Iowa Admin. Code r. 701-89.10 - The income tax certificate of acquittance
(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.
Ifall 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.
Notes
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