is filed, the department
7may examine the return, assess and determine the tax due if
8the return is found to be incorrect, and give notice to the
9person liable for the tax of the assessment and determination
10as provided in paragraph “b”. If a return, when filed, is
11incorrect or insufficient, the department shall determine
12the amount of tax due from information or knowledge the
13department is able to obtain. The determination may be made
14using any generally recognized valid and reliable sampling
15technique, whether or not the person being audited has complete
16records, and if mutually agreed upon by the department and
17the person being audited. The period for the examination and
18determination of the correct amount of tax is unlimited in the
19case of a false or fraudulent return made with the intent to
20evade tax.
21DIVISION VII
22MOTOR FUEL TAXES
23 Sec. 14. Section 452A.3, subsection 1, paragraph b,
24unnumbered paragraph 1, Code 2024, is amended to read as
25follows:
26On and after July 1, 2026, an excise tax of thirty cents is
27imposed on each gallon of ethanol blended gasoline classified
28as E-15 or higher. Before July 1, 2026, the rate of the
29excise tax on ethanol blended gasoline classified as E-15 or
30higher shall be based on the number of gallons of ethanol
31blended gasoline classified as E-15 or higher that are
32distributed in this state as expressed as a percentage of the
33number of gallons of motor fuel distributed in this state,
34which is referred to as the distribution percentage. For
35purposes of this paragraph, only ethanol blended gasoline and
-5-1nonblended gasoline, not including aviation gasoline, shall
2be used in determining the percentage basis for the excise
3tax. The department shall determine the percentage basis
4for each determination period beginning January 1 and ending
5December 31 based on data from the reports filed pursuant to
6section 452A.33. Before June 1, the department may amend the
7distribution percentage due to a mistake, if there is a late
8report filed by a retail dealer to the department under section
9452A.33, subsection 1, or if the distribution percentage is
10not accurate. The rate for the excise tax shall apply for the
11period beginning July 1 and ending June 30 following the end
12of the determination period. Before July 1, 2026, the rate
13of the excise tax on each gallon of ethanol blended gasoline
14classified as E-15 or higher shall be as follows:
15 Sec. 15. Section 452A.3, subsection 3, paragraph a,
16subparagraph (2), unnumbered paragraph 1, Code 2024, is amended
17to read as follows:
18Except as otherwise provided in this section and in this
19subchapter, this subparagraph shall apply to the excise tax
20imposed on each gallon of biodiesel blended fuel classified
21as B-11 or higher used for any purpose for the privilege of
22operating motor vehicles in this state. On and after July 1,
232026, the rate of the excise tax on each gallon of biodiesel
24blended fuel classified as B-11 or higher is thirty-two
25and five-tenths cents. Before July 1, 2026, the rate of
26the excise tax shall be based on the number of gallons of
27biodiesel blended fuel classified as B-11 or higher that are
28distributed in this state as expressed as a percentage of
29the number of gallons of special fuel for diesel engines of
30motor vehicles distributed in this state, which is referred
31to as the distribution percentage. The department shall
32determine the percentage basis for each determination period
33beginning January 1 and ending December 31 based on data from
34the reports filed pursuant to section 452A.33. Before June
351, the department may amend the distribution percentage due
-6-1to a mistake, if there is a late report filed by a retail
2dealer to the department under section 452A.33, subsection 1,
3or the distribution percentage is not accurate. The rate of
4the excise tax shall apply for the period beginning July 1 and
5ending June 30 following the end of the determination period.
6Before July 1, 2026, the rate of the excise tax on each gallon
7of biodiesel blended fuel classified as B-11 or higher shall
8be as follows:
9 Sec. 16. Section 452A.15, subsection 5, Code 2024, is
10amended to read as follows:
115. The director may impose a civil penalty against any
12person who fails to timely file the reports or keep the records
13required under this section. The penalty shall be one hundred
14dollars for the first violation and shall increase by one
15hundred dollars for each additional violation occurring in the
16calendar year in which the first violation occurred.
17 Sec. 17. Section 452A.33, subsection 2, unnumbered
18paragraph 1, Code 2024, is amended to read as follows:
19On or before April 1 the department shall deliver a report
20to the governor and the legislative services agency. Before
21June 1, the department may amend the report due to a mistake,
22if there is a late report by a retail dealer under subsection
231, or if the report is not accurate. The report shall compile
24information reported by retail dealers to the department as
25provided in this section and shall at least include all of the
26following:
27 Sec. 18. Section 452A.41, subsection 5, paragraph a, Code
282024, is amended to read as follows:
29a. For the purpose of determining the amount of liability
30for the electric fuel tax, each dealer and user shall file with
31the department not later than July 31 for the period beginning
32January 1 and ending June 30, and not later than January 30
33 31 for the period beginning July 1 and ending December 30 31,
34a biannual tax return certified under penalties for false
35certification. The return shall show, with reference to each
-7-1location at which fuel is delivered or placed by the dealer or
2user into the battery or other energy storage device of any
3electric motor vehicle during the next preceding six calendar
4months, information as required by the department. On and
5after January 1, 2026, the department may require by rule that
6such tax returns be filed quarterly.
7 Sec. 19. Section 452A.44, Code 2024, is amended by adding
8the following new subsection:
9 NEW SUBSECTION. 4. If electric fuel is sold or dispensed
10for a nontaxable purpose, the purchaser may complete and
11provide an exemption certificate produced by the department to
12the license holder.
13DIVISION VIII
14VETERANS TRUST FUND AND LOTTERY
15 Sec. 20. Section 99G.3, Code 2024, is amended by adding the
16following new subsection:
17 NEW SUBSECTION. 17A. “Setoff program” means the program
18administered pursuant to section 421.65.
19 Sec. 21. Section 99G.7, subsection 1, paragraph e, Code
202024, is amended by striking the paragraph.
21 Sec. 22. Section 99G.39, subsection 3, Code 2024, is amended
22to read as follows:
233. Two million five hundred thousand dollars in lottery
24revenues shall be transferred each fiscal year to the veterans
25trust fund established pursuant to section 35A.13 prior to
26deposit of the lottery revenues in the general fund pursuant
27to section 99G.40. However, if the balance of the veterans
28trust fund is fifty million dollars or more on both July 1 of
29the current fiscal year and July 1 of the preceding fiscal
30year, the moneys shall be appropriated to the department for
31distribution to county directors of veteran affairs, with fifty
32percent of the moneys to be distributed equally to each county
33and fifty percent of the moneys to be distributed to each
34county based upon the population of veterans in the county,
35so long as the moneys distributed to a county do not supplant
-8-1moneys appropriated by that county for the county director of
2veteran affairs.
3 Sec. 23. Section 99G.41, subsections 1, 2, 3, and 4, Code
42024, are amended to read as follows:
51. Any claimant agency may submit to the department a
6list of the names of all persons indebted to such claimant
7agency or to persons on whose behalf the claimant agency is
8acting. The A lottery prize payment awarded as cash or cash
9equivalents is subject to the setoff program. Additionally, a
10debtor and the full amount of the debt shall be compiled in a
11list, and collectible from any lottery winnings prize payment
12awarded as cash or cash equivalents due the debtor without
13regard to limitations on the amounts that may be collectible in
14increments through garnishment or other proceedings. Such list
15shall constitute a valid lien upon and claim of lien against
16the lottery winnings prize payment of any debtor named in such
17list. The list shall contain the names of the debtors, their
18social security numbers if available, and any other information
19that assists the department in identifying the debtors named in
20the list. The list shall be treated the same as setoff program
21information under section 421.65, subsection 2, paragraph “a”.
222. The department is authorized and directed to withhold
23any winnings paid out directly by the department subject to the
24lien created by this section, and send notice to the winner or
25send notice as directed by the setoff program. However, if the
26winner appears and claims winnings in person, the department
27shall notify the winner at that time by hand delivery of such
28action. The department shall pay the funds over to the agency
29administering the offset to the setoff program.
303. Notwithstanding the provisions of section 99G.34 which
31prohibit disclosure by the department of certain portions
32of the contents of prize winner records or information,
33and notwithstanding any other confidentiality statute,
34the department may provide to a claimant agency the setoff
35program and public agency, as defined in section 421.65, all
-9-1information necessary to accomplish and effectuate the intent
2of this section.
34. The information obtained by a claimant agency from the
4department in accordance with this section shall retain its
5confidentiality and shall only be used by a claimant agency
6in the pursuit of its debt collection duties and practices.
7Any employee or prior employee of any claimant agency who
8unlawfully discloses any such information for any other
9purpose, except as otherwise specifically authorized by law,
10shall be subject to the same penalties specified by law for
11unauthorized disclosure of confidential information by an agent
12or employee of the department under this chapter.
13DIVISION IX
14ALCOHOLIC BEVERAGES
15 Sec. 24. Section 123.3, Code 2024, is amended by adding the
16following new subsection:
17 NEW SUBSECTION. 36A. “Operating still” means a still that
18is registered with the federal alcohol and tobacco tax and
19trade bureau of the United States department of the treasury
20and is actively used to manufacture spirits.
21 Sec. 25. Section 123.30, subsection 4, Code 2024, is amended
22to read as follows:
234. Notwithstanding any provision of this chapter to the
24contrary, a person holding a retail alcohol license to sell
25alcoholic beverages for consumption on the licensed premises
26may permit a customer to remove one unsealed bottle of wine
27for consumption off the premises if the customer has purchased
28and consumed a portion of the bottle of wine on the licensed
29premises. The licensee or the licensee’s agent shall securely
30reseal such bottle in a bag designed so that it is visibly
31apparent that the resealed bottle of wine has not been tampered
32with and provide a dated receipt for the resealed bottle of
33wine to the customer. A wine bottle resealed pursuant to the
34requirements of this subsection is subject to the requirements
35of sections 321.284 and 321.284A. A person holding a retail
-10-1alcohol license to sell alcoholic beverages for consumption on
2the licensed premises may permit a customer to carry an open
3container of wine from the person’s licensed premises into
4another immediately adjacent licensed premises that is covered
5by a license or permit that authorizes the consumption of wine,
6a temporarily closed public right-of-way, or a private place.
7 Sec. 26. Section 123.30, Code 2024, is amended by adding the
8following new subsection:
9 NEW SUBSECTION. 5. A person holding a retail alcohol
10license to sell alcoholic beverages for consumption on the
11licensed premises may permit a customer to carry an open
12container of wine or beer from the person’s licensed premises
13to one of the following immediately adjacent locations:
14a. Another licensed premises that authorizes the consumption
15of beer or wine.
16b. A temporarily closed public right-of-way.
17c. A private place.
18 Sec. 27. Section 123.43A, subsection 6, Code 2024, is
19amended to read as follows:
206. Notwithstanding any provision of this chapter to the
21contrary or the fact that a person is the holder of a class
22“A” native distilled spirits license, a native distillery may
23be granted a class “C” retail alcohol license as defined in
24section 123.30 for the same premises licensed under a class “A”
25native distilled spirits license where the manufacturing of
26native distilled spirits occurs. A native distillery may be
27granted not more than two class “C” retail alcohol licenses.
