HF 805

as introduced - 88th Legislature (2013 - 2014) Posted on 02/22/2013 01:45pm

A bill for an act
relating to taxation; imposing a gift tax and coordinating the tax with the estate
tax; amending Minnesota Statutes 2012, sections 289A.10, subdivision 1;
291.005, subdivision 1; 291.03, subdivision 1; proposing coding for new law in
Minnesota Statutes, chapter 292.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

Minnesota Statutes 2012, section 289A.10, subdivision 1, is amended to read:

Subdivision 1.

Return required.

In the case of a decedent who has an interest in
property with a situs in Minnesota, the personal representative must submit a Minnesota
estate tax return to the commissioner, on a form prescribed by the commissioner, if:

(1) a federal estate tax return is required to be filed; or

(2) the new text begin sum of the new text end federal gross estate new text begin and federal adjusted taxable gifts made within
three years of the date of the decedent's death new text end exceeds $1,000,000.

The return must contain a computation of the Minnesota estate tax due. The return
must be signed by the personal representative.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for estates of decedents dying after
December 31, 2012.
new text end

Sec. 2.

Minnesota Statutes 2012, section 291.005, subdivision 1, is amended to read:

Subdivision 1.

Scope.

Unless the context otherwise clearly requires, the following
terms used in this chapter shall have the following meanings:

(1) "Commissioner" means the commissioner of revenue or any person to whom the
commissioner has delegated functions under this chapter.

(2) "Federal gross estate" means the gross estate of a decedent as required to be valued
and otherwise determined for federal estate tax purposes under the Internal Revenue Code.

(3) "Internal Revenue Code" means the United States Internal Revenue Code of
1986, as amended through deleted text begin April 14, 2011 deleted text end new text begin January 3, 2013 new text end , but without regard to the
provisions of deleted text begin sections 501 and 901 of Public Law 107-16, as amended by Public Law
111-312, and section 301(c) of Public Law 111-312 deleted text end new text begin section 2011, paragraph (f), of the
Internal Revenue Code new text end .

(4) "Minnesota adjusted taxable estate" means federal adjusted taxable estate as
defined by section 2011(b)(3) of the Internal Revenue Code, plus

(i) the amount of deduction for state death taxes allowed under section 2058 of the
Internal Revenue Code;

new text begin (ii) the amount of taxable gifts, as defined in section 292.16, and made by the
decedent within three years of the decedent's date of death; new text end less

deleted text begin (ii) deleted text end new text begin (iii) new text end (A) the value of qualified small business property under section 291.03,
subdivision 9, and the value of qualified farm property under section 291.03, subdivision
10, or (B) $4,000,000, whichever is less.

(5) "Minnesota gross estate" means the federal gross estate of a decedent after (a)
excluding therefrom any property included therein which has its situs outside Minnesota,
and (b) including therein any property omitted from the federal gross estate which is
includable therein, has its situs in Minnesota, and was not disclosed to federal taxing
authorities.

(6) "Nonresident decedent" means an individual whose domicile at the time of
death was not in Minnesota.

(7) "Personal representative" means the executor, administrator or other person
appointed by the court to administer and dispose of the property of the decedent. If there
is no executor, administrator or other person appointed, qualified, and acting within this
state, then any person in actual or constructive possession of any property having a situs in
this state which is included in the federal gross estate of the decedent shall be deemed
to be a personal representative to the extent of the property and the Minnesota estate tax
due with respect to the property.

(8) "Resident decedent" means an individual whose domicile at the time of death
was in Minnesota.

(9) "Situs of property" means, with respect to new text begin :
new text end

new text begin (i) new text end real property, the state or country in which it is located; deleted text begin with respect to deleted text end

new text begin (ii) new text end tangible personal property, the state or country in which it was normally kept or
located at the time of the decedent's death new text begin or for a gift of tangible personal property within
three years of death, the state or country in which it was normally kept or located when
the gift was executed new text end ; and deleted text begin with respect to
deleted text end

new text begin (iii) new text end intangible personal property, the state or country in which the decedent was
domiciled at death new text begin or for a gift of intangible personal property within three years of death,
the state or country in which the decedent was domiciled when the gift was executed new text end .

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for decedents dying after December
31, 2012.
new text end

Sec. 3.

Minnesota Statutes 2012, section 291.03, subdivision 1, is amended to read:

Subdivision 1.

