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Introduced Version House Bill 4435 History

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Key: Green = existing Code. Red = new code to be enacted
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H. B. 4435


(By Delegate White)

[By Request of the State Tax Division]

[Introduced February 10, 2010 ; referred to the

Committee on the Judiciary then Finance.]




A BILL to amend and reenact §11-11-2, §11-11-3, §11-11-7, §11-11- 12, §11-11-17, §11-11-20, §11-11-38, §11-11-39 and §11-11-40 of the Code of West Virginia, 1931, as amended, all relating to estate tax; providing definitions; imposing tax; specifying treatment of nonprobate personal property; specifying inventory of nonprobate personal property be prepared; specifying penalty for failure to comply with provisions relating to nonprobate personal property; specifying treatment for changes in federal estate tax; specifying imposition of lien for unpaid tax; specifying liability of transferees and others; specifying divestment and reattachment of lien; specifying divestment, discharge and release of lien, specifying for certificate of discharge, release or nonattachment; specifying effect of certificate of discharge; providing for revocation of certification of release or nonattachment and notice thereof and effective date thereof; specifying certificates void under certain conditions; specifying liability of personal representative; specifying notice and payment pursuant to discharge of personal liability for federal estate taxes; specifying estates to which article applies; specifying when article remains in force and effect; specifying application of article to estates of decedents dying after June 30, 2010, pursuant to establishment or reestablishment by the government of the United States, of credit against federal estate tax for payment of state death taxes in the year 2010; specifying article effective and applicable to estates of all decedents dying after June 30, 2010.

Be it enacted by the Legislature of West Virginia:

That §11-11-2, §11-11-3, §11-11-7, §11-11-12, §11-11-17, §11- 11-20, §11-11-38, §11-11-39 and §11-11-40 of the Code of West Virginia, 1931, as amended, be amended and reenacted, all to read as follows:

ARTICLE 11. ESTATE TAXES.

§11-11-2. Definitions.

(a) General. -- When used in this article, or in the administration of this article, terms defined in subsection (b) shall have the meanings ascribed to them by this section, unless a different meaning is clearly required by either the context in which the term is used, or by specific definition.

(b) Terms defined.

(1) Alien. -- The term "alien" means a decedent who, at the time of his or her death, was not domiciled in this state or any other state of the United States and was not a citizen of the United States.

(2) Decedent or transferor. -- The terms "decedent" or "transferor" are used herein interchangeably and mean a deceased natural person by or from whom a transfer is made; and include any testator, intestate grantor, bargainor, vendor, assignor, donor, joint tenant or insured.

(3) Delegate. -- The term "delegate" in the phrase "or his or her delegate," when used in reference to the Tax Commissioner, means any officer or employee of the State Tax Department duly authorized by the Tax Commissioner directly, or indirectly by one or more redelegations of authority, to perform the function or functions mentioned or described in the context.

(4) Estate or property. -- The terms "estate" or "property" mean the real or personal property or interest therein of a decedent or transferor and includes all the following:

(A) All intangible personal property of a resident decedent within or without this state or subject to the jurisdiction of this state.

