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 t
he 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.