Tax amount.

(a) The tax imposed shall be an amount equal to the
proportion of the maximum credit for state death taxes computed under section 2011 of
the Internal Revenue Code, but using Minnesota adjusted taxable estate instead of federal
adjusted taxable estate, as the Minnesota gross estate bears to the value of the federal
gross estate. new text begin The tax is reduced by the gift tax paid by the decedent under section 292.17
on gifts included in the Minnesota adjusted gross estate.
new text end

(b) The tax determined under this subdivision must not be greater than the sum of
the following amounts multiplied by a fraction, the numerator of which is the Minnesota
gross estate and the denominator of which is the federal gross estate:

(1) the rates and brackets under section 2001(c) of the Internal Revenue Code
multiplied by the sum of:

(i) the taxable estate, as defined under section 2051 of the Internal Revenue Code; plus

(ii) adjusted taxable gifts, as defined in section 2001(b) of the Internal Revenue
Code; less

(iii) the lesser of (A) the sum of the value of qualified small business property
under subdivision 9, and the value of qualified farm property under subdivision 10, or
(B) $4,000,000; less

(2) the amount of tax allowed under section 2001(b)(2) of the Internal Revenue
Code; and less

(3) the federal credit allowed under section 2010 of the Internal Revenue Code.

(c) For purposes of this subdivision, "Internal Revenue Code" means the Internal
Revenue Code of 1986, as amended through December 31, 2000.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for decedents dying after December
31, 2012.
new text end

Sec. 4.

new text begin [292.16] DEFINITIONS.
new text end

new text begin (a) For purposes of this chapter, the following definitions apply.
new text end

new text begin (b) The definitions of terms defined in section 291.005 apply.
new text end

new text begin (c) "Resident" has the meaning given in section 290.01.
new text end

new text begin (d) "Taxable gifts" means:
new text end

new text begin (1) the transfers by gift which are included in taxable gifts for federal gift tax
purposes under the following sections of the Internal Revenue Code:
new text end

new text begin (i) section 2503;
new text end

new text begin (ii) sections 2511 to 2514; and
new text end

new text begin (iii) sections 2516 to 2519; less
new text end

new text begin (2) the deductions allowed in sections 2522 to 2524 of the Internal Revenue Code.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable gifts made after June
30, 2013.
new text end

Sec. 5.

new text begin [292.17] GIFT TAX.
new text end

new text begin Subdivision 1. new text end

new text begin Imposition. new text end

new text begin (a) A tax is imposed on the transfer of property by gift
by any individual resident or nonresident in an amount equal to ten percent of the amount
of the taxable gift.
new text end

new text begin (b) The donor is liable for payment of the tax. If the gift tax is not paid when due,
the donee of any gift is personally liable for the tax to the extent of the value of the gift.
new text end

new text begin Subd. 2. new text end

new text begin Lifetime credit. new text end

new text begin A credit is allowed against the tax imposed under this
section equal to $100,000. This credit applies to the cumulative amount of taxable gifts
made by the donor during the donor's lifetime.
new text end

new text begin Subd. 3. new text end

new text begin Out-of-state gifts. new text end

new text begin Taxable gifts exclude the transfer of:
new text end

new text begin (1) real property located outside of this state;
new text end

new text begin (2) tangible personal property that was normally kept at a location outside of the
state on the date the gift was executed; and
new text end

new text begin (3) intangible personal property made by an individual who is not a resident.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable gifts made after June
30, 2013.
new text end

Sec. 6.

new text begin [292.18] RETURNS.
new text end

new text begin (a) Any individual who makes a taxable gift during the taxable year shall file a gift
tax return in the form and manner prescribed by the commissioner.
new text end

new text begin (b) If the donor dies before filing the return, the executor of the donor's will or
the administrator of the donor's estate shall file the return. If the donor becomes legally
incompetent before filing the return, the guardian or conservator shall file the return.
new text end

new text begin (c) The return must include:
new text end

new text begin (1) each gift made during the calendar year which is to be included in computing the
taxable gifts;
new text end

new text begin (2) the deductions claimed and allowable under section 292.16, paragraph (d),
clause (2);
new text end

new text begin (3) a description of the gift, and the donee's name, address, and Social Security
number;
new text end

new text begin (4) the fair market value of gifts not made in money; and
new text end

new text begin (5) any other information the commissioner requires to administer the gift tax.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable gifts made after June
30, 2013.
new text end