28A manufacturer of native distilled spirits distillery may be
29issued a class “C” retail alcohol license regardless of whether
30the manufacturer is also a manufacturer of beer pursuant to a
31class “A” beer permit or a manufacturer of native wine pursuant
32to a class “A” wine permit.
33 Sec. 28. Section 123.45, subsection 3, Code 2024, is amended
34to read as follows:
353. A person engaged in the wholesaling of beer or wine
-11-1may sell only disposable glassware, which is constructed of
2paper, paper laminated, or plastic materials and designed
3primarily for personal consumption on a one-time usage
4basis, to retailers for use within the premises of licensed
5establishments, for an amount which is greater than or equal
6to an amount which represents the greater of either the amount
7paid for the disposable glassware by the supplier or the amount
8paid for the disposable glassware by the wholesaler. Also,
9notwithstanding any other provision of this chapter or the
10fact that a person is the holder of a class “A” beer permit,
11a native brewery may be granted not more than two a class “C”
12retail alcohol licenses license or not more than two a special
13class “C” retail alcohol licenses license, both as defined in
14section 123.30, for the same premises licensed under a class
15“A” beer permit where the manufacturing of beer occurs. A
16native brewery may be granted not more than two class “C”
17retail alcohol licenses or two special class “C” retail alcohol
18licenses. A native brewery may be issued a class “C” retail
19alcohol license or a special class “C” retail alcohol license,
20 regardless of whether that person is also a manufacturer
21of native distilled spirits pursuant to a class “A” native
22distilled spirits license or a manufacturer of native wine
23pursuant to a class “A” wine permit.
24 Sec. 29. Section 123.176, subsection 5, Code 2024, is
25amended to read as follows:
265. Notwithstanding any other provision of this chapter
27or the fact that a person is the holder of a class “A” wine
28permit, a person engaged in the business of manufacturing
29native wine may be granted a class “C” retail alcohol license
30or special class “C” retail native wine license as defined in
31section 123.30, for the same premises licensed under a class
32“A” wine permit where the manufacturing of native wine occurs.
33A manufacturer of native wine may be granted not more than
34two class “C” retail alcohol licenses or special class “C”
35retail native wine licenses. A manufacturer of native wine
-12-1may be issued a class “C” retail alcohol license or special
2class “C” retail native wine license regardless of whether the
3manufacturer is also a manufacturer of beer pursuant to a class
4“A” beer permit or a manufacturer of native distilled spirits
5pursuant to a class “A” native distilled spirits license.
6DIVISION X
7INHERITANCE TAX — FUTURE CODE CHANGES DUE TO REPEAL
8 Sec. 30. Section 12D.9, subsection 3, Code 2024, is amended
9to read as follows:
103. State For a death occurring before January 1, 2025, state
11 inheritance tax treatment of interests in Iowa educational
12savings plans shall be as provided in section 450.4, subsection
138. This subsection shall apply to all Iowa educational savings
14plans existing on or after July 1, 1998.
15 Sec. 31. Section 12I.8, subsection 3, Code 2024, is amended
16to read as follows:
173. State For a death occurring before January 1, 2025, state
18 inheritance tax treatment of interests in Iowa ABLE savings
19plans shall be as provided in section 450.4, subsection 9.
20 Sec. 32. Section 12I.10, subsection 3, Code 2024, is amended
21to read as follows:
223. State For a death occurring before January 1, 2025, state
23 inheritance tax treatment of interests in the qualified ABLE
24program with which the state has contracted pursuant to this
25section shall be as provided in section 450.4, subsection 9.
26 Sec. 33. Section 16.177, subsection 8, Code 2024, is amended
27to read as follows:
288. Bonds issued under this section are declared to be issued
29for an essential public and governmental purpose and all bonds
30issued under this section shall be exempt from taxation by the
31state of Iowa and the interest on the bonds shall be exempt
32from the state income tax and the any state inheritance tax.
33 Sec. 34. Section 321.47, subsection 2, paragraph a, Code
342024, is amended to read as follows:
35a. The persons entitled under the laws of descent and
-13-1distribution to the possession and ownership of a vehicle owned
2in whole or in part by a decedent who died intestate, upon
3filing an affidavit stating the name and date of death of the
4decedent, the right to possession and ownership of the persons
5filing the affidavit, and that there has been no administration
6of the decedent’s estate, which instrument must also contain
7an agreement by the affiant to indemnify creditors of the
8decedent who would be entitled to levy execution upon the motor
9vehicle to the extent of the value of the motor vehicle, shall,
10upon complying with the other title transfer requirements of
11this chapter, be issued a registration card for the decedent’s
12interest in the vehicle and a certificate of title to the
13vehicle. If a decedent died testate, and either the will is
14not probated or is admitted to probate without administration,
15the persons entitled to the possession and ownership of
16a vehicle owned in whole or in part by the decedent may
17file an affidavit and, upon complying with the other title
18transfer requirements of this chapter, shall be issued a
19registration card for the decedent’s interest in the vehicle
20and a certificate of title to the vehicle. The affidavit
21must contain the same information and indemnity agreement
22as is required in cases of intestacy under this subsection.
23Chapter 450 is not For a death occurring before January 1,
242025, a requirement of chapter 450 shall not be considered
25 satisfied by the filing of the affidavit provided for in this
26subsection. If, from the records in the office of the county
27treasurer, there appear to be any liens on the vehicle, the
28certificate of title must contain a statement of the liens
29unless the application is accompanied by proper evidence of
30the satisfaction or extinction of such liens. Evidence of
31extinction includes but is not limited to an affidavit of the
32applicant stating that a security interest was foreclosed as
33provided in chapter 554, article 9, part 6. The department
34shall waive the certificate of title fee and surcharge required
35under sections 321.20, 321.20A, 321.23, 321.46, 321.52, and
-14-1321.52A if the person entitled to possession and ownership of
2a vehicle, as provided in this subsection, is the surviving
3spouse of a decedent.
4 Sec. 35. Section 331.602, subsection 23, Code 2024, is
5amended to read as follows:
623. Forward For deaths occurring before January 1, 2025,
7forward to the director of revenue a copy of any deed, bill of
8sale, or other transfer which shows that it is made or intended
9to take effect at or after the death of the person executing
10the instrument as provided in section 450.81.
11 Sec. 36. Section 331.756, subsection 57, Code 2024, is
12amended to read as follows:
1357. Represent For a death occurring before January 1, 2025,
14represent the state in litigation relating to the inheritance
15tax if requested by the department of revenue as provided in
16section 450.1.
17 Sec. 37. Section 421.27, subsection 1, paragraph d,
18subparagraph (13), Code 2024, is amended to read as follows:
19(13) That For a death occurring before January 1, 2025,
20that an Iowa inheritance tax return is filed for an estate
21within the later of nine months from the date of death or sixty
22days from the filing of a disclaimer by the beneficiary of the
23estate refusing to take the property or right or interest in
24the property.
25 Sec. 38. Section 421.60, subsection 2, paragraph c,
26subparagraph (1), Code 2024, is amended to read as follows:
27(1) If the notice of assessment or denial of a claim for
28refund relates to a tax return filed pursuant to section
29422.14, or pursuant to chapter 450 for a death occurring before
30January 1, 2025, by the taxpayer which designates an individual
31as an authorized representative of the taxpayer with respect to
32that return, or if a power of attorney has been filed with the
33department by the taxpayer which designates an individual as
34an authorized representative of the taxpayer with respect to
35any tax that is included in the notice of assessment or denial
-15-1of a claim for refund, a copy of the notice together with any
2additional information required to be sent to the taxpayer
3shall be sent to the authorized representative as well.
4 Sec. 39. Section 422.27, subsection 1, Code 2024, is amended
5to read as follows:
61. A final account of a personal representative, as defined
7in section 450.1, shall not be allowed by any court unless the
8account shows, and the judge of the court finds, that all taxes
9imposed by this subchapter upon the personal representative,
10which have become payable, have been paid, and that all taxes
11which may become due are secured by bond or deposit, or are
12otherwise secured. The certificate of acquittances of the
13department of revenue is conclusive as to the payment of the
14tax to the extent of the acquittance. This subsection does
15not apply if all property in the estate of a decedent is
16held in joint tenancy with right of survivorship by husband
17and wife alone. For purposes of this subsection, “personal
18representative” means an administrator, executor, or trustee as
19each is defined in section 633.3.
20 Sec. 40. Section 455G.6, subsection 14, Code 2024, is
21amended to read as follows:
2214. Bonds issued under the provisions of this section are
23declared to be issued for an essential public and governmental
24purpose and all bonds issued under this subchapter shall be
25exempt from taxation by the state of Iowa and the interest on
26the bonds shall be exempt from the state income tax and the any
27 state inheritance tax.
28 Sec. 41. Section 496C.14, subsection 6, paragraph h, Code
292024, is amended to read as follows:
30h. Notwithstanding the provisions of this section,
31payment of any part of the purchase price for shares of a
32deceased shareholder shall not be required until the executor
33or administrator of the deceased shareholder provides
34any indemnity, release, or other document from any taxing
35authority, which is reasonably necessary to protect the
-16-1corporation against liability for any estate, inheritance, and
2death taxes tax, or any inheritance tax for a death occurring
3before January 1, 2025.
4 Sec. 42. Section 524.805, subsection 8, Code 2024, is
5amended to read as follows:
68. A state bank may receive deposits from one or more
7persons with the provision that upon the death of the
8depositors the deposit account shall be the property of the
9person or persons designated by the deceased depositors as
10shown on the deposit account records of the state bank. After
11payment by the state bank, the proceeds shall remain subject
12to the any debts of the decedent and the any payment of Iowa
13inheritance tax, if any for a death occurring prior to January
141, 2025. A state bank paying the person or persons designated
15shall not be liable as a result of that action for any debts
16of the decedent or for any estate, inheritance, or succession
17taxes which may be due this state.
18 Sec. 43. Section 541A.2, subsection 6, unnumbered paragraph
191, Code 2024, is amended to read as follows:
20An individual development account closed in accordance
21with this subsection is not subject to the limitations and
22benefits provided by this chapter but is subject to state tax
23in accordance with the provisions of section 422.7, subsection
2417, and in accordance with the provisions of section 450.4,
25subsection 6, for a death occurring before January 1, 2025. An
26individual development account may be closed for any of the
27following reasons:
28 Sec. 44. Section 602.8102, subsection 63, Code 2024, is
29amended to read as follows:
3063. Carry out duties relating to the inheritance tax as
31provided in chapter 450 for deaths occurring before January 1,
322025.
33 Sec. 45. Section 633.21, Code 2024, is amended to read as
34follows:
35633.21 Appraisers’ fees and referees’ fees fixed by rule.
-17- 1The district judges of each judicial district shall by rule
2fix the fees of probate referees, and also provide, insofar as
3practicable, a uniform schedule of compensation for inheritance
4 tax appraisers, other appraisers, brokers, and agents employed
5at estate expense.
