Iowa Administrative Code › Agency 701 - Revenue Department › Title VIII - Fiduciary Income Tax › Chapter 700 - Fiduciary Income Tax › Rule 701-700.10 - The Income Tax Certificate of Acquittance

Current through Register Vol. 47, No. 3, July 24, 2024
(1)
In
				general.
Iowa Code section
				422.27 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
				422.27 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 pay
				composite return tax on distributions of nonresident beneficiaries' Iowa-source
				income from the estate or trust. In the case of an estate, the income tax
				liability of the decedent both for 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
				633.425. 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 422.27 and the Iowa income tax
				portion of the requirements of Iowa Code sections
				633.477 and
				633.479. 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 422.27, 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.