(B) All intangible personal property in this state belonging to a deceased nonresident of the United States, including all stock of a corporation organized under the laws of this state, or which has its principal place of business or does the major part of its
business in this state, or of a federal corporation or national bank which has its principal place of business or does the major part of its business in this state, excluding, however, savings accounts and savings and loan associations operating under the authority of the State Banking Commissioner or the Federal Home Loan Bank Board, and bank deposits, unless those deposits are held and used in connection with a business conducted or operated, in whole or in part, in this state.
(5) Federal credit. -- The term "federal credit" means the maximum amount of the credit for state death taxes allowable by Section 2011, credit against federal estate tax (or Section 2102 in the case of an alien) and Section 2602, credit against the federal tax on generation-skipping transfers of the United States Internal Revenue Code of 1986, as amended or renumbered, or in successor provisions of the laws of the United States, in respect to a decedent's taxable estate. The term "maximum amount" shall be construed so as to take full advantage of such credit as the laws of the United States may allow: Provided, That in no event shall such amount be less than the federal credit allowable by Sections 2011, 2102 and 2602 of the Internal Revenue Code, as it existed on January one, one thousand nine hundred eighty-five: Provided, however, That for estates of decedents dying after the thirty-first day of December, two thousand one, such amount may in no event be less than the federal credit allowable by Sections 2011, 2102, and 2604 of the Internal Revenue Code, as amended by the estate, gift
and generation - skipping transfer tax provisions of Public Law 107-16, the Economic Growth and Tax Relief Reconciliation Act of 2001 January 1, 2010.
(6) Gross estate. -- The term "gross estate" means the gross estate of the decedent as defined in Section 2031 (or Section 2103 in the case of an alien) of the United States Internal Revenue Code of 1986, as amended or renumbered, or in successor provisions of the laws of the United States.

(7) Includes and including. -- The words "includes" and "including" when used in a definition contained in this article shall not be deemed to exclude other things otherwise within the meaning of the term being defined.

(8) Intangible personal property. -- The term "intangible personal property" means incorporeal personal property including deposits in banks, negotiable instruments, mortgages, debts, receivables, shares of stock, bonds, notes, credits, evidences of an interest in personal property, evidences of debt and chooses in action generally.

(9) Internal Revenue Code. -- The term "Internal Revenue Code" means the United States Internal Revenue Code of 1986, as amended and in effect on the first day of January, one thousand nine hundred eighty-five, including all changes to such code enacted subsequent to such date, that are similar to or a replacement of the section cited or referred to January 1, 2010.

(10) Net estate. -- The term "net estate" means the net estate
of the decedent as defined in Section 2051 of the United States Internal Revenue Code of 1986, as amended or renumbered, or in successor provisions of the laws of the United States.
(11) Nonresident. -- The term "nonresident" means a decedent who was a citizen of the United States, but was domiciled outside the State of West Virginia at the time of his or her death.

(12) Notice. -- The term "notice" means a written notice sent to the last known address of the addressee and shall be effective upon mailing.

(13) Other state. -- The term "other state" means any state of the fifty states in the United States (other than this state) and includes the District of Columbia and any possession or territory of the United States.

(14) Person. -- The term "person" includes natural person, corporation, society, association, partnership, joint venture, syndicate, estate, trust or other entity under which business or other activities may be conducted.

(15) Person required to file. -- The phrase "person required to file" means any person, including a personal representative, qualified heir, distributee or trustee required or permitted to file a federal estate tax return, or a West Virginia estate tax return, pursuant to the provisions of the Internal Revenue Code or this article.

(16) Personal representative. -- The terms "personal representative" and "fiduciary" are used interchangeably and mean:

(A) The personal representative of the estate of the decedent, appointed, qualified and acting within this state; or

(B) If there is no personal representative appointed, qualified and acting within this state, then any person in actual or constructive possession of the West Virginia gross estate of the decedent. The term "personal representative" includes the executor of a will, the administrator of the estate of a deceased person, the administrator of such estate with the will annexed, the administrator de bonis non of such estate, whether there be a will or not, the sheriff or other officer lawfully charged with the administration of the estate of a deceased person, and every other curator or committee of a decedent's estate for or against whom suits may be brought for causes of action which accrued to or against such decedent.

(17) Real property situated in this state. -- The phrase "real property situated in this state" means any and all interests in real property located in this state, including leasehold interests, royalty interests, production payments and working interests in coal, oil, gas and other natural resources.

(18) Resident. -- The term "resident" means a decedent who was domiciled in the State of West Virginia at the time of his or her death.

(19) State. -- The term "state" means any state, territory or possession of the United States and the District of Columbia.

