Iowa Administrative Code › Agency 701 - Revenue Department › Title I - Administration › Chapter 89 - Fiduciary Income Tax › Rule 701-89.10 - The Income Tax Certificate of Acquittance

Current through Register Vol. 47, No. 3, July 24, 2024
(1)
In general.
Iowa Code
				section
				42227.
				requires the income tax obligation of an estate or trust to be paid prior to
				approval of the final report by the court. Iowa Code section
				42227.
				refers only to the report of the executor, administrator or trustee. In
				addition, the statute makes reference only to a trustee's final report that is
				approved by a court. A trust that does not report to and is not subject to the
				supervision of a court is not required to obtain a certificate of acquittance.
				However, the statute's reference to a trustee who must report to the court
				would also include, but is not limited to, a referee in partition and the
				trustee of the estate of an individual bankrupt under Chapter 7 or 11 of Title
				11 of the United States Code. What constitutes a trust is a matter of the trust
				law of the state of situs.
(2)
The application for certificate of acquittance.
The final
				fiduciary return of income serves as an application for an income tax
				certificate of acquittance. For a certificate of acquittance to be received,
				the appropriate box on the final fiduciary return must be checked to request
				the certificate.
(3)
Requirements for a certificate of acquittance.
The issuance of
				an income tax certificate of acquittance is dependent upon full payment of the
				income tax liability of the estate or trust for the period of administration.
				This includes the obligation to withhold income tax on distributions to
				nonresident beneficiaries. In the case of an estate, the income tax liability
				of the decedent for both prior years and the year of death must be paid to the
				extent of the probate property subject to the jurisdiction of the court. The
				probate property must be applied to the payment of the decedent's income tax
				liability according to the order of payment of an estate's debts and charges
				specified in Iowa Code section
				633425..
				If the probate property of the estate is insufficient to pay the decedent's
				income tax obligation in full, the department, in lieu of a certificate of
				acquittance, shall issue a certificate stating that the probate property is
				insufficient to pay the decedent's income tax liability and that the department
				does not object to the closure of the estate. In the event the decedent's
				income tax obligation is not paid in full, the closure of the decedent's estate
				does not release any other person who is liable to pay the decedent's income
				tax obligation.
(4)
The
				extent of the certificate.
An income tax certificate of acquittance is
				a statement of the department certifying that all income taxes due from the
				estate or trust have been paid in full to the extent of the income and
				deductions reported to the department. The certificate fulfills the statutory
				requirements of Iowa Code section
				42227.
				and the Iowa income tax portion of the requirements of Iowa Code sections
				633477. and
				633479.. Providing all
				other closure requirements are met, the certificate permits the closure of the
				estate or trust by the court. However, the certificate of acquittance is not a
				release of liability for any income tax or additional tax that may become due,
				such as the result of an audit by the Internal Revenue Service or because of
				additional income not reported. See 701-subrule 38.2(1) for the limitations on
				the period of time to conduct income tax audits.
(5)
No income tax certificate of
				acquittance required
-
exception to general rule.
If
all
of the property included in the estate is held in joint
				tenancy with rights of survivorship by a husband and wife as the only joint
				tenants, then in this case the provisions of Iowa Code section
				42227.,
				subsection 1, do not apply and an income tax certificate of acquittance from
				the department is not required.
This rule is intended to implement Iowa Code sections 422.27,
				  633.425, 633.477 and 633.479.