Senate Bill No. 136
(By Senators Tomblin (Mr. President) and Sprouse
By Request of the Executive)
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[Introduced January 14, 2004; referred to the Committee on
Finance.]
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A BILL to repeal §11-11-39 of the code of West Virginia, 1931, as
amended; and to amend and reenact §11-11-2, §11-11-3, §11-11-8
and §11-11-43 of said code, all relating to preserving West
Virginia's estate tax by decoupling from the changes in
federal estate tax law as a result of federal Economic Growth
and Tax Relief Reconciliation Act of 2001; and specifying
effective date.
Be it enacted by the Legislature of West Virginia:
That §11-11-39 of the code of West Virginia, 1931, as amended,
be repealed; and that §11-11-2, §11-11-3, §11-11-8 and §11-11-43 of
said code 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" "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" "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, bargain or, vendor, assignor, donor,
joint tenant or insured.
(3)
Delegate. - The term "delegate" "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" "Estate" or
"property"
mean means 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 "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 2604, credit against the
federal tax on generation-skipping transfers of the United States
Internal Revenue Code of 1954, 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 2604 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 the thirty-first day of December, two
thousand one, without the reduction in the state death tax credit
as provided for in section 2011(b)(2), the limitation on the state
death tax credit as provided in section 2011(e), or the termination
of the state death tax credit as provided for in section 2011(f) of
the United States Internal Revenue Code and as enacted by the
Economic Growth and Tax Relief Reconciliation Act of 2001.
(6)
Gross estate. - The term "gross "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 1954, as amended or renumbered, or in successor provisions
of the laws of the United States.
(7)
Includes and including. - The words "includes" "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
"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 1954, 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.
(10)
Net estate. - The term net "Net estate" means the net
estate of the decedent as defined in Section 2051 of the United
States Internal Revenue Code of 1954, as amended or renumbered, or
in successor provisions of the laws of the United States.
(11)
Nonresident. - The term "nonresident "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 "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 "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 "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 "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 "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
"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 "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 "State" means any state,
territory or possession of the United States and the District of
Columbia.
(20)
Tangible personal property. - The term "tangible
"Tangible personal property" means corporeal personal property
including money.
(21)
Tax. - The term "tax "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 "Tax commissioner"
means the tax commissioner of the state of West Virginia or his or her delegate.
(23)
Taxable estate. - The term "taxable "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
1954 1986, as amended or renumbered, or in
successor provisions of the laws of the United States.
(24)
Taxpayer. - The term taxpayer "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 "This code" means the code of
West Virginia, one thousand nine hundred thirty-one, as amended.
(26)
This state. - The term "this "This state" means the state
of West Virginia.
(27)
Transfer. - The term "transfer "Transfer" means
"transfer" as defined in Sections 2001, 2101, 2601 of the United
States Internal Revenue Code of
1954 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 "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 "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
1954 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
applicable to estates of decedents dying during
calendar year two thousand two or two thousand three, established
in Section 2010
(c) of the Internal Revenue Code of 1986, as
amended, shall
hereinafter be applied before calculating the West
Virginia estate tax.
§11-11-8. Estate tax returns.
(a)
When no return required. -- No West Virginia estate tax
return needs to be filed if the estate of the decedent is not
subject to the tax imposed by this article.
(b)
Returns by personal representative. -- The personal
representative of every estate subject to the tax imposed by this
article
who is required by the laws of the United States to file
a federal estate tax return, shall file with the tax commissioner:
on or before the date the federal estate tax return is required to
be filed
(1) A return for the tax due under this article; and
(2) An executed copy of the federal estate tax
return, if any.
(c)
Returns by beneficiaries. --
(1) If the personal representative fails to make a complete
return as to any part of the gross estate of the decedent, he shall
include in his return a description of such part and the name of
every person holding a legal or beneficial interest therein. The
providing of such information shall not, in and of itself,
exonerate the personal representative from any additions to tax or
penalties prescribed by law for failure to file a complete return.
(2) Upon notice from the tax commissioner, a beneficiary of
the estate, or other person holding a legal or beneficial interest
therein, shall file a return under this article providing such
information as the tax commissioner may request pertaining to the
interest of the beneficiary, or other person, in the estate of the
decedent.
(d)
Returns due. -- Returns made under this article shall be
filed within nine months after the date of the decedent's death.
(e)
Place of filing. -- Estate tax returns shall be filed with
the tax commissioner at his office in Charleston, West Virginia.
§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 thirty-first day of March, two thousand three.
NOTE: The purpose of this bill is to break the automatic
connection between the amount of the state death tax credit in the
federal estate tax law and the amount of tax an estate owes to the
state of West Virginia. As a result, the phase-out of the state
death tax credit and the gradual increase in the unified credit in
the federal estate tax law, as provided for in the Economic Growth
and Tax Relief Reconciliation Act of 2001, will not affect West
Virginia's estate tax. This bill sets the West Virginia estate tax
at the amount equal to the federal credit allowed for state death
taxes paid as provided for in I.R.C. § 2010, as of December 31,
2001. Additionally, this bill sets the unified credit at an amount
equal to the unified credit for estates of decedents dying in 2002
and 2003, i.e., the bill excludes from the West Virginia estate tax
estates valued at or below $1,000,000. This bill would effectively
stop phase-out of the West Virginia estate tax.
Strike-throughs indicate language that would be stricken from
present law. Underscoring indicates new language that would be
added.
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