(20) Tangible personal property. -- The term "tangible
personal property" means corporeal personal property including money.
(21) Tax. -- The term "tax" means the tax imposed by this article, and includes any additions to tax, penalties and interest imposed by this article or article ten of this chapter.

(22) Tax Commissioner. -- The term "Tax Commissioner" means the Tax Commissioner of the State of West Virginia or his or her delegate.

(23) Taxable estate. -- The term "taxable estate" means the taxable estate of the decedent as defined in Section 2051 (or Section 2106 in the case of an alien) of the United States Internal Revenue Code of 1986, as amended or renumbered, or in successor provisions of the laws of the United States.

(24) Taxpayer. -- The term "taxpayer" means any person required to file a return for the tax imposed by this article and any person liable for payment of the tax imposed by this article.

(25) This Code. -- The term "this Code" means the Code of West Virginia, 1931, as amended.

(26) This state. -- The term "this state" means the State of West Virginia.

(27) Transfer. -- The term "transfer" means "transfer" as defined in Sections 2001, 2101, 2601 of the United States Internal Revenue Code of 1986, as amended or renumbered, or in successor provisions of the laws of the United States. It includes the passage of any property, or any interest therein, or income
therefrom, in possession or enjoyment, present or future, in trust or otherwise, whether by inheritance, descent, devise, succession, bequest, grant, deed, bargain, sale, gift or appointment.
(28) Transferee. -- The term "transferee" means any person to whom a transfer is made and includes any legatee, devisee, heir, next of kin, grantee, donee, vendee, assignee, successor, survivor or beneficiary.

(29) United States. -- The term "United States", when used in a geographical sense, includes only the fifty states and the District of Columbia.

(30) Value. -- The term "value" means the value of property, the value of the gross estate or the value of the taxable estate as finally determined for federal estate tax purposes under the laws of the United States relating to federal estate taxes.

(c) Any term used in this article shall have the same meaning as when used in a comparable context in the laws of the United States relative to estate taxes, unless a different meaning is clearly required by the provisions of this article. Any reference in this article to the laws of the United States relating to federal estate taxes shall mean the provisions of the Internal Revenue Code of 1986, and amendments thereto, and other provisions of the laws of the United States relating to federal estate taxes, as the same may be or become effective at any time or from time to time.

§11-11-3. Imposition of tax.

