Iowa Administrative Code › Agency 701 - Revenue Department › Title X - Inheritance Tax › Chapter 900 - Inheritance Tax › Rule 701-900.2 - Inheritance Tax Returns and Payment of Tax

Current through Register Vol. 47, No. 3, July 24, 2024
(1)
Filing of an inheritance tax
				return.
Estates meeting certain requirements must file an inheritance
				tax return, and it is the duty of certain persons associated with the estate to
				file the inheritance tax return as follows:
a.
Mandatory filing.
The inheritance tax return provided for in
				subrule 86.2(2) must be filed if the gross share of any heir, beneficiary,
				transferee, or surviving joint tenant exceeds the exemptions allowable in Iowa
				Code sections 450.4 and
				450.9. In addition, if Iowa real
				estate is includable in the gross estate, the return must be filed, even if no
				tax is due, prior to the issuance of a no tax due certificate.
Effective July 1, 2001, an estate is required to file an Iowa
				  inheritance tax return if the entire estate of the decedent exceeds the sum of
				  $25,000 after deducting the liabilities of the estate.
b.
Who must file.
If the
				decedent's estate is probated as provided in Iowa Code chapter 633 or
				administered as provided in Iowa Code section
				450.22, the personal
				representative of the estate is charged with the duty of filing the return with
				the department. If the personal representative of the estate fails to file the
				return or if the estate is not probated, it shall be the duty of those heirs,
				beneficiaries, transferees, surviving joint tenants, and trustees who receive
				shares in excess of the allowable exemptions or shares which are taxable in
				whole or in part, without the deduction of liabilities, and those individuals
				in receipt of the decedent's property are either jointly or severally to file
				the return with the department.
c.
Who is not required to file a return for estates of decedents dying on
				or after July 1, 2004.
(1) Effective
				for estates with decedents dying on or after July 1, 2004, if an estate has no
				Iowa inheritance tax due and there is no obligation for the estate to file a
				federal estate tax return, even though real estate is involved, an Iowa
				inheritance tax return need not be filed if at least one of the following
				situations is applicable:
1. All estate assets
				are held solely in joint tenancy with right of survivorship between husband and
				wife alone; or
2. All estate assets
				are held solely in joint tenancy with right of survivorship, and not as tenants
				in common, solely between the decedent and individuals listed in Iowa Code
				section 450.9 who are statutorily exempt
				from Iowa inheritance tax on shares received from a decedent based on the
				individuals' relationship to the decedent. This numbered paragraph does not
				apply to a jointly held interest in an asset that passes to both an individual
				listed in Iowa Code section
				450.9 and any other individual
				not listed in Iowa Code section
				450.9, including that
				individual's spouse. See subparagraph 86.2(1)
"c"
(2) for a list
				of individuals who are statutorily exempt from Iowa inheritance tax pursuant to
				Iowa Code section 450.9; or
3. All assets are passing by beneficiary
				designation pursuant to a trust and are intended to pass the decedent's
				property at death or through a nonprobate transfer solely to individuals listed
				in Iowa Code section 450.9 who are statutorily exempt
				from Iowa inheritance tax on shares received from a decedent based on their
				relationship to the decedent. This numbered paragraph does not apply to a
				jointly held interest in an asset that passes to both an individual listed in
				Iowa Code section 450.9 and any other individual
				not listed in Iowa Code section
				450.9, including that
				individual's spouse. See subparagraph 86.2(1)
"c"
(2) for a list
				of individuals who are statutorily exempt from Iowa inheritance tax pursuant to
				Iowa Code section 450.9; or
4. All estate assets are passed by will or
				intestate succession as set forth in Iowa Code chapter 633, division IV, and
				beginning with section
				633.210, solely to individuals
				who are statutorily exempt from Iowa inheritance tax as set forth below in
				subparagraph 86.2(1)
"c"
(2); or
5. For estates of decedents dying on or after
				July 1, 2007, if the total aggregate value of all the tangible personal
				property in the estate is $5,000 or less and in-kind distributions are made.
				Any in-kind distribution of personal property is exempt from inheritance tax
				when the total aggregate value of the tangible personal property in the estate
				is $5,000 or less. If the total aggregate amount of tangible personal property
				is greater than $5,000, then the exemption for in-kind distributions of
				tangible personal property does not apply. See Iowa Code section
				450.4(7); see
				also Iowa Code section
				633.276 for a description of
				tangible personal property that qualifies.
EXAMPLE 1: The total aggregate value of the tangible personal
				  property in the estate is $3,000. The executor makes an in-kind distribution of
				  a diamond ring worth $1,000 to a neighbor. The diamond ring is not subject to
				  inheritance tax.
EXAMPLE 2: The total aggregate value of the tangible personal
				  property in the estate is $15,000. The executor makes an in-kind distribution
				  of a diamond ring worth $1,000 to a neighbor. The diamond ring is subject to
				  inheritance tax because the total aggregate value of tangible personal property
				  is greater than $5,000.
(2) Individuals listed in Iowa Code section
				450.9 who are statutorily exempt from Iowa inheritance tax.
1. For estates of decedents dying prior to
				July 1, 2016, the entire amount of property, interest in property, and income
				passing solely to the surviving spouse, and parents, grandparents,
				great-grandparents, and other lineal ascendants, children including legally
				adopted children and biological children entitled to inherit under the laws of
				this state, stepchildren, and grandchildren, great-grandchildren, and other
				lineal descendants are exempt from Iowa inheritance tax.
2. For estates of decedents dying on or after
				July 1, 2016, the entire amount of property, interest in property, and income
				passing solely to the surviving spouse, lineal ascendants, lineal descendents,
				and stepchildren and their lineal descendants are exempt from Iowa inheritance
				tax. "Lineal descendants" includes descendants by adoption.
d.
General rules.
An Iowa inheritance tax return must be filed if
				estate assets pass to both an individual listed in Iowa Code section
				450.9 and that individual's
				spouse.
(1) If an inheritance tax return is
				not required because the estate meets the criteria in paragraph
				86.2(1)
"c,"
the final report (beginning with Iowa Code section
				633.469) need not contain an
				inheritance tax receipt (clearance) issued by the department, but must properly
				certify that one of the criteria set forth in paragraph
				86.2(1)
"c"
has been met as set forth in Iowa Code section
				450.58(2).
(2) If any interest in real estate passes on
				account of the decedent's death and no Iowa inheritance tax return is required
				to be filed and the real estate does not pass through probate administration,
				then one of the persons succeeding to the interest in the real property must
				file an affidavit in the county in which the real property is located setting
				forth the legal description of the real property and the fact that an Iowa
				inheritance tax return is not required to be filed with the department. A copy
				of this affidavit must be retained by the beneficiary that holds the real
				estate.
(3) If a return is filed
				with the department and the return is not required to be filed, the department
				will retain the return as required by statutes governing retention of returns.
				However, the department will not process the filed return if the statute does
				not require that the return be filed. The department will not issue a clearance
				in an estate in which a return is not required to be filed.