6 Sec. 46. Section 633.31, subsection 2, paragraph a, Code
72024, is amended to read as follows:
8a. For services performed in short form probates
9pursuant to sections 450.22 and 450.44 for deaths occurring
10before January 1, 2025$ 15.00
11 Sec. 47. Section 633.356, subsection 1, unnumbered
12paragraph 1, Code 2024, is amended to read as follows:
13When the gross value of the decedent’s personal property
14that would otherwise be distributed by will or intestate
15succession is or has been, at any time since the decedent’s
16death, fifty thousand dollars or less and there is no real
17property, or for deaths occurring before January 1, 2025, the
18real property passes to persons exempt from inheritance tax
19as joint tenants with full rights of survivorship pursuant to
20chapter 450, and if forty days have elapsed since the death of
21the decedent, a successor as defined in subsection 2 may, by
22furnishing an affidavit prepared pursuant to subsection 3 or
238, and without procuring letters of appointment, do any of the
24following with respect to one or more items of such personal
25property:
26 Sec. 48. Section 633.356, subsection 3, paragraph a,
27subparagraph (3), Code 2024, is amended to read as follows:
28(3) That the gross value of the decedent’s personal property
29that would otherwise be distributed by will or intestate
30succession is, or has been at any time since the decedent’s
31death, fifty thousand dollars or less and there is no real
32property, or for deaths occurring before January 1, 2025, the
33real property passes to persons exempt from inheritance tax
34as joint tenants with full rights of survivorship pursuant to
35chapter 450.
-18-1 Sec. 49. Section 633.356, subsection 3, paragraph a,
2subparagraph (10), Code 2024, is amended to read as follows:
3(10) That no inheritance or other taxes are owed to the
4department of revenue for a death occurring prior to January 1,
52025, or if taxes are owed, that the taxes will be paid to the
6extent of funds received pursuant to the affidavit.
7 Sec. 50. Section 633.356, subsection 9, Code 2024, is
8amended to read as follows:
99. Upon receipt of an affidavit under subsection 3 and
10reasonable proof under subsection 5 of the identity of each
11successor seeking distribution by virtue of the affidavit,
12the holder of the property shall disclose to the affiant
13whether the value of the property held by the holder is, or has
14been at any time since the decedent’s death, fifty thousand
15dollars or less. An affidavit furnished for the purpose of
16determining whether the value of the property is, or has
17been at any time since the decedent’s death, fifty thousand
18dollars or less need not contain the language required under
19subsection 3, paragraph “a”, subparagraph (3), but shall state
20that the affiant reasonably believes that the gross value
21of the decedent’s personal property that would otherwise be
22distributed by will or intestate succession is, or has been at
23any time since the decedent’s death, fifty thousand dollars
24or less and there is no real property or for deaths occurring
25before January 1, 2025, the real property passes to persons
26exempt from inheritance tax as joint tenants with full rights
27of survivorship pursuant to chapter 450.
28 Sec. 51. Section 633.361, subsection 12, Code 2024, is
29amended to read as follows:
3012. A listing of all other items, with estimated values,
31which are subject to Iowa inheritance tax for deaths occurring
32before January 1, 2025, or federal estate tax.
33 Sec. 52. Section 633.365, Code 2024, is amended to read as
34follows:
35633.365 Appraisement.
-19- 1Property belonging to the estate need not be appraised
2unless required for inheritance tax purposes for deaths
3occurring before January 1, 2025, under the provisions of this
4probate code, or by order of court.
5 Sec. 53. Section 633.399, Code 2024, is amended to read as
6follows:
7633.399 Report for approval.
8After making any such sale, mortgage, exchange or lease
9of real property, the personal representative shall make
10a verified report thereof to the court. The court shall
11examine said report, and if satisfied that the sale, mortgage,
12exchange, or lease has been at a price and upon terms
13advantageous to the estate, and, in all respects, made in
14conformity with law, and that it ought to be confirmed, shall
15confirm the same and order the personal representative to
16deliver a deed, mortgage, lease or other proper instruments
17to the persons entitled thereto; provided, however, that in
18the event said real property has been sold at private sale
19without an appraisal for inheritance tax purposes for a death
20occurring before January 1, 2025, or for purpose of such sale,
21or, if it has been so appraised and has been sold at private
22sale for less than the appraised value thereof, then, upon the
23filing of such report, the court may enter an order fixing a
24time and place for hearing thereon and prescribe a notice of
25such hearing to be served upon all interested persons, any one
26of whom, prior to the time fixed for such hearing, may file
27written objections to the entry of an order approving said
28sale. If not satisfied that the sale, mortgage, exchange, or
29lease has been made in conformity with law and that it is to the
30best interests of the estate, the court may reject the sale,
31mortgage, exchange, or lease, and enter such orders as the
32court may deem advisable.
33 Sec. 54. Section 633.477, subsection 10, Code 2024, is
34amended to read as follows:
3510. A statement as to whether or not all statutory
-20-1requirements pertaining to taxes have been complied with
2including whether the federal estate tax due has been paid,
3whether a lien continues to exist for any federal estate tax,
4and whether inheritance tax was paid or a return was filed in
5this state for a death occurring before January 1, 2025.
6 Sec. 55. Section 633.479, subsection 2, paragraph a,
7subparagraph (5), Code 2024, is amended to read as follows:
8(5) Compliance with sections section 422.27, and section
9 450.58 for deaths occurring before January 1, 2025, have been
10fulfilled.
11 Sec. 56. Section 633.481, Code 2024, is amended to read as
12follows:
13633.481 Certificate to county recorder for tax purposes
14without administration.
15When an inventory or report is filed under section 450.22 for
16deaths occurring before January 1, 2025, without administration
17of the estate of the decedent, the heir or heir’s attorney
18shall prepare and deliver to the county recorder of the county
19in which the real estate is situated a certificate pertaining
20to each parcel of real estate described in the inventory or
21report. Any fees for certificates or recording fees required
22by this section or section 633.480 shall be assessed as costs
23of administration. The fees for recording and indexing the
24instrument shall be as provided in section 331.604. The county
25recorder shall deliver the certificates to the county auditor
26as provided in section 558.58.
27 Sec. 57. Section 635.7, subsection 1, Code 2024, is amended
28to read as follows:
291. The personal representative is required to file the
30report and inventory for which provision is made in section
31633.361, including all probate and nonprobate assets. This
32chapter does not exempt the personal representative from
33complying with the requirements of section 422.27, 450.22,
34450.58, 633.480, or 633.481, and the administration of an
35estate whether converted to or from a small estate shall be
-21-1considered one proceeding pursuant to section 633.330. For
2a death occurring before January 1, 2025, this chapter does
3not exempt the personal representative from complying with the
4requirements of section 450.22 or 450.58.
5 Sec. 58. Section 635.8, subsection 1, paragraph e, Code
62024, is amended to read as follows:
7e. A statement that all statutory requirements pertaining to
8taxes have been complied with, including whether federal estate
9tax due has been paid, whether a lien continues to exist for
10any federal estate tax, and whether inheritance tax was paid
11or a tax return was filed in this state for a death occurring
12before January 1, 2025.
13 Sec. 59. Section 654.16, subsection 2, Code 2024, is amended
14to read as follows:
152. If a homestead is designated, the court shall determine
16the fair market value of the designated homestead before
17the sheriff’s sale. The court may consult with the county
18appraisers appointed pursuant to section 450.24 for deaths
19occurring before January 1, 2025, or with one or more
20independent appraisers, to determine the fair market value of
21the designated homestead.
22 Sec. 60. EFFECTIVE DATE. This division of this Act takes
23effect January 1, 2025.
24 Sec. 61. APPLICABILITY. This division of this Act applies
25to the estates of decedents dying on or after January 1, 2025.
26DIVISION XI
27LUMP SUM DISTRIBUTION OF RETIREMENT INCOME
28 Sec. 62. Section 422.5, subsection 8, Code 2024, is amended
29to read as follows:
308. a. In addition to the other taxes imposed by this
31section, a tax is imposed, except under paragraph “b”, on the
32amount of a lump sum distribution for which the taxpayer has
33elected under section 402(e) of the Internal Revenue Code to
34be separately taxed for federal income tax purposes for the
35tax year. The rate of tax is equal to twenty-five percent of
-22-1the separate federal tax imposed on the amount of the lump
2sum distribution. A nonresident is liable for this tax only
3on that portion of the lump sum distribution allocable to
4Iowa. The total amount of the lump sum distribution subject
5to separate federal tax shall be included in net income for
6purposes of determining eligibility under subsections 2 and 3,
7as applicable, except the amount of the lump sum distribution
8exempt from state tax in paragraph “b” shall not be included.
9b. The amount of a lump sum distribution that is received
10from a governmental or other pension or retirement plan,
11including defined benefit or defined contribution plans,
12annuities, individual retirement accounts, plans maintained or
13contributed to by an employer, or maintained or contributed
14to by a self-employed person as an employer, and deferred
15compensation plans or any earnings attributable to the deferred
16compensation plans is exempt from state tax imposed under
17paragraph “a” if received by a person who is disabled, or is
18fifty-five years of age or older, or is the surviving spouse of
19an individual or is a survivor having an insurable interest in
20an individual who would have qualified for the exemption under
21this subsection for the tax year.
22 Sec. 63. EFFECTIVE DATE. This division of this Act, being
23deemed of immediate importance, takes effect upon enactment.
24 Sec. 64. RETROACTIVE APPLICABILITY. This division of this
25Act applies retroactively to January 1, 2024, for tax years
26beginning on or after that date.
27DIVISION XII
28ESTIMATED TAX THRESHOLD
29 Sec. 65. Section 422.16, subsection 12, paragraph a,
30subparagraph (1), Code 2024, is amended to read as follows:
31(1) Taxpayers filing a return shall make estimated tax
32payments if their Iowa income tax liability can reasonably be
33expected to amount to two hundred one thousand dollars or more
34for the year.
35 Sec. 66. EFFECTIVE DATE. This division of this Act takes
-23-1effect January 1, 2025.
2 Sec. 67. APPLICABILITY. This division of this Act applies
3to tax years beginning on or after January 1, 2025.
4EXPLANATION
5The inclusion of this explanation does not constitute agreement with
6the explanation’s substance by the members of the general assembly.
7This bill relates to the administration of state taxation,
8the lottery, and alcoholic beverages under the purview of the
9department of revenue.
10DIVISION I — DISCLOSURE OF TAX INFORMATION. The bill
11specifies and updates the circumstances the department of
12revenue (department) may disclose state tax return and audit
13information to law enforcement.
14The division takes effect upon enactment.
15DIVISION II — ANNUAL REPORTING. The bill strikes the
16requirement that the department annually report to the general
17assembly the areas of recurrent taxpayer noncompliance with the
18rules of the department including any recommendations relating
19to the noncompliance.
20DIVISION III — PROPERTY TAX — EXTENSIONS. Under current
21law, a claimant may ask the director of the department, the
22county treasurer, or the director of the department of health
23and human services for an extension to claim a reimbursement
24for rent constituting property taxes in case of sickness,
25absence, or disability. The bill strikes the director of the
26department from involvement in the extension request by the
27claimant.