Whenever a federal estate tax is payable to the United States, there is hereby imposed a West Virginia estate tax equal to the portion, if any, of the maximum allowable amount of federal credit for state death taxes which is attributable to property located in this state, or within its taxing jurisdiction. In no event, however, shall the estate tax hereby imposed result in a total death tax liability to this state and the United States in excess of the death tax liability to the United States which would result if this article were not in effect: Provided, That the estate tax hereby imposed shall not be affected by other credits properly allowable in computing the federal estate tax except that the unified credit established in Section 2010 of the Internal Revenue Code of 1986, as amended, shall be applied before calculating the West Virginia estate tax. This section shall apply to the estates of all decedents dying after June 30, 2010.
§11-11-7. Nonprobate inventory of estates; penalties.
(a) The personal representative of every resident decedent who owned or had an interest in any nonprobate personal property, and the personal representative of every nonresident decedent who owned or had an interest in any nonprobate personal property which is a part of the taxable estate located in West Virginia, shall, under oath, list and appraise on a nonprobate inventory form prescribed by the Tax Commissioner, all tangible and intangible nonprobate personal property owned by the decedent or in which the decedent had an interest, at its fair market value on the date of the decedent's death. The nonprobate personal property to be included on the nonprobate inventory form includes, but is not limited to, the following:
(1) Personalty held as joint tenants with right of survivorship with one or more third parties;
(2) Personalty payable on the death of the decedent to one or more third parties;
(3) Personalty held by the decedent as a life tenant;
(4) Insurance on the decedent's life payable to beneficiaries other than the executor or administrator of the decedent's estate;
(5) Powers of appointment;
(6) Annuities;
(7) Transfers during the decedent's life in which any beneficial interest passes by trust or otherwise to another person by reason of the death of the decedent;
(8) Revocable transfers in trust or otherwise;
(9) Taxable gifts under Section 2503 of the United States Internal Revenue Code of 1986; and
(10) All other nonprobate personalty included in the federal gross estate of the decedent.
(b) For purposes of this section, "nonprobate personal property" means all property which does not pass by operation of the decedent's will or by the laws of intestate descent and distribution or is otherwise not subject to administration in a decedent's estate at common law.
(c) The personal representative shall prepare the nonprobate inventory form and file it, together with the appraisement form required by section fourteen, article one, chapter forty-four of this code for estates of decedents dying on or after the thirteenth day of July, two thousand one July 1, 2010, with the clerk of the county commission or the fiduciary supervisor within ninety days of the date of qualification of the personal representative in this state. Provided, That for estates of decedents dying on or after the said thirteenth day of July but before the date the amendments to this section become effective, the requirement to file the nonprobate inventory form with the clerk or supervisor shall apply only if that form has not already been filed with Tax Commissioner
(d) Any personal representative who fails to comply with the provisions of this section, without reasonable cause, is guilty of a misdemeanor and, upon conviction thereof, shall be fined not less than $25 nor more than $500.
§11-11-12. Report of change in federal estate tax.
(a) Report of federal change. -- If the amount of the federal taxable estate reported on federal estate tax return is changed or corrected by the United States Internal Revenue Service, or other competent authority, the personal representative shall report the change or correction within ninety days after the final determination of the change, or correction, or as otherwise required by the Tax Commissioner. Such The report shall concede the accuracy of the change, or correction, or state whether and wherein the determination is believed to be erroneous. The imposition of an additional federal estate tax under Section 2032A of the Internal Revenue Code shall constitute a change. The Tax Commissioner may by regulation prescribe exceptions to the requirements of this section as he deems appropriate.
(b) Payment of deficiency. -- If, based upon any deficiency in federal estate tax and the ground therefore, it shall appear that the amount of tax previously paid under this article is less than the amount of tax due and owing, the difference together with interest at the rate of one percent per month from the date the tax became delinquent under this article shall be remitted at the time the notice required by this section is filed.
(c) Failure to give notice. -- In the event the personal representative required to file the return and pay the tax required by this article shall fail to give the notice required by this section, any additional tax which may be due and owing may be assessed by the Tax Commissioner at any time notwithstanding the provisions of section fifteen, article ten of this chapter.
(d) This section shall apply to the estates of all decedents dying after June 30, 2010.
§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 subsection (b), (c) or (d) of this section.
(b) Liability of transferees and others; divestment and reattachment 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. However, a like lien shall attach to all the property not so transferred of such spouse, transferee, trustee, surviving tenant, person in possession, or beneficiary, or transferee of any person.
(c) Continuance after discharge of fiduciary; divestment and reattachment 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 be divested of the lien provided in subsection (a) of this section or to any claim or demand for any such deficiency. 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 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.
(h) This section shall apply to the estates of all decedents dying after June 30, 2010.
