Annuities purchased under an employee pension plan or retirement plan are not taxable. The portion of the installment payments which are subject to Iowa income tax is exempt from Iowa inheritance tax. The inheritance tax return must be filed and any tax due paid on or before the last day of the ninth month after the death of the decedent. An extension of time to file the return and make payment may be requested by contacting the Department. If an extension is granted, the taxpayer will be required to pay interest on the unpaid tax which remains due.
Interest accrues on a monthly basis, with each fraction of a month considered a full month.
A penalty is assessed by the Department for failure to timely file or pay the tax due. This occurs when the return and payment are delinquent and an extension of time has not been granted. The penalty is computed on the amount of the tax that is due. If assets are discovered after completing and filing a return, an amended return must be filed and any additional tax paid. Audits The Department may conduct an audit of the inheritance tax return for the purpose of checking the property included, the values of the property, liabilities listed and the tax due.