(1)
Audits. Upon filing of
the inheritance tax return, the department must audit and examine it and
determine the correct tax due. A copy of the federal estate tax return must be
filed with the inheritance tax return in those estates where federal law
requires the filing of a federal estate tax return. The department may request
the submission of wills, trust instruments, contracts of sale, deeds,
appraisals, and such other information as may reasonably be necessary to
establish the correct tax due. See Iowa Code sections
45066.
and
45067.
and
Tiffany v. County Board of Review, 188 N.W.2d 343, 349
(Iowa 1971). For taxpayers using an electronic data interchange process or
technology also see 701-subrule 11.4(4). The person or persons liable for the
payment of the tax imposed by Iowa Code chapter 450 shall keep the records
relating to the gross and net estate required for federal estate tax purposes
under 26 U.S.C. Section
6001 of the Internal Revenue Code and federal
regulation Section 20.6001 -1.
(2)
Assessments for additional tax. The taxpayer must file an
inheritance tax return on forms prescribed by the director on or before the
last day of the ninth month after the death of the decedent. When an
inheritance tax return is filed, the department shall examine it and determine
the correct amount of tax. If the amount paid is less than the correct amount
due, the department must notify the taxpayer of the total amount due together
with any penalty and interest which shall be a sum certain if paid on or before
the last day of the month in which the notice is postmarked or on or before the
last day of the following month if the notice is postmarked after the twentieth
day of a month and before the last day of the following month. For estates with
decedents dying on or after July 1,1999, the date of the notice and not the
postmark date is controlling. If the inheritance tax return is not filed within
the time prescribed by law, taking into consideration any extensions of time,
or the return as filed is not correct, the department may make an assessment
for the tax and any penalty and interest due based on the inventories, wills,
trust instruments, and other information necessary to ascertain the correct
tax. For interest and penalty rate information, see 701-Chapter 10.
(3)
Refunds. If the
examination and audit of the inheritance tax return discloses an overpayment of
tax, the department will refund the excess to the taxpayer See 701-Chapter 10
for the statutory interest rate commencing on or after January I, 1982. For
estates of decedents dying prior to January I, 1988, interest shall be computed
for a period beginning 60 days from the date of the payment to be refunded. For
estates of decedents dying on or after January I, 1988, interest must be
computed for a period beginning the first day of the second calendar month
following the date of payment, or the date upon which the return which sets out
the refunded payment was actually filed, or the date that return was due to be
filed, whichever date is the latest. For the purposes of computing the period,
each fraction of a month counts as an entire month. If the taxpayer, after the
tax has been paid, discovers additional liabilities which, when offset by any
additional assets results in an overpayment of the tax, the excess payment will
be refunded to the taxpayer upon filing with the department an amended
inheritance tax return claiming a refund. No refund for excessive tax paid
shall be made by the department unless an amended return is filed with the
department within three years (five years for estates of decedents dying prior
to July 1, 1984) after the tax payment upon which the claim is made became due,
or one year after the tax was paid, whichever time is the later-see Iowa Code
section
45094(3)..
(4)
Supplemental assessments and
refund adjustments. The department may, at any time within the period
prescribed for assessment or refund adjustment, make a supplemental assessment
or refund adjustment whenever it is ascertained that any assessment or refund
adjustment is imperfect or incomplete in any respect.
If an assessment or refund adjustment is appealed (protested
under rule
701-78. (17A) ) and is
resolved whether by informal proceedings or by adjudication, the department and
the taxpayer are precluded from making a supplemental assessment or refund
adjustment concerning the same issue involved in such appeal for the same tax
period unless there is a showing of mathematical or clerical error or a showing
of fraud or misrepresentation.
(5)
Assessments-period of
limitations. Effective for estates of decedents dying on or after July
I, 1984, assessments for additional tax due must be made within the following
periods of time:
a. Within three years after
the return is filed for property reported to the department on the return. The
three-year period of Limitation does not begin until the return is filed. The
time of the decedent's death is not relevant. For purposes of determining the
period of limitations, the assessment period shall terminate on the same day of
the month three years later which corresponds to the day and month the return
was filed. If there is no numerically corresponding day three years after the
return is filed, or if the expiration date falls on a Saturday, Sunday, or
legal holiday, the assessment period expires the preceding day in case there is
no corresponding day, or the next day following which is not a Saturday,
Sunday, or legal holiday.
b. The
period of time for making an assessment for additional tax is unlimited if a
return is not filed with the department.
c. If a return is filed with the department,
but property which is subject to taxation is omitted from the return, the
three-year period for making an assessment for additional tax on the omitted
property does not begin until the omitted property is reported to the
department on an amended return. The omission of property from the return only
extends the period of limitations for making an assessment for additional tax
against the beneficiary, surviving joint tenant, or transferee whose share is
increased by the omitted property. Other shares of the estate are not affected
by the extended assessment period due to the omitted property. The inheritance
tax is a separate succession tax on each share of the estate, not on the estate
as a whole.In re Estate of Stone, 132 Iowa 136, 109 N.W. 455
(1906).
