COMMITTEE SUBSTITUTE
FOR
H. B. 2794
(By Delegates Staton, Fleischauer and Trump
)
(Originating in the Committee on the Judiciary)
[April 1, 1997]
A BILL to amend and reenact section seventeen, article eleven,
chapter eleven of the code of West Virginia, one thousand nine
hundred thirty one, as amended, relating to estate tax liens,
clarifying that certain estate tax liens are divested and re- attach upon transfer of certain property.
Be it enacted by the Legislature of West Virginia:
That section seventeen, article eleven, chapter eleven of the
code of West Virginia, one thousand nine hundred thirty-one, as
amended, be amended and reenacted to read as follows:
ARTICLE
11. ESTATE TAXES.
§11-11-17. Special lien for estate tax.
(a) Lien created. -- Unless the tax imposed by section three
of this article is sooner paid in full, or becomes unenforceable by
reason of lapse of time, it shall be a lien for ten years after the
death of the decedent upon all property, real or personal, of the decedent located in this state, except as provided in subsections
(b), (c) or (d) of this section.
(b) Liability of transferees and others; divestment and re-
attachment of lien. -- If the tax imposed by this article is not
paid when due, then the spouse, transferee, trustee (except the
trustee of an employees' trust which meets the requirements of
Section 401(a) of the Internal Revenue Code of 1986, as amended),
surviving tenant, person in possession of the property by reason of
the exercise, nonexercise, or release of a power of appointment, or
beneficiary, who receives, or possesses on the date of the
decedent's death, property included in the gross estate for federal
estate tax purposes, to the extent of the value at the time of the
decedent's death of the property, shall be personally liable for
the tax. Any part of the property transferred by (or transferred
by a transferee of) the spouse, transferee, trustee, surviving
tenant, person in possession, or beneficiary, to a purchaser or
holder of a security interest shall be divested of the lien
provided in subsection (a) of this section. and However, a like
lien shall attach to all the property not similarly transferred of
such spouse, transferee, trustee, surviving tenant, person in
possession, or beneficiary, or transferee of any person. except any
part transferred to a purchaser or a holder of a security interest.
(c) Continuance after discharge of fiduciary; divestment and
re-attachment of lien. -- The provisions of section twenty of this article eleven (relating to discharge of fiduciary from personal
liability) shall not operate as a release of any part of the gross
estate from the lien provided in subsection (a) of this section for
any deficiency that may thereafter be determined to be due, unless
such part of the gross estate (or any interest therein) has been
transferred to a purchaser or a holder of a security interest, in
which case the part (or the interest) so transferred shall not be
subject to a lien be divested of the lien provided in subsection
(a) of this section or to any claim or demand for any such
deficiency. but the However, a like lien shall attach to the
consideration received from the purchaser or holder of a security
interest, by the heirs, legatees, devisees, or distributees.
(d) Other Exceptions. --
(1) The part of the property of the decedent as may at the
time be subject to the lien provided for in subsection (a) of this
section shall be divested of such lien to the extent used for
payment of charges against the estate or expenses of its
administration allowed by the county commission or court having
jurisdiction thereof.
(2) The part of the personal property of the decedent as may
at the time be subject to the lien provided for in subsection (a)
of this section shall be divested of the lien upon the conveyance
or transfer of the property to a bona fide purchaser or holder of
a security interest for an adequate and full consideration in money or money's worth. The liens shall then attach to the consideration
received for the property from the purchaser or holder of a
security interest.
(e) Release of lien. -- Subject to such regulations as the tax
commissioner may prescribe, the tax commissioner shall issue a
certificate of release of any lien arising under this section not
later than thirty days after the day on which the tax commissioner
finds that the liability for the amount assessed, together with all
interest and applicable penalties and additions to tax in respect
thereof, has been fully satisfied or has become legally
unenforceable.
(f) Certificate of discharge. -- Subject to such regulations
as the tax commissioner may prescribe, the tax commissioner may
issue a certificate of discharge of any or all of the property
subject to the lien imposed by this section if the tax commissioner
finds that the liability secured by the lien has been fully
satisfied or provided for.
(g) Effect of certificate. --
(1) Conclusiveness. -- Except as provided in subdivisions (2)
and (3) of this subsection, if a certificate is issued pursuant to
subsection (f) of this section by the tax commissioner and is filed
in the same office as the notice of lien to which it relates (if
such notice of lien has been filed), the certificate shall have the
following effect:
(A) In the case of a certificate of release, the certificate
shall be conclusive that the lien referred to in the certificate is
extinguished;
(B) In the case of a certificate of discharge, the certificate
shall be conclusive that the property covered by the certificate is
discharged from the lien; and
(C) In the case of a certificate of nonattachment, the
certificate shall be conclusive that the lien of the state of West
Virginia does not attach to the property of the person referred to
in the certificate.
(2) Revocation of certification of release or nonattachment.
-- If the tax commissioner determines that a certificate of release
or nonattachment of a lien imposed by this section was issued
erroneously or improvidently, or if a certificate of release of the
lien was issued pursuant to a collateral agreement entered into in
connection with a compromise under section five-q, article ten of
this chapter, which has been breached, and if the period of
limitation on collection after assessment has not expired, the tax
commissioner may revoke the certificate and reinstate the lien:
(A) By mailing written notice, by certified mail, return
receipt requested, of the revocation to the person against whom the
tax was assessed at his or her last known address; and
(B) By filing notice of the revocation in the same office in
which notice of lien to which it relates was filed (if the notice of lien had been filed).
Such reinstated lien: (I) Shall be effective on the date the
notice of revocation is mailed to the taxpayer in accordance with
the provisions of the foregoing paragraph (A), but not earlier than
the date on which any required filing of notice of revocation is
filed in accordance with the provisions of the foregoing paragraph
(B); and (ii) shall have the same force and effect (as of the
date), until the expiration of the period of limitation on
collection after assessment, as a lien imposed by section eleven,
article ten of this chapter, (relating to lien for taxes).
(3) Certificates void under certain conditions. --
Notwithstanding any other provision of this article, any lien
imposed by this section shall attach to any property with respect
to which a certificate of discharge has been issued if the person
liable for payment of the tax reacquires the property after the
certificate has been issued.
NOTE: The purpose of this bill is to clarify that an estate
tax lien is divested when property is transferred and a like lien
is created on the property of the transferee or the consideration
received.
Strike-throughs indicate language that would be stricken from
the present law, and underscoring indicates new language that would
be added.