28DIVISION IV — FARM TENANCY INCOME TAX EXCLUSION.
29 Currently, an eligible individual may exclude income received
30by the individual pursuant to a farm tenancy covering real
31property held by the individual for 10 or more years, if the
32individual materially participated in a farming business for
3310 or more years. The bill allows the eligible individual to
34exclude such income under such circumstances, if the individual
35materially participated in a farming business for 10 or more
-24-1years in the aggregate. The bill further specifies the term
2“held” is to be determined by the holding period provisions of
3section 1223 of the Internal Revenue Code and other federal
4regulations which is identical to the use of the term “held”
5under the farming business exclusion in Code section 422.7(13).
6DIVISION V — PASS-THROUGH ENTITIES. Under current law,
7the department may issue a notice of adjustment (adjustment of
8tax) to a partnership or pass-through entity pursuant to Code
9section 422.25C, and specifies that the notice of adjustment
10is appealable pursuant to Code sections 422.28 and 422.29.
11The bill specifies the notice of adjustment is not always
12appealable under the circumstances provided in Code section
13422.25.
14The division takes effect upon enactment and applies
15retroactively to January 1, 2024.
16DIVISION VI — SALES TAX CHANGES. Under current law, a
17purchaser, user, and consumer of taxable property or services
18may be authorized to remit tax owed directly to the department
19instead of the tax being collected and paid by the seller. The
20bill specifies that in order to qualify for the direct pay tax
21permit such a taxpayer must accrue a tax liability of more than
22$8,000 on a monthly basis. Currently, such a taxpayer must
23accrue a tax liability of $4,000 on a semimonthly basis in
24order to qualify for the direct pay tax permit.
25Currently, if the department determines a sales tax return
26is incorrect, the department may determine the amount of tax
27due from information or knowledge the department is able to
28obtain, including using any mutually agreed upon valid and
29reliable sampling technique. The bill strikes the provision
30requiring the sampling technique be mutually agreed upon by the
31taxpayer and the department, and allows the department to use
32such a sampling technique without mutual agreement from the
33taxpayer.
34DIVISION VII — MOTOR FUEL TAXES. Under current law and
35before July 1, 2026, the department determines the rate of
-25-1excise tax imposed on each gallon of ethanol blended gasoline
2based upon the distribution percentage calculated in Code
3section 452A.3(1)(b), and the excise tax rate imposed on each
4gallon of biodiesel blended fuel based on the distribution
5percentage calculated in Code section 453A.3(3)(a)(2). The
6department determines the distribution percentage based upon
7data from reports filed pursuant to Code section 452A.33. The
8bill allows the department to amend the initial distribution
9percentage due to a mistake, or if there is a late report filed
10by a retail dealer to the department, or the distribution
11percentage is not accurate.
12The bill changes the due date of a biannual tax return
13relating to electric fuel tax due in January by one day, and
14modifies the biannual tax period by one day.
15The bill allows a person who uses electric fuel for a
16nontaxable purpose to provide an exemption certificate to
17the license holder selling or dispensing the fuel, if the
18certificate is produced by the department.
19DIVISION VIII — VETERANS TRUST FUND AND LOTTERY. The bill
20strikes the requirement that the department report semiannually
21to the general assembly’s standing committees on government
22oversight regarding the operations of the lottery.
23The bill establishes new criteria triggering distributions
24from the veterans trust fund when the balance of the fund
25equals or exceeds $50 million. Under the bill, if the balance
26of the veterans trust fund is $50 million or more on both
27July 1 of the current fiscal year and July 1 of the preceding
28fiscal year, the moneys from the veterans trust fund shall
29be appropriated to the department for distribution to county
30directors of veteran affairs as provided in current law in Code
31section 99G.39(3).
32The bill establishes new setoff program procedures (debt
33collection) for a debtor’s lottery prize payment awarded as
34cash or cash equivalent. The bill defines “setoff program” to
35mean the program administered by the department pursuant to
-26-1Code section 421.65.
2DIVISION IX — ALCOHOLIC BEVERAGES. The bill defines
3“operating still” to mean a still that is registered with the
4federal alcohol and tobacco tax and trade bureau of the United
5States department of the treasury and is actively used to
6manufacture spirits. The term “operating still” is used in the
7definition of “native distillery” in Code section 123.3(35).
8The bill moves portions of Code section 123.30(4) to new Code
9section 123.30(5) and allows a person holding a retail alcohol
10license to permit a customer to carry an open container of beer
11from the person’s licensed premises into another immediately
12adjacent licensed premises that is covered by a license or
13permit that authorizes the consumption of beer. Current law
14allows a person to carry an open container of wine under such
15circumstances but not beer.
16The bill allows a person who is the holder of a class
17“A” native distilled spirits license to be granted a class
18“C” retail alcohol license for the same premises licensed
19under the class “A” native distilled spirit license where the
20manufacturing of native distilled spirits occurs.
21The bill provides a native brewery may be granted a class “C”
22retail alcohol license or a special class “C” retail alcohol
23license for the premises licensed under a class “A” beer permit
24where the manufacturing of beer occurs. The bill provides
25that a native brewery may be granted not more than two class
26“C” retail alcohol licenses or granted two special class “C”
27alcohol licenses. Under the bill, a native brewery may be
28issued a class “C” retail alcohol license or a special class
29“C” alcohol license, regardless of whether the person is a
30manufacturer of native distilled spirits pursuant to a class
31“A” native distilled spirits license or a manufacturer of
32native wine pursuant to a class “A” wine permit.
33The bill allows a person who is the holder of a class “A”
34wine permit to be granted a class “C” retail alcohol license
35or a special class “C” retail native wine license for the same
-27-1premises licensed under the class “A” wine permit where the
2manufacturing of native wine occurs.
3DIVISION X — INHERITANCE TAX — FUTURE CODE CHANGES DUE TO
4REPEAL. The bill changes numerous Code sections to reflect the
5future repeal of the inheritance tax beginning for the estates
6of decedents dying on or after January 1, 2025. However, other
7provisions of Code chapter 450 relating to the inheritance tax
8have not been repealed. The division takes effect January 1,
92025, and applies to the estates of decedents dying on or after
10that date.
11DIVISION XI — LUMP SUM DISTRIBUTION OF RETIREMENT INCOME.
12Under current law, commencing with tax years beginning on or
13after January 1, 2023, retirement income is not subject to
14Iowa individual income tax. However, under current law a lump
15sum distribution from a retirement account is subject to Iowa
16income tax under Code section 422.5(8) at a rate of 25 percent
17of the federal tax rate imposed on the amount of the lump sum
18distribution.
19The bill provides that the taxation of a lump sum
20distribution from a retirement account is also exempt from
21state taxation by exempting the lump sum distribution for a
22person who is disabled, or 55 years of age or older, or who is
23the surviving spouse of an individual or is a survivor having
24an insurable interest in an individual who would have qualified
25for the exemption for the tax year.
26The bill excludes the lump sum distribution exempt from
27state taxation from being included in calculating the
28individual income tax filing thresholds in Code section
29422.5(2) and (3).
30The division takes effect upon enactment and applies
31retroactively to tax years beginning on or after January 1,
322024.
33DIVISION XII — ESTIMATED TAX THRESHOLD. Under the bill,
34a taxpayer filing a return is required to make estimated
35tax payments if Iowa income tax liability can reasonably be
-28-1expected to exceed $1,000 or more. Under current law, such
2a taxpayer filing a return is required to make estimated
3tax payments if Iowa income tax liability can reasonably be
4expected to exceed $200 or more.
5The division takes effect January 1, 2025, and applies to tax
6years beginning on or after that date.
-29-jm/jh
2alcoholic beverages provisions under the purview of the
3department of revenue, changing the taxation of lump sum
4distributions of retirement income, increasing estimated tax
5thresholds, making appropriations, and including effective
6date and retroactive applicability provisions.
7BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
1DIVISION I
2DISCLOSURE OF TAX INFORMATION
3 Section 1. Section 421.19, subsection 2, Code 2024, is
4amended by striking the subsection and inserting in lieu
5thereof the following:
62. The department may notify federal, state, or local
7law enforcement agencies, and may disclose state returns,
8state return information, state investigative information or
9audit information, or any other state information, to such law
10enforcement agencies, if the department has information that
11indicates any of the following:
12a. A person intentionally filed a false claim, affidavit,
13return, or other information with intent to evade tax or obtain
14a refund, credit, or other benefit from the department.
15b. A person failed to file a return with intent to evade a
16tax or filing requirement.
17c. A person failed to pay with the intent to evade tax.
18d. A person committed any act or omission that is a criminal
19offense under a provision of this title administered by the
20department.
21 Sec. 2. Section 421.19, subsection 3, Code 2024, is amended
22to read as follows:
233. Notwithstanding sections 422.20 and 422.72, the
24department may disclose state returns, state return
25information, state investigative or audit information, or any
26other state information as provided under this section.
27 Sec. 3. EFFECTIVE DATE. This division of this Act, being
28deemed of immediate importance, takes effect upon enactment.
29DIVISION II
30ANNUAL REPORTING
31 Sec. 4. Section 421.60, subsection 2, paragraph k, Code
322024, is amended by striking the paragraph.
33 Sec. 5. Section 422.75, Code 2024, is amended to read as
34follows:
35422.75 Statistics — publication.
-1- 1The department shall prepare and publish an annual report
2which shall include statistics reasonably available, with
3respect to the operation of this chapter, including amounts
4collected, classification of taxpayers, and such other facts
5as are deemed pertinent and valuable. The annual report shall
6also include the reports and information required pursuant to
7section 421.60, subsection 2, paragraph “k”.
8DIVISION III
9PROPERTY TAX — EXTENSIONS
10 Sec. 6. Section 425.20, subsection 3, Code 2024, is amended
11to read as follows:
123. In case of sickness, absence, or other disability of
13the claimant or if, in the judgment of the director of revenue
14or the director of health and human services, as applicable,
15 good cause exists and the claimant requests an extension, the
16director of health and human services may extend the time for
17filing a claim for reimbursement and the director of revenue
18may extend the time for filing a claim for credit. However,
19any further time granted shall not extend beyond December 31
20of the year following the year in which the claim was required
21to be filed. Claims filed as a result of this subsection shall
22be filed with the director of health and human services or the
23director of revenue, as applicable, who shall provide for the
24reimbursement of the claim to the claimant.
25DIVISION IV
26FARM TENANCY INCOME TAX EXCLUSION
27 Sec. 7. Section 422.7, subsection 14, paragraph a, Code
282024, is amended to read as follows:
29a. Subtract, to the extent included, net income received
30by an eligible individual pursuant to a farm tenancy agreement
31covering real property held by the eligible individual for
32ten or more years, if the eligible individual materially
33participated in a farming business for ten or more years in the
34aggregate.
35 Sec. 8. Section 422.7, subsection 14, paragraph f, Code
-2-12024, is amended by adding the following new subparagraph:
2 NEW SUBPARAGRAPH. (04) “Held” shall be determined with
3reference to the holding period provisions of section 1223 of
4the Internal Revenue Code and the federal regulations pursuant
5thereto.