(6)
Period of limitations-federal audits.
a.
Statute of limitations and
federal audits in general In the case of a federal audit, the
department, notwithstanding the normal three-year audit period specified in
Iowa Code paragraphs
45094.
(5)
"a" and
"b, " shall have an additional
six-month period for examination of the inheritance tax return to determine the
correct tax due and for making an assessment for additional tax that may be
due.
The additional six-month period begins on the date the
taxpayer performs two affirmative acts:
(I) notifies the department, and the
department receives such a notification, in writing, that all controversies
with the Internal Revenue Service concerning the federal estate, gift, and
generation skipping transfer taxes have been concluded and (2) submits to the
department a copy of the federal audit, closing statement, court decision, or
any other relevant federal document concerning the concluded controversy. The
additional six-month examination period does not begin until both of the acts
are performed. See Iowa Code sections
622105.
and
622106.
for the mailing date as constituting the filing date and Iowa Code section
41(34).
and
Emmetsburg Ready Mix Co. v. Norris, 362 N.W.2d 498 (Iowa 1985) when
the due date falls on a legal holiday.
b.
Statute of limitations regarding
federal audits involving real estate.
(1) In general. Effective for estates with
decedents dying on or after July I, 1999, in addition to the period of
Limitation for examination and determination, the department shall make an
examination to adjust the value of real property for Iowa inheritance tax
purposes to the value accepted by the Internal Revenue Service for federal
estate tax purposes. The department shall have an additional six months to make
an examination and adjustment for the value of the real property.
(2) Beginning of the additional six-month
period. The additional six-month period for assessment and adjustment begins on
the date the taxpayer performs two affirmative acts:
(a) notifies the department, in writing, that
all controversies with the Internal Revenue Service concerning the federal
estate, gift, and generation skipping transfer taxes have been concluded and
(b) submits to the department a
copy of the federal audit, closing statement, court decision, or any other
relevant federal document. Such documents must indicate the final federal
determination and final audit adjustments of all real property.
(3) Adjustment required. The
department must make an adjustment to the value of real property for
inheritance tax purposes to the value accepted for federal estate tax purposes
regardless of whether any of the following have occurred: an inheritance tax
clearance has been issued; an appraisal has been obtained on the real property
indicating a contrary value; there has been an acceptance of another value for
real property by the department; an agreement has been entered into by the
department and the personal representative for the estate and persons having an
interest in the real property regarding the value of the real
property.
(4) Refunds. Despite the
time period for refunds set forth in Iowa Code section
45094(3).,
the personal representative for the estate has six months from the day of final
disposition of any real property valuation matter between the personal
representative for the estate and the Internal Revenue Service to claim a
refund from the department of an overpayment of tax due to the change in the
valuation of real property by the Internal Revenue Service.
c.
Effect of additional
time periods. The additional six-month audit period set forth
in
"a " and
"b " under this subrule does not
limit, or shorten the normal three-year examination period. As a result, a
six-month additional examination period has no application if the additional
six-month examination period would expire during the normal three-year audit
period. If additional tax is found to be due, see paragraph 86.12(5) "b" for
the inheritance tax lien filing requirements for securing the additional tax
after an inheritance tax clearance has been issued. The six-month additional
examination period means the department shall have at least six months to
examine the return after the notification. The department will have more time
if the normal three-year examination period expires after the six-month
additional period for examination. After the expiration of the normal
three-year examination period, and absent an agreement to the contrary, the
six-month extension of the statute of limitations for assessing Iowa
inheritance tax based on federal audit adjustments for real property is limited
to federal audit adjustments that directly affect Iowa inheritance tax and
involve Iowa inheritance tax laws that incorporate Internal Revenue Code
provisions. See Iowa Code section
45094(5).,
701-869.
(450) and
701-8612.
(450), and
Kelly-Springfield Tire Co. v. Iowa Board of Tax
Review, 414N.W.2d 113 (Iowa 1987).
This rule is intended to implement Iowa Code sections 422.25
and 422.30; section 450.37 as amended by 1999 Iowa Acts, chapter 151, section
47; and Iowa Code sections 450.53, 450.65, 450.71, 450.94, 450A.12 and
451.12.