§11-11-20. Liability of personal representatives; etc.
(a) Personal representative. -- Any personal representative who distributes any property of an estate without first paying, securing another's payment of, or furnishing security for payment of the taxes due under this article, is personally liable for payment of the taxes due, to the extent of the value of any property that may come or that may have come into the possession of the personal representative. Security for payment of taxes due under this article shall be in an amount equal to or greater than the value of all property that is or has come into the possession of the personal representative, determined as of the time the security is furnished.
(b) Other person having control, custody or possession of property. -- Any person in this state who has control, custody or possession of any property includible in the gross estate of a decedent for federal estate tax purposes, and who delivers any of the property to the personal representative or other legal representative of the decedent outside this state without first paying, securing another's payment of, or furnishing security for payment of the taxes due under this article, is liable for the taxes due under this article to the extent of the value of the property delivered. Security for payment of the taxes due under this article shall be in an amount equal to or greater than the value of all property delivered to the personal representative or other legal representative of the decedent outside this state by such a person.
(c) Persons not having control. -- For the purpose of this section, persons do not have control, custody or possession of a decedent's property if they are not responsible for paying the tax due under this article, such as transferees, which term includes, but is not limited to, stockbrokers or stock transfer agents, banks and other depositories of checking and savings accounts, safe deposit companies and life insurance companies.
(d) Reliance upon Tax Commissioner's certificates. -- For the purposes of this section, any person in this state who has the control, custody or possession of any property includible in the gross estate of the decedent for federal estate tax purposes, and who delivers any of the property to the personal representative or other legal representative of the decedent, may rely upon the release or certificate furnished by the Tax Commissioner under section seventeen of this article to the personal representative as evidence of compliance with the requirements of this article, and make the deliveries and transfers as the personal representative may direct without being liable for any taxes due under this article with respect to any property.
(e) Discharge of personal liability for federal estate taxes. -- If a personal representative receives a discharge from personal liability for federal estate taxes pursuant to Section 2204 of the Internal Revenue Code of 1986, as amended, and if the personal representative makes written application to the Tax Commissioner for determination of the amount of the tax due under this article and for discharge from personal liability, the Tax Commissioner, within two months after receiving satisfactory evidence of the Section 2204 discharge, but not after the expiration of the period for issuance of a deficiency assessment, shall notify the personal representative of the amount of the tax due under this article, including the amount of any interest, additions to tax or penalties that are due. The personal representative, upon payment of the amount of which he is notified (other than any portion for which an extension of time for payment has been granted), and upon furnishing any bond that may be required by the Tax Commissioner to secure payment of any amount for which the time for payment has been extended, shall be discharged from personal liability for any deficiency in tax thereafter found to be due and shall be entitled to a receipt or writing showing the discharge.
(f) This section shall apply to the estates of all decedents dying after June 30, 2010.
§11-11-38. Estates to which article applies. former law preserved
Persons dying after June 30, 1985 June 30, 2010. -- Except as otherwise specifically provided, the provisions of this article shall apply to the estate of every person dying on or after the first day of July, one thousand nine hundred eighty-five July 1, 2010.
(b) Persons dying before July 1, 1985. -- With respect to persons dying prior to the first day of July, one thousand nine hundred eighty-five, the provisions of article eleven, chapter eleven of this Code, in effect on the first day of January, one thousand nine hundred eighty-five, are hereby continued in force, and fully preserved, until their objects have been fully accomplished.
§11-11-39. Effectiveness of this article.
This article shall remain in force and effect until either one of the following events occurs:
(1) This article is repealed by the Legislature; or
(2) The government of the United States ceases to allow credit against its estate tax for payment of state death taxes: Provided, That pursuant to establishment or reestablishment by the government of the United States, of credit against its estate tax for payment of state death taxes in the year 2010, this article is effective and shall apply to the estates of all decedents dying after June 30, 2010.
§11-11-43. Effective date.
The amendments to this article made by this act shall take effect as provided in the Constitution of this state and, upon the effective date, these amendments shall apply to the estates of all decedents dying after the thirtieth day of June, one thousand nine hundred eighty-five, for which no estate tax lien release has been issued by the Tax Commissioner prior to the effective date of these amendments in the year one thousand nine hundred ninety-six, and to estates of all decedents dying on or after the effective date of these amendments This article shall apply to the estates of all decedents dying after June 30, 2010.



NOTE: The purpose of this bill is to reestablish the West Virginia estate tax, pursuant to establishment or reestablishment, in the year 2010, of the credit against federal estate tax for payment of state death taxes.

Strike-throughs indicate language that would be stricken from the present law, and underscoring indicates new language that would be added.
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