6DIVISION V
7PASS-THROUGH ENTITIES
8 Sec. 9. Section 422.25C, subsection 2, Code 2024, is amended
9to read as follows:
102. For tax years beginning on or after January 1, 2020, any
11adjustments to a partnership’s or pass-through entity’s items
12of income, gain, loss, expense, or credit, or an adjustment to
13such items allocated to a partner that holds an interest in a
14partnership or pass-through entity for the reviewed year by
15the department as a result of a state partnership audit, shall
16be determined at the partnership level or pass-through entity
17level in the same manner as provided by section 6221(a) of the
18Internal Revenue Code and the regulations thereunder unless a
19different treatment is specifically provided in this title.
20The provisions of sections 6222, 6223, and 6227 of the Internal
21Revenue Code and the regulations thereunder shall also apply to
22a partnership or pass-through entity and its direct or indirect
23partners in the same manner as provided in such sections unless
24a different treatment is specifically provided in this title.
25For purposes of applying such sections, due account shall be
26made for differences in federal and Iowa terminology. The
27adjustment provided by section 6221(a) of the Internal Revenue
28Code shall be determined as provided in such section but shall
29be based on Iowa taxable income or other tax attributes of
30the partnership or pass-through entity as determined pursuant
31to this chapter for the reviewed year. The department shall
32issue a notice of adjustment to the partnership or pass-through
33entity. Such notice shall be treated as an assessment for the
34purposes of section 422.25, and the notice shall be appealable,
35except as provided in section 422.25, by the partnership or
-3-1pass-through entity pursuant to sections 422.28 and 422.29 and
2shall be issued within the time period provided by section
3422.25. Once the adjustments to partnership-related or
4pass-through entity-related items or reallocations of income,
5gains, losses, expenses, credits, and other attributes among
6such partners for the reviewed year are finally determined,
7the partnership or pass-through entity and any direct partners
8or indirect partners shall then be subject to the provisions
9of section 422.25, subsection 1, paragraph “e”, and section
10422.25A in the same manner as if the state partnership audit
11were a federal partnership level audit, and as if the final
12state partnership audit adjustment were a final federal
13partnership adjustment. The penalty exceptions in section
14421.27, subsection 2, paragraphs “b” and “c”, shall not apply
15to a state partnership audit.
16 Sec. 10. EFFECTIVE DATE. This division of this Act, being
17deemed of immediate importance, takes effect upon enactment.
18 Sec. 11. RETROACTIVE APPLICABILITY. This division of this
19Act applies retroactively to January 1, 2024.
20DIVISION VI
21SALES TAX CHANGES
22 Sec. 12. Section 423.36, subsection 9, paragraph a, Code
232024, is amended to read as follows:
24a. Except as provided in paragraph “b”, purchasers, users,
25and consumers of tangible personal property, specified digital
26products, or enumerated services taxed pursuant to subchapter
27II or III of this chapter or chapter 423B may be authorized,
28pursuant to rules adopted by the director, to remit tax owed
29directly to the department instead of the tax being collected
30and paid by the seller. To qualify for a direct pay tax permit,
31the purchaser, user, or consumer must accrue a tax liability of
32more than four eight thousand dollars in tax under subchapters
33II and III in a semimonthly monthly period and make deposits
34and file returns pursuant to section 423.31. This authority
35shall not be granted or exercised except upon application to
-4-1the director and then only after issuance by the director of a
2direct pay tax permit.
3 Sec. 13. Section 423.37, subsection 1, paragraph a, Code
42024, is amended to read as follows:
5a. As soon as practicable after a return is filed and
6within three years after the return is filed, the department
7may examine the return, assess and determine the tax due if
8the return is found to be incorrect, and give notice to the
9person liable for the tax of the assessment and determination
10as provided in paragraph “b”. If a return, when filed, is
11incorrect or insufficient, the department shall determine
12the amount of tax due from information or knowledge the
13department is able to obtain. The determination may be made
14using any generally recognized valid and reliable sampling
15technique, whether or not the person being audited has complete
16records, and if mutually agreed upon by the department and
17the person being audited. The period for the examination and
18determination of the correct amount of tax is unlimited in the
19case of a false or fraudulent return made with the intent to
20evade tax.
21DIVISION VII
22MOTOR FUEL TAXES
23 Sec. 14. Section 452A.3, subsection 1, paragraph b,
24unnumbered paragraph 1, Code 2024, is amended to read as
25follows:
26On and after July 1, 2026, an excise tax of thirty cents is
27imposed on each gallon of ethanol blended gasoline classified
28as E-15 or higher. Before July 1, 2026, the rate of the
29excise tax on ethanol blended gasoline classified as E-15 or
30higher shall be based on the number of gallons of ethanol
31blended gasoline classified as E-15 or higher that are
32distributed in this state as expressed as a percentage of the
33number of gallons of motor fuel distributed in this state,
34which is referred to as the distribution percentage. For
35purposes of this paragraph, only ethanol blended gasoline and
-5-1nonblended gasoline, not including aviation gasoline, shall
2be used in determining the percentage basis for the excise
3tax. The department shall determine the percentage basis
4for each determination period beginning January 1 and ending
5December 31 based on data from the reports filed pursuant to
6section 452A.33. Before June 1, the department may amend the
7distribution percentage due to a mistake, if there is a late
8report filed by a retail dealer to the department under section
9452A.33, subsection 1, or if the distribution percentage is
10not accurate. The rate for the excise tax shall apply for the
11period beginning July 1 and ending June 30 following the end
12of the determination period. Before July 1, 2026, the rate
13of the excise tax on each gallon of ethanol blended gasoline
14classified as E-15 or higher shall be as follows:
15 Sec. 15. Section 452A.3, subsection 3, paragraph a,
16subparagraph (2), unnumbered paragraph 1, Code 2024, is amended
17to read as follows:
18Except as otherwise provided in this section and in this
19subchapter, this subparagraph shall apply to the excise tax
20imposed on each gallon of biodiesel blended fuel classified
21as B-11 or higher used for any purpose for the privilege of
22operating motor vehicles in this state. On and after July 1,
232026, the rate of the excise tax on each gallon of biodiesel
24blended fuel classified as B-11 or higher is thirty-two
25and five-tenths cents. Before July 1, 2026, the rate of
26the excise tax shall be based on the number of gallons of
27biodiesel blended fuel classified as B-11 or higher that are
28distributed in this state as expressed as a percentage of
29the number of gallons of special fuel for diesel engines of
30motor vehicles distributed in this state, which is referred
31to as the distribution percentage. The department shall
32determine the percentage basis for each determination period
33beginning January 1 and ending December 31 based on data from
34the reports filed pursuant to section 452A.33. Before June
351, the department may amend the distribution percentage due
-6-1to a mistake, if there is a late report filed by a retail
2dealer to the department under section 452A.33, subsection 1,
3or the distribution percentage is not accurate. The rate of
4the excise tax shall apply for the period beginning July 1 and
5ending June 30 following the end of the determination period.
6Before July 1, 2026, the rate of the excise tax on each gallon
7of biodiesel blended fuel classified as B-11 or higher shall
8be as follows:
9 Sec. 16. Section 452A.15, subsection 5, Code 2024, is
10amended to read as follows:
115. The director may impose a civil penalty against any
12person who fails to timely file the reports or keep the records
13required under this section. The penalty shall be one hundred
14dollars for the first violation and shall increase by one
15hundred dollars for each additional violation occurring in the
16calendar year in which the first violation occurred.
17 Sec. 17. Section 452A.33, subsection 2, unnumbered
18paragraph 1, Code 2024, is amended to read as follows:
19On or before April 1 the department shall deliver a report
20to the governor and the legislative services agency. Before
21June 1, the department may amend the report due to a mistake,
22if there is a late report by a retail dealer under subsection
231, or if the report is not accurate. The report shall compile
24information reported by retail dealers to the department as
25provided in this section and shall at least include all of the
26following:
27 Sec. 18. Section 452A.41, subsection 5, paragraph a, Code
282024, is amended to read as follows:
29a. For the purpose of determining the amount of liability
30for the electric fuel tax, each dealer and user shall file with
31the department not later than July 31 for the period beginning
32January 1 and ending June 30, and not later than January 30
33 31 for the period beginning July 1 and ending December 30 31,
34a biannual tax return certified under penalties for false
35certification. The return shall show, with reference to each
-7-1location at which fuel is delivered or placed by the dealer or
2user into the battery or other energy storage device of any
3electric motor vehicle during the next preceding six calendar
4months, information as required by the department. On and
5after January 1, 2026, the department may require by rule that
6such tax returns be filed quarterly.
7 Sec. 19. Section 452A.44, Code 2024, is amended by adding
8the following new subsection:
9 NEW SUBSECTION. 4. If electric fuel is sold or dispensed
10for a nontaxable purpose, the purchaser may complete and
11provide an exemption certificate produced by the department to
12the license holder.
13DIVISION VIII
14VETERANS TRUST FUND AND LOTTERY
15 Sec. 20. Section 99G.3, Code 2024, is amended by adding the
16following new subsection:
17 NEW SUBSECTION. 17A. “Setoff program” means the program
18administered pursuant to section 421.65.
19 Sec. 21. Section 99G.7, subsection 1, paragraph e, Code
202024, is amended by striking the paragraph.
21 Sec. 22. Section 99G.39, subsection 3, Code 2024, is amended
22to read as follows:
233. Two million five hundred thousand dollars in lottery
24revenues shall be transferred each fiscal year to the veterans
25trust fund established pursuant to section 35A.13 prior to
26deposit of the lottery revenues in the general fund pursuant
27to section 99G.40. However, if the balance of the veterans
28trust fund is fifty million dollars or more on both July 1 of
29the current fiscal year and July 1 of the preceding fiscal
30year, the moneys shall be appropriated to the department for
31distribution to county directors of veteran affairs, with fifty
32percent of the moneys to be distributed equally to each county
33and fifty percent of the moneys to be distributed to each
34county based upon the population of veterans in the county,
35so long as the moneys distributed to a county do not supplant
-8-1moneys appropriated by that county for the county director of
2veteran affairs.
3 Sec. 23. Section 99G.41, subsections 1, 2, 3, and 4, Code
42024, are amended to read as follows:
51. Any claimant agency may submit to the department a
6list of the names of all persons indebted to such claimant
7agency or to persons on whose behalf the claimant agency is
8acting. The A lottery prize payment awarded as cash or cash
9equivalents is subject to the setoff program. Additionally, a
10debtor and the full amount of the debt shall be compiled in a
11list, and collectible from any lottery winnings prize payment
12awarded as cash or cash equivalents due the debtor without
13regard to limitations on the amounts that may be collectible in
14increments through garnishment or other proceedings. Such list
15shall constitute a valid lien upon and claim of lien against
16the lottery winnings prize payment of any debtor named in such
17list. The list shall contain the names of the debtors, their
18social security numbers if available, and any other information
19that assists the department in identifying the debtors named in
20the list. The list shall be treated the same as setoff program
21information under section 421.65, subsection 2, paragraph “a”.