Sec. 7.

new text begin [292.19] FILING REQUIREMENTS.
new text end

new text begin Gift tax returns must be filed by the April 15 following the close of the calendar
year, except if a gift is made during the calendar year in which the donor dies, the return
for the donor must be filed by the last date, including extensions, for filing the gift tax
return for federal gift tax purposes for the donor.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable gifts made after June
30, 2013.
new text end

Sec. 8.

new text begin [292.20] APPRAISAL OF PROPERTY; DECLARATION BY DONOR.
new text end

new text begin The commissioner may require the donor or the donee to show the property subject to
the tax under section 292.17 to the commissioner upon demand and may employ a suitable
person to appraise the property. The donor shall submit a declaration, in a form prescribed
by the commissioner and including any certification required by the commissioner, that the
property shown by the donor on the gift tax return includes all of the property transferred by
gift for the calendar year and not deductible under section 292.16, paragraph (d), clause (2).
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable gifts made after June
30, 2013.
new text end

Sec. 9.

new text begin [292.21] ADMINISTRATIVE PROVISIONS.
new text end

new text begin Subdivision 1. new text end

new text begin Payment of tax; penalty for late payment. new text end

new text begin The tax imposed under
section 292.17 is due and payable to the commissioner by the April 15 following the close
of the calendar year during which the gift was made. The return required under section
292.19 must be included with the payment. If a taxable gift is made during the calendar
year in which the donor dies, the due date is the last date, including extensions, for filing
the gift tax return for federal gift tax purposes for the donor. If any person fails to pay the
tax due within the time specified under this section, a penalty applies equal to ten percent
of the amount due and unpaid or $100, whichever is greater. The unpaid tax and penalty
bear interest at the rate under section 270C.40 from the due date of the return.
new text end

new text begin Subd. 2. new text end

new text begin Extensions. new text end

new text begin The commissioner may, for good cause, extend the time for
filing a gift tax return, if a written request is filed with a tentative return accompanied by a
payment of the tax, which is estimated in the tentative return, on or before the last day for
filing the return. Any person to whom an extension is granted must pay, in addition to the
tax, interest at the rate under section 270C.40 from the date on which the tax would have
been due without the extension.
new text end

new text begin Subd. 3. new text end

new text begin Changes in federal gift tax. new text end

new text begin If the amount of a taxpayer's taxable gifts
for federal gift tax purposes, as reported on the taxpayer's federal gift tax return for any
calendar year, is changed or corrected by the Internal Revenue Service or other officer
of the United States or other competent authority, the taxpayer shall report the change or
correction in federal taxable gifts within 180 days after the final determination of the change
or correction, and concede the accuracy of the determination or provide a letter detailing
how the federal determination is incorrect or does not change the Minnesota gift tax. Any
taxpayer filing an amended federal gift tax return shall also file within 180 days an amended
return under this chapter and shall include any information the commissioner requires. The
time for filing the report or amended return may be extended by the commissioner upon due
cause shown. Notwithstanding any limitation of time in this chapter, if, upon examination,
the commissioner finds that the taxpayer is liable for the payment of an additional tax, the
commissioner shall, within a reasonable time from the receipt of the report or amended
return, notify the taxpayer of the amount of additional tax, together with interest computed
at the rate under section 270C.40 from the date when the original tax was due and payable.
Within 30 days of the mailing of the notice, the taxpayer shall pay the commissioner the
amount of the additional tax and interest. If, upon examination of the report or amended
return and related information, the commissioner finds that the taxpayer has overpaid the
tax due the state, the commissioner shall refund the overpayment to the taxpayer.
new text end

new text begin Subd. 4. new text end

new text begin Application of federal rules. new text end

new text begin In administering the tax under this chapter,
the commissioner shall apply the provisions of sections 2701 to 2704 of the Internal
Revenue Code. The words "secretary or his delegate," as used in those sections of the
Internal Revenue Code, mean the commissioner.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable gifts made after June
30, 2013.
new text end

Sec. 10.

new text begin [292.22] CREDIT AGAINST ESTATE TAX.
new text end

new text begin A credit is allowed against the estate tax imposed under chapter 291 in the amount
of any tax imposed and paid under this chapter for a gift includable in the Minnesota
adjusted taxable estate of the donor under section 291.005.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable gifts made after June
30, 2013.
new text end