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HF 1212

as introduced - 85th Legislature (2007 - 2008) Posted on 12/15/2009 12:00am

KEY: stricken = removed, old language.
underscored = added, new language.

Current Version - as introduced

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A bill for an act
relating to taxation; imposing a gift tax and coordinating the tax with the estate
tax; amending Minnesota Statutes 2006, sections 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 2006, 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) "Federal gross estate" means the gross estate of a decedent as valued and
otherwise determined for federal estate tax purposes by federal taxing authorities pursuant
to the provisions of the Internal Revenue Code.

(2) "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.

(3) "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.

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

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

(6) "Situs of property" means, with respect to real property, the state or country in
which it is located; with respect to tangible personal property, the state or country in which
it was normally kept or located at the time of the decedent's death; and with respect to
intangible personal property, the state or country in which the decedent was domiciled
at death.

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

(8) "Internal Revenue Code" means the United States Internal Revenue Code of
1986, as amended through May 18, 2006.

(9) "Minnesota adjusted taxable estate" means federal adjusted taxable estate as
defined by section 2011(b)(3) of the Internal Revenue Code, increased bynew text begin :
new text end

new text begin (i) new text end the amount of deduction for state death taxes allowed under section 2058 of the
Internal Revenue Codedeleted text begin .deleted text end new text begin ;
new text end

new text begin (ii) the amount of expenses which are deducted for federal income tax purposes
under section 642(g) of the Internal Revenue Code; and
new text end

new text begin (iii) 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

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for decedents dying after December
31, 2006.
new text end

Sec. 2.

Minnesota Statutes 2006, section 291.03, subdivision 1, is amended to read:


Subdivision 1.

Tax amount.

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, as amended through December 31, 2000, 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. The tax determined under this
paragraph shall not be greater than the amount computed by applying the rates and
brackets under section 2001(c) of the Internal Revenue Code to the Minnesota adjusted
gross estate and subtracting the federal credit allowed under section 2010 of the Internal
Revenue Code of 1986, as amended through December 31, 2000. deleted text begin For the purposes of
this section, expenses which are deducted for federal income tax purposes under section
642(g) of the Internal Revenue Code as amended through December 31, 2002, are not
allowable in computing the tax under this chapter.
deleted text end new text begin The tax is reduced by the total amount
of gift tax paid by the decedent under section 292.17 to the extent the gift was included
in the Minnesota adjusted taxable estate.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for decedents dying after December
31, 2006.
new text end

Sec. 3.

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) "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 through 2514; and
new text end

new text begin (iii) sections 2516 through 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, 2007.
new text end

Sec. 4.

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 tangible personal
property and real property having a situs outside this state.
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, 2007.
new text end

Sec. 5.

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 (c),
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, 2007.
new text end

Sec. 6.

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, 2007.
new text end

Sec. 7.

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 excluded from taxable gifts
under section 292.16, paragraph (c), 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, 2007.
new text end

Sec. 8.

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 for good cause may 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 providing 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 through 2704 of the Internal
Revenue Code. The words "secretary or his delegate," as used in those sections of the
Internal Revenue Code, means 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, 2007.
new text end

Sec. 9.

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, 2007.
new text end