222. The department is authorized and directed to withhold
23any winnings paid out directly by the department subject to the
24lien created by this section, and send notice to the winner or
25send notice as directed by the setoff program. However, if the
26winner appears and claims winnings in person, the department
27shall notify the winner at that time by hand delivery of such
28action. The department shall pay the funds over to the agency
29administering the offset to the setoff program.
303. Notwithstanding the provisions of section 99G.34 which
31prohibit disclosure by the department of certain portions
32of the contents of prize winner records or information,
33and notwithstanding any other confidentiality statute,
34the department may provide to a claimant agency the setoff
35program and public agency, as defined in section 421.65, all
-9-1information necessary to accomplish and effectuate the intent
2of this section.
34. The information obtained by a claimant agency from the
4department in accordance with this section shall retain its
5confidentiality and shall only be used by a claimant agency
6in the pursuit of its debt collection duties and practices.
7Any employee or prior employee of any claimant agency who
8unlawfully discloses any such information for any other
9purpose, except as otherwise specifically authorized by law,
10shall be subject to the same penalties specified by law for
11unauthorized disclosure of confidential information by an agent
12or employee of the department under this chapter.
13DIVISION IX
14ALCOHOLIC BEVERAGES
15 Sec. 24. Section 123.3, Code 2024, is amended by adding the
16following new subsection:
17 NEW SUBSECTION. 36A. “Operating still” means a still that
18is registered with the federal alcohol and tobacco tax and
19trade bureau of the United States department of the treasury
20and is actively used to manufacture spirits.
21 Sec. 25. Section 123.30, subsection 4, Code 2024, is amended
22to read as follows:
234. Notwithstanding any provision of this chapter to the
24contrary, a person holding a retail alcohol license to sell
25alcoholic beverages for consumption on the licensed premises
26may permit a customer to remove one unsealed bottle of wine
27for consumption off the premises if the customer has purchased
28and consumed a portion of the bottle of wine on the licensed
29premises. The licensee or the licensee’s agent shall securely
30reseal such bottle in a bag designed so that it is visibly
31apparent that the resealed bottle of wine has not been tampered
32with and provide a dated receipt for the resealed bottle of
33wine to the customer. A wine bottle resealed pursuant to the
34requirements of this subsection is subject to the requirements
35of sections 321.284 and 321.284A. A person holding a retail
-10-1alcohol license to sell alcoholic beverages for consumption on
2the licensed premises may permit a customer to carry an open
3container of wine from the person’s licensed premises into
4another immediately adjacent licensed premises that is covered
5by a license or permit that authorizes the consumption of wine,
6a temporarily closed public right-of-way, or a private place.
7 Sec. 26. Section 123.30, Code 2024, is amended by adding the
8following new subsection:
9 NEW SUBSECTION. 5. A person holding a retail alcohol
10license to sell alcoholic beverages for consumption on the
11licensed premises may permit a customer to carry an open
12container of wine or beer from the person’s licensed premises
13to one of the following immediately adjacent locations:
14a. Another licensed premises that authorizes the consumption
15of beer or wine.
16b. A temporarily closed public right-of-way.
17c. A private place.
18 Sec. 27. Section 123.43A, subsection 6, Code 2024, is
19amended to read as follows:
206. Notwithstanding any provision of this chapter to the
21contrary or the fact that a person is the holder of a class
22“A” native distilled spirits license, a native distillery may
23be granted a class “C” retail alcohol license as defined in
24section 123.30 for the same premises licensed under a class “A”
25native distilled spirits license where the manufacturing of
26native distilled spirits occurs. A native distillery may be
27granted not more than two class “C” retail alcohol licenses.
28A manufacturer of native distilled spirits distillery may be
29issued a class “C” retail alcohol license regardless of whether
30the manufacturer is also a manufacturer of beer pursuant to a
31class “A” beer permit or a manufacturer of native wine pursuant
32to a class “A” wine permit.
33 Sec. 28. Section 123.45, subsection 3, Code 2024, is amended
34to read as follows:
353. A person engaged in the wholesaling of beer or wine
-11-1may sell only disposable glassware, which is constructed of
2paper, paper laminated, or plastic materials and designed
3primarily for personal consumption on a one-time usage
4basis, to retailers for use within the premises of licensed
5establishments, for an amount which is greater than or equal
6to an amount which represents the greater of either the amount
7paid for the disposable glassware by the supplier or the amount
8paid for the disposable glassware by the wholesaler. Also,
9notwithstanding any other provision of this chapter or the
10fact that a person is the holder of a class “A” beer permit,
11a native brewery may be granted not more than two a class “C”
12retail alcohol licenses license or not more than two a special
13class “C” retail alcohol licenses license, both as defined in
14section 123.30, for the same premises licensed under a class
15“A” beer permit where the manufacturing of beer occurs. A
16native brewery may be granted not more than two class “C”
17retail alcohol licenses or two special class “C” retail alcohol
18licenses. A native brewery may be issued a class “C” retail
19alcohol license or a special class “C” retail alcohol license,
20 regardless of whether that person is also a manufacturer
21of native distilled spirits pursuant to a class “A” native
22distilled spirits license or a manufacturer of native wine
23pursuant to a class “A” wine permit.
24 Sec. 29. Section 123.176, subsection 5, Code 2024, is
25amended to read as follows:
265. Notwithstanding any other provision of this chapter
27or the fact that a person is the holder of a class “A” wine
28permit, a person engaged in the business of manufacturing
29native wine may be granted a class “C” retail alcohol license
30or special class “C” retail native wine license as defined in
31section 123.30, for the same premises licensed under a class
32“A” wine permit where the manufacturing of native wine occurs.
33A manufacturer of native wine may be granted not more than
34two class “C” retail alcohol licenses or special class “C”
35retail native wine licenses. A manufacturer of native wine
-12-1may be issued a class “C” retail alcohol license or special
2class “C” retail native wine license regardless of whether the
3manufacturer is also a manufacturer of beer pursuant to a class
4“A” beer permit or a manufacturer of native distilled spirits
5pursuant to a class “A” native distilled spirits license.
6DIVISION X
7INHERITANCE TAX — FUTURE CODE CHANGES DUE TO REPEAL
8 Sec. 30. Section 12D.9, subsection 3, Code 2024, is amended
9to read as follows:
103. State For a death occurring before January 1, 2025, state
11 inheritance tax treatment of interests in Iowa educational
12savings plans shall be as provided in section 450.4, subsection
138. This subsection shall apply to all Iowa educational savings
14plans existing on or after July 1, 1998.
15 Sec. 31. Section 12I.8, subsection 3, Code 2024, is amended
16to read as follows:
173. State For a death occurring before January 1, 2025, state
18 inheritance tax treatment of interests in Iowa ABLE savings
19plans shall be as provided in section 450.4, subsection 9.
20 Sec. 32. Section 12I.10, subsection 3, Code 2024, is amended
21to read as follows:
223. State For a death occurring before January 1, 2025, state
23 inheritance tax treatment of interests in the qualified ABLE
24program with which the state has contracted pursuant to this
25section shall be as provided in section 450.4, subsection 9.
26 Sec. 33. Section 16.177, subsection 8, Code 2024, is amended
27to read as follows:
288. Bonds issued under this section are declared to be issued
29for an essential public and governmental purpose and all bonds
30issued under this section shall be exempt from taxation by the
31state of Iowa and the interest on the bonds shall be exempt
32from the state income tax and the any state inheritance tax.
33 Sec. 34. Section 321.47, subsection 2, paragraph a, Code
342024, is amended to read as follows:
35a. The persons entitled under the laws of descent and
-13-1distribution to the possession and ownership of a vehicle owned
2in whole or in part by a decedent who died intestate, upon
3filing an affidavit stating the name and date of death of the
4decedent, the right to possession and ownership of the persons
5filing the affidavit, and that there has been no administration
6of the decedent’s estate, which instrument must also contain
7an agreement by the affiant to indemnify creditors of the
8decedent who would be entitled to levy execution upon the motor
9vehicle to the extent of the value of the motor vehicle, shall,
10upon complying with the other title transfer requirements of
11this chapter, be issued a registration card for the decedent’s
12interest in the vehicle and a certificate of title to the
13vehicle. If a decedent died testate, and either the will is
14not probated or is admitted to probate without administration,
15the persons entitled to the possession and ownership of
16a vehicle owned in whole or in part by the decedent may
17file an affidavit and, upon complying with the other title
18transfer requirements of this chapter, shall be issued a
19registration card for the decedent’s interest in the vehicle
20and a certificate of title to the vehicle. The affidavit
21must contain the same information and indemnity agreement
22as is required in cases of intestacy under this subsection.
23Chapter 450 is not For a death occurring before January 1,
242025, a requirement of chapter 450 shall not be considered
25 satisfied by the filing of the affidavit provided for in this
26subsection. If, from the records in the office of the county
27treasurer, there appear to be any liens on the vehicle, the
28certificate of title must contain a statement of the liens
29unless the application is accompanied by proper evidence of
30the satisfaction or extinction of such liens. Evidence of
31extinction includes but is not limited to an affidavit of the
32applicant stating that a security interest was foreclosed as
33provided in chapter 554, article 9, part 6. The department
34shall waive the certificate of title fee and surcharge required
35under sections 321.20, 321.20A, 321.23, 321.46, 321.52, and
-14-1321.52A if the person entitled to possession and ownership of
2a vehicle, as provided in this subsection, is the surviving
3spouse of a decedent.
4 Sec. 35. Section 331.602, subsection 23, Code 2024, is
5amended to read as follows:
623. Forward For deaths occurring before January 1, 2025,
7forward to the director of revenue a copy of any deed, bill of
8sale, or other transfer which shows that it is made or intended
9to take effect at or after the death of the person executing
10the instrument as provided in section 450.81.
11 Sec. 36. Section 331.756, subsection 57, Code 2024, is
12amended to read as follows:
1357. Represent For a death occurring before January 1, 2025,
14represent the state in litigation relating to the inheritance
15tax if requested by the department of revenue as provided in
16section 450.1.
17 Sec. 37. Section 421.27, subsection 1, paragraph d,
18subparagraph (13), Code 2024, is amended to read as follows:
19(13) That For a death occurring before January 1, 2025,
20that an Iowa inheritance tax return is filed for an estate
21within the later of nine months from the date of death or sixty
22days from the filing of a disclaimer by the beneficiary of the
23estate refusing to take the property or right or interest in
24the property.
25 Sec. 38. Section 421.60, subsection 2, paragraph c,
26subparagraph (1), Code 2024, is amended to read as follows:
27(1) If the notice of assessment or denial of a claim for
28refund relates to a tax return filed pursuant to section
29422.14, or pursuant to chapter 450 for a death occurring before
30January 1, 2025, by the taxpayer which designates an individual
31as an authorized representative of the taxpayer with respect to
32that return, or if a power of attorney has been filed with the
33department by the taxpayer which designates an individual as
34an authorized representative of the taxpayer with respect to
35any tax that is included in the notice of assessment or denial
-15-1of a claim for refund, a copy of the notice together with any
2additional information required to be sent to the taxpayer
3shall be sent to the authorized representative as well.
4 Sec. 39. Section 422.27, subsection 1, Code 2024, is amended
5to read as follows:
61. A final account of a personal representative, as defined
7in section 450.1, shall not be allowed by any court unless the
8account shows, and the judge of the court finds, that all taxes
9imposed by this subchapter upon the personal representative,
10which have become payable, have been paid, and that all taxes
11which may become due are secured by bond or deposit, or are
12otherwise secured. The certificate of acquittances of the
13department of revenue is conclusive as to the payment of the
14tax to the extent of the acquittance. This subsection does
15not apply if all property in the estate of a decedent is
16held in joint tenancy with right of survivorship by husband
17and wife alone. For purposes of this subsection, “personal
18representative” means an administrator, executor, or trustee as
19each is defined in section 633.3.
20 Sec. 40. Section 455G.6, subsection 14, Code 2024, is
21amended to read as follows:
2214. Bonds issued under the provisions of this section are
23declared to be issued for an essential public and governmental
24purpose and all bonds issued under this subchapter shall be
25exempt from taxation by the state of Iowa and the interest on
26the bonds shall be exempt from the state income tax and the any
27 state inheritance tax.
28 Sec. 41. Section 496C.14, subsection 6, paragraph h, Code
292024, is amended to read as follows:
30h. Notwithstanding the provisions of this section,
31payment of any part of the purchase price for shares of a
32deceased shareholder shall not be required until the executor
33or administrator of the deceased shareholder provides
34any indemnity, release, or other document from any taxing
35authority, which is reasonably necessary to protect the
-16-1corporation against liability for any estate, inheritance, and
2death taxes tax, or any inheritance tax for a death occurring
3before January 1, 2025.
4 Sec. 42. Section 524.805, subsection 8, Code 2024, is
5amended to read as follows:
68. A state bank may receive deposits from one or more
7persons with the provision that upon the death of the
8depositors the deposit account shall be the property of the
9person or persons designated by the deceased depositors as
10shown on the deposit account records of the state bank. After
11payment by the state bank, the proceeds shall remain subject
12to the any debts of the decedent and the any payment of Iowa
13inheritance tax, if any for a death occurring prior to January
141, 2025. A state bank paying the person or persons designated
15shall not be liable as a result of that action for any debts
16of the decedent or for any estate, inheritance, or succession
17taxes which may be due this state.
18 Sec. 43. Section 541A.2, subsection 6, unnumbered paragraph
191, Code 2024, is amended to read as follows:
20An individual development account closed in accordance
21with this subsection is not subject to the limitations and
22benefits provided by this chapter but is subject to state tax
23in accordance with the provisions of section 422.7, subsection
2417, and in accordance with the provisions of section 450.4,
25subsection 6, for a death occurring before January 1, 2025. An
26individual development account may be closed for any of the
27following reasons:
28 Sec. 44. Section 602.8102, subsection 63, Code 2024, is
29amended to read as follows:
3063. Carry out duties relating to the inheritance tax as
31provided in chapter 450 for deaths occurring before January 1,
322025.
33 Sec. 45. Section 633.21, Code 2024, is amended to read as
34follows:
35633.21 Appraisers’ fees and referees’ fees fixed by rule.
-17- 1The district judges of each judicial district shall by rule
2fix the fees of probate referees, and also provide, insofar as
3practicable, a uniform schedule of compensation for inheritance
4 tax appraisers, other appraisers, brokers, and agents employed
5at estate expense.
6 Sec. 46. Section 633.31, subsection 2, paragraph a, Code
72024, is amended to read as follows:
8a. For services performed in short form probates
9pursuant to sections 450.22 and 450.44 for deaths occurring
10before January 1, 2025$ 15.00
11 Sec. 47. Section 633.356, subsection 1, unnumbered
12paragraph 1, Code 2024, is amended to read as follows:
13When the gross value of the decedent’s personal property
14that would otherwise be distributed by will or intestate
15succession is or has been, at any time since the decedent’s
16death, fifty thousand dollars or less and there is no real
17property, or for deaths occurring before January 1, 2025, the
18real property passes to persons exempt from inheritance tax
19as joint tenants with full rights of survivorship pursuant to
20chapter 450, and if forty days have elapsed since the death of
21the decedent, a successor as defined in subsection 2 may, by
22furnishing an affidavit prepared pursuant to subsection 3 or
238, and without procuring letters of appointment, do any of the
24following with respect to one or more items of such personal
25property:
26 Sec. 48. Section 633.356, subsection 3, paragraph a,
27subparagraph (3), Code 2024, is amended to read as follows:
28(3) That the gross value of the decedent’s personal property
29that would otherwise be distributed by will or intestate
30succession is, or has been at any time since the decedent’s
31death, fifty thousand dollars or less and there is no real
32property, or for deaths occurring before January 1, 2025, the
33real property passes to persons exempt from inheritance tax
34as joint tenants with full rights of survivorship pursuant to
35chapter 450.
-18-1 Sec. 49. Section 633.356, subsection 3, paragraph a,
2subparagraph (10), Code 2024, is amended to read as follows:
3(10) That no inheritance or other taxes are owed to the
4department of revenue for a death occurring prior to January 1,
52025, or if taxes are owed, that the taxes will be paid to the
6extent of funds received pursuant to the affidavit.
7 Sec. 50. Section 633.356, subsection 9, Code 2024, is
8amended to read as follows:
99. Upon receipt of an affidavit under subsection 3 and
10reasonable proof under subsection 5 of the identity of each
11successor seeking distribution by virtue of the affidavit,
12the holder of the property shall disclose to the affiant
13whether the value of the property held by the holder is, or has
14been at any time since the decedent’s death, fifty thousand
15dollars or less. An affidavit furnished for the purpose of
16determining whether the value of the property is, or has
17been at any time since the decedent’s death, fifty thousand
18dollars or less need not contain the language required under
19subsection 3, paragraph “a”, subparagraph (3), but shall state
20that the affiant reasonably believes that the gross value
21of the decedent’s personal property that would otherwise be
22distributed by will or intestate succession is, or has been at
23any time since the decedent’s death, fifty thousand dollars
24or less and there is no real property or for deaths occurring
25before January 1, 2025, the real property passes to persons
26exempt from inheritance tax as joint tenants with full rights
27of survivorship pursuant to chapter 450.
28 Sec. 51. Section 633.361, subsection 12, Code 2024, is
29amended to read as follows:
3012. A listing of all other items, with estimated values,
31which are subject to Iowa inheritance tax for deaths occurring
32before January 1, 2025, or federal estate tax.
33 Sec. 52. Section 633.365, Code 2024, is amended to read as
34follows:
35633.365 Appraisement.
-19- 1Property belonging to the estate need not be appraised
2unless required for inheritance tax purposes for deaths
3occurring before January 1, 2025, under the provisions of this
4probate code, or by order of court.
5 Sec. 53. Section 633.399, Code 2024, is amended to read as
6follows:
7633.399 Report for approval.
8After making any such sale, mortgage, exchange or lease
9of real property, the personal representative shall make
10a verified report thereof to the court. The court shall
11examine said report, and if satisfied that the sale, mortgage,
12exchange, or lease has been at a price and upon terms
13advantageous to the estate, and, in all respects, made in
14conformity with law, and that it ought to be confirmed, shall
15confirm the same and order the personal representative to
16deliver a deed, mortgage, lease or other proper instruments
17to the persons entitled thereto; provided, however, that in
18the event said real property has been sold at private sale
19without an appraisal for inheritance tax purposes for a death
20occurring before January 1, 2025, or for purpose of such sale,
21or, if it has been so appraised and has been sold at private
22sale for less than the appraised value thereof, then, upon the
23filing of such report, the court may enter an order fixing a
24time and place for hearing thereon and prescribe a notice of
25such hearing to be served upon all interested persons, any one
26of whom, prior to the time fixed for such hearing, may file
27written objections to the entry of an order approving said
28sale. If not satisfied that the sale, mortgage, exchange, or
29lease has been made in conformity with law and that it is to the
30best interests of the estate, the court may reject the sale,
31mortgage, exchange, or lease, and enter such orders as the
32court may deem advisable.
33 Sec. 54. Section 633.477, subsection 10, Code 2024, is
34amended to read as follows:
3510. A statement as to whether or not all statutory
-20-1requirements pertaining to taxes have been complied with
2including whether the federal estate tax due has been paid,
3whether a lien continues to exist for any federal estate tax,
4and whether inheritance tax was paid or a return was filed in
5this state for a death occurring before January 1, 2025.
6 Sec. 55. Section 633.479, subsection 2, paragraph a,
7subparagraph (5), Code 2024, is amended to read as follows:
8(5) Compliance with sections section 422.27, and section
9 450.58 for deaths occurring before January 1, 2025, have been
10fulfilled.
11 Sec. 56. Section 633.481, Code 2024, is amended to read as
12follows:
13633.481 Certificate to county recorder for tax purposes
14without administration.
15When an inventory or report is filed under section 450.22 for
16deaths occurring before January 1, 2025, without administration
17of the estate of the decedent, the heir or heir’s attorney
18shall prepare and deliver to the county recorder of the county
19in which the real estate is situated a certificate pertaining
20to each parcel of real estate described in the inventory or
21report. Any fees for certificates or recording fees required
22by this section or section 633.480 shall be assessed as costs
23of administration. The fees for recording and indexing the
24instrument shall be as provided in section 331.604. The county
25recorder shall deliver the certificates to the county auditor
26as provided in section 558.58.
27 Sec. 57. Section 635.7, subsection 1, Code 2024, is amended
28to read as follows:
291. The personal representative is required to file the
30report and inventory for which provision is made in section
31633.361, including all probate and nonprobate assets. This
32chapter does not exempt the personal representative from
33complying with the requirements of section 422.27, 450.22,
34450.58, 633.480, or 633.481, and the administration of an
35estate whether converted to or from a small estate shall be
-21-1considered one proceeding pursuant to section 633.330. For
2a death occurring before January 1, 2025, this chapter does
3not exempt the personal representative from complying with the
4requirements of section 450.22 or 450.58.
5 Sec. 58. Section 635.8, subsection 1, paragraph e, Code
62024, is amended to read as follows:
7e. A statement that all statutory requirements pertaining to
8taxes have been complied with, including whether federal estate
9tax due has been paid, whether a lien continues to exist for
10any federal estate tax, and whether inheritance tax was paid
11or a tax return was filed in this state for a death occurring
12before January 1, 2025.
13 Sec. 59. Section 654.16, subsection 2, Code 2024, is amended
14to read as follows:
152. If a homestead is designated, the court shall determine
16the fair market value of the designated homestead before
17the sheriff’s sale. The court may consult with the county
18appraisers appointed pursuant to section 450.24 for deaths
19occurring before January 1, 2025, or with one or more
20independent appraisers, to determine the fair market value of
21the designated homestead.
22 Sec. 60. EFFECTIVE DATE. This division of this Act takes
23effect January 1, 2025.
24 Sec. 61. APPLICABILITY. This division of this Act applies
25to the estates of decedents dying on or after January 1, 2025.
26DIVISION XI
27LUMP SUM DISTRIBUTION OF RETIREMENT INCOME
28 Sec. 62. Section 422.5, subsection 8, Code 2024, is amended
29to read as follows:
308. a. In addition to the other taxes imposed by this
31section, a tax is imposed, except under paragraph “b”, on the
32amount of a lump sum distribution for which the taxpayer has
33elected under section 402(e) of the Internal Revenue Code to
34be separately taxed for federal income tax purposes for the
35tax year. The rate of tax is equal to twenty-five percent of
-22-1the separate federal tax imposed on the amount of the lump
2sum distribution. A nonresident is liable for this tax only
3on that portion of the lump sum distribution allocable to
4Iowa. The total amount of the lump sum distribution subject
5to separate federal tax shall be included in net income for
6purposes of determining eligibility under subsections 2 and 3,
7as applicable, except the amount of the lump sum distribution
8exempt from state tax in paragraph “b” shall not be included.
9b. The amount of a lump sum distribution that is received
10from a governmental or other pension or retirement plan,
11including defined benefit or defined contribution plans,
12annuities, individual retirement accounts, plans maintained or
13contributed to by an employer, or maintained or contributed
14to by a self-employed person as an employer, and deferred
15compensation plans or any earnings attributable to the deferred
16compensation plans is exempt from state tax imposed under
17paragraph “a” if received by a person who is disabled, or is
18fifty-five years of age or older, or is the surviving spouse of
19an individual or is a survivor having an insurable interest in
20an individual who would have qualified for the exemption under
21this subsection for the tax year.
22 Sec. 63. EFFECTIVE DATE. This division of this Act, being
23deemed of immediate importance, takes effect upon enactment.
24 Sec. 64. RETROACTIVE APPLICABILITY. This division of this
25Act applies retroactively to January 1, 2024, for tax years
26beginning on or after that date.
27DIVISION XII
28ESTIMATED TAX THRESHOLD
29 Sec. 65. Section 422.16, subsection 12, paragraph a,
30subparagraph (1), Code 2024, is amended to read as follows:
31(1) Taxpayers filing a return shall make estimated tax
32payments if their Iowa income tax liability can reasonably be
33expected to amount to two hundred one thousand dollars or more
34for the year.
35 Sec. 66. EFFECTIVE DATE. This division of this Act takes
-23-1effect January 1, 2025.
2 Sec. 67. APPLICABILITY. This division of this Act applies
3to tax years beginning on or after January 1, 2025.
4EXPLANATION
5The inclusion of this explanation does not constitute agreement with
6the explanation’s substance by the members of the general assembly.
7This bill relates to the administration of state taxation,
8the lottery, and alcoholic beverages under the purview of the
9department of revenue.
10DIVISION I — DISCLOSURE OF TAX INFORMATION. The bill
11specifies and updates the circumstances the department of
12revenue (department) may disclose state tax return and audit
13information to law enforcement.
14The division takes effect upon enactment.
15DIVISION II — ANNUAL REPORTING. The bill strikes the
16requirement that the department annually report to the general
17assembly the areas of recurrent taxpayer noncompliance with the
18rules of the department including any recommendations relating
19to the noncompliance.
20DIVISION III — PROPERTY TAX — EXTENSIONS. Under current
21law, a claimant may ask the director of the department, the
22county treasurer, or the director of the department of health
23and human services for an extension to claim a reimbursement
24for rent constituting property taxes in case of sickness,
25absence, or disability. The bill strikes the director of the
26department from involvement in the extension request by the
27claimant.
28DIVISION IV — FARM TENANCY INCOME TAX EXCLUSION.
29 Currently, an eligible individual may exclude income received
30by the individual pursuant to a farm tenancy covering real
31property held by the individual for 10 or more years, if the
32individual materially participated in a farming business for
3310 or more years. The bill allows the eligible individual to
34exclude such income under such circumstances, if the individual
35materially participated in a farming business for 10 or more
-24-1years in the aggregate. The bill further specifies the term
2“held” is to be determined by the holding period provisions of
3section 1223 of the Internal Revenue Code and other federal
4regulations which is identical to the use of the term “held”
5under the farming business exclusion in Code section 422.7(13).
6DIVISION V — PASS-THROUGH ENTITIES. Under current law,
7the department may issue a notice of adjustment (adjustment of
8tax) to a partnership or pass-through entity pursuant to Code
9section 422.25C, and specifies that the notice of adjustment
10is appealable pursuant to Code sections 422.28 and 422.29.
11The bill specifies the notice of adjustment is not always
12appealable under the circumstances provided in Code section
13422.25.
14The division takes effect upon enactment and applies
15retroactively to January 1, 2024.
16DIVISION VI — SALES TAX CHANGES. Under current law, a
17purchaser, user, and consumer of taxable property or services
18may be authorized to remit tax owed directly to the department
19instead of the tax being collected and paid by the seller. The
20bill specifies that in order to qualify for the direct pay tax
21permit such a taxpayer must accrue a tax liability of more than
22$8,000 on a monthly basis. Currently, such a taxpayer must
23accrue a tax liability of $4,000 on a semimonthly basis in
24order to qualify for the direct pay tax permit.
25Currently, if the department determines a sales tax return
26is incorrect, the department may determine the amount of tax
27due from information or knowledge the department is able to
28obtain, including using any mutually agreed upon valid and
29reliable sampling technique. The bill strikes the provision
30requiring the sampling technique be mutually agreed upon by the
31taxpayer and the department, and allows the department to use
32such a sampling technique without mutual agreement from the
33taxpayer.
34DIVISION VII — MOTOR FUEL TAXES. Under current law and
35before July 1, 2026, the department determines the rate of
-25-1excise tax imposed on each gallon of ethanol blended gasoline
2based upon the distribution percentage calculated in Code
3section 452A.3(1)(b), and the excise tax rate imposed on each
4gallon of biodiesel blended fuel based on the distribution
5percentage calculated in Code section 453A.3(3)(a)(2). The
6department determines the distribution percentage based upon
7data from reports filed pursuant to Code section 452A.33. The
8bill allows the department to amend the initial distribution
9percentage due to a mistake, or if there is a late report filed
10by a retail dealer to the department, or the distribution
11percentage is not accurate.
12The bill changes the due date of a biannual tax return
13relating to electric fuel tax due in January by one day, and
14modifies the biannual tax period by one day.
15The bill allows a person who uses electric fuel for a
16nontaxable purpose to provide an exemption certificate to
17the license holder selling or dispensing the fuel, if the
18certificate is produced by the department.
19DIVISION VIII — VETERANS TRUST FUND AND LOTTERY. The bill
20strikes the requirement that the department report semiannually
21to the general assembly’s standing committees on government
22oversight regarding the operations of the lottery.
23The bill establishes new criteria triggering distributions
24from the veterans trust fund when the balance of the fund
25equals or exceeds $50 million. Under the bill, if the balance
26of the veterans trust fund is $50 million or more on both
27July 1 of the current fiscal year and July 1 of the preceding
28fiscal year, the moneys from the veterans trust fund shall
29be appropriated to the department for distribution to county
30directors of veteran affairs as provided in current law in Code
31section 99G.39(3).
32The bill establishes new setoff program procedures (debt
33collection) for a debtor’s lottery prize payment awarded as
34cash or cash equivalent. The bill defines “setoff program” to
35mean the program administered by the department pursuant to
-26-1Code section 421.65.
2DIVISION IX — ALCOHOLIC BEVERAGES. The bill defines
3“operating still” to mean a still that is registered with the
4federal alcohol and tobacco tax and trade bureau of the United
5States department of the treasury and is actively used to
6manufacture spirits. The term “operating still” is used in the
7definition of “native distillery” in Code section 123.3(35).
8The bill moves portions of Code section 123.30(4) to new Code
9section 123.30(5) and allows a person holding a retail alcohol
10license to permit a customer to carry an open container of beer
11from the person’s licensed premises into another immediately
12adjacent licensed premises that is covered by a license or
13permit that authorizes the consumption of beer. Current law
14allows a person to carry an open container of wine under such
15circumstances but not beer.
16The bill allows a person who is the holder of a class
17“A” native distilled spirits license to be granted a class
18“C” retail alcohol license for the same premises licensed
19under the class “A” native distilled spirit license where the
20manufacturing of native distilled spirits occurs.
21The bill provides a native brewery may be granted a class “C”
22retail alcohol license or a special class “C” retail alcohol
23license for the premises licensed under a class “A” beer permit
24where the manufacturing of beer occurs. The bill provides
25that a native brewery may be granted not more than two class
26“C” retail alcohol licenses or granted two special class “C”
27alcohol licenses. Under the bill, a native brewery may be
28issued a class “C” retail alcohol license or a special class
29“C” alcohol license, regardless of whether the person is a
30manufacturer of native distilled spirits pursuant to a class
31“A” native distilled spirits license or a manufacturer of
32native wine pursuant to a class “A” wine permit.
33The bill allows a person who is the holder of a class “A”
34wine permit to be granted a class “C” retail alcohol license
35or a special class “C” retail native wine license for the same
-27-1premises licensed under the class “A” wine permit where the
2manufacturing of native wine occurs.
3DIVISION X — INHERITANCE TAX — FUTURE CODE CHANGES DUE TO
4REPEAL. The bill changes numerous Code sections to reflect the
5future repeal of the inheritance tax beginning for the estates
6of decedents dying on or after January 1, 2025. However, other
7provisions of Code chapter 450 relating to the inheritance tax
8have not been repealed. The division takes effect January 1,
92025, and applies to the estates of decedents dying on or after
10that date.
11DIVISION XI — LUMP SUM DISTRIBUTION OF RETIREMENT INCOME.
12Under current law, commencing with tax years beginning on or
13after January 1, 2023, retirement income is not subject to
14Iowa individual income tax. However, under current law a lump
15sum distribution from a retirement account is subject to Iowa
16income tax under Code section 422.5(8) at a rate of 25 percent
17of the federal tax rate imposed on the amount of the lump sum
18distribution.
19The bill provides that the taxation of a lump sum
20distribution from a retirement account is also exempt from
21state taxation by exempting the lump sum distribution for a
22person who is disabled, or 55 years of age or older, or who is
23the surviving spouse of an individual or is a survivor having
24an insurable interest in an individual who would have qualified
25for the exemption for the tax year.
26The bill excludes the lump sum distribution exempt from
27state taxation from being included in calculating the
28individual income tax filing thresholds in Code section
29422.5(2) and (3).
30The division takes effect upon enactment and applies
31retroactively to tax years beginning on or after January 1,
322024.
33DIVISION XII — ESTIMATED TAX THRESHOLD. Under the bill,
34a taxpayer filing a return is required to make estimated
35tax payments if Iowa income tax liability can reasonably be
-28-1expected to exceed $1,000 or more. Under current law, such
2a taxpayer filing a return is required to make estimated
3tax payments if Iowa income tax liability can reasonably be
4expected to exceed $200 or more.
5The division takes effect January 1, 2025, and applies to tax
6years beginning on or after that date.
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