HF 993

as introduced - 84th Legislature (2005 - 2006) Posted on 12/15/2009 12:00am

A bill for an act
relating to taxation; abolishing the estate tax;
amending Minnesota Statutes 2004, sections 289A.01;
289A.60, subdivision 2a; 524.3-916; repealing
Minnesota Statutes 2004, sections 289A.10; 289A.18,
subdivision 3; 289A.19, subdivision 4; 289A.20,
subdivision 3; 289A.30, subdivision 2; 289A.31,
subdivision 6; 289A.38, subdivision 3; 291.005;
291.01; 291.03; 291.075; 291.12; 291.13; 291.16;
291.21; 291.215; 291.27; 291.41; 291.42; 291.43;
291.44; 291.45; 291.46; 291.47.

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

Section 1.

Minnesota Statutes 2004, section 289A.01, is
amended to read:

289A.01 APPLICATION OF CHAPTER.

This chapter applies to laws administered by the
commissioner under chapters 290, 290A, deleted text begin 291, deleted text end and 297A, and
sections 298.01 and 298.015.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for estates of
decedents dying after December 31, 2005.
new text end

Sec. 2.

Minnesota Statutes 2004, section 289A.60,
subdivision 2a, is amended to read:

Subd. 2a.

Penalties for extended delinquency.

(a) If an
individual income tax is not paid within 180 days after the date
of filing of a return or, in the case of taxes assessed by the
commissioner, within 180 days after the assessment date or, if
appealed, within 180 days after final resolution of the appeal,
an extended delinquency penalty of five percent of the tax
remaining unpaid is added to the amount due.

(b) If a corporate franchise, fiduciary income, mining
company, deleted text begin estate, deleted text end partnership, S corporation, or nonresident
entertainer tax return is not filed within 30 days after written
demand for the filing of a delinquent return, an extended
delinquency penalty of five percent of the tax not paid prior to
the demand is added to the tax, or in the case of an individual
income tax return, a minimum penalty of $100 or the five percent
penalty is imposed, whichever amount is greater.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for estates of
decedents dying after December 31, 2005. new text end

Sec. 3.

Minnesota Statutes 2004, section 524.3-916, is
amended to read:

524.3-916 APPORTIONMENT OF ESTATE TAXES AND
GENERATION-SKIPPING TAX.

(a) For purposes of this section:

(1) "estate" means the gross estate of a decedent as
determined for the purpose of federal estate tax deleted text begin or the estate
tax payable to this state deleted text end ;

(2) "decedent's generation-skipping transfers" means all
generation-skipping transfers as determined for purposes of the
federal generation-skipping tax which occur by reason of the
decedent's death which relate to property which is included in
the decedent's estate;

(3) "person" means any individual, partnership,
association, joint stock company, corporation, limited liability
company, government, political subdivision, governmental agency,
or local governmental agency;

(4) "person interested in the estate" means any person
entitled to receive, or who has received, from a decedent or by
reason of the death of a decedent any property or interest
therein included in the decedent's estate. It includes a
personal representative, guardian, conservator, trustee, and
custodian;

(5) "state" means any state, territory, or possession of
the United States, the District of Columbia, and the
Commonwealth of Puerto Rico;

(6) "estate tax" means the federal estate tax deleted text begin and the state
estate tax determined by the commissioner of revenue pursuant to
chapter 291 deleted text end and interest and penalties imposed in addition to
the tax;

(7) "decedent's generation-skipping tax" means the federal
generation-skipping tax imposed on the decedent's
generation-skipping transfers and interest and penalties imposed
in addition to the tax;

(8) "fiduciary" means personal representative or trustee.

(b) Unless the will or other governing instrument otherwise
provides:

(1) the estate tax shall be apportioned among all persons
interested in the estate. The apportionment is to be made in
the proportion that the value of the interest of each person
interested in the estate bears to the total value of the
interests of all persons interested in the estate. The values
used in determining the tax are to be used for that purpose; and

(2) the decedent's generation-skipping tax shall be
apportioned as provided by federal law. To the extent not
provided by federal law, the decedent's generation-skipping tax
shall be apportioned among all persons receiving the decedent's
generation-skipping transfers whose tax apportionment is not
provided by federal law in the proportion that the value of the
transfer to each person bears to the total value of all such
transfers.

If the decedent's will or other written instrument directs
a method of apportionment of estate tax or of the decedent's
generation-skipping tax different from the method described in
this section, the method described in the will or other written
instrument controls provided, however, that:

(i) unless the decedent's will or other written instrument
specifically indicates an intent to waive any right of recovery
under section 2207A of the Internal Revenue Code of 1986, as
amended, estate taxes must be apportioned under the method
described in this section to property included in the decedent's
estate under section 2044 of the Internal Revenue Code of 1986,
as amended; and

(ii) unless the decedent's will or other written instrument
specifically indicates an intent to waive any right of recovery
under section 2207B of the Internal Revenue Code of 1986, as
amended, estate taxes must be apportioned under the method
described in this section to property included in the decedent's
estate under section 2036 of the Internal Revenue Code of 1986,
as amended.

(c)(1) The court in which venue lies for the administration
of the estate of a decedent, on petition for the purpose may
determine the apportionment of the estate tax or of the
decedent's generation-skipping tax.

(2) If the court finds that it is inequitable to apportion
interest and penalties in the manner provided in subsection (b),
because of special circumstances, it may direct apportionment
thereof in the manner it finds equitable.

(3) If the court finds that the assessment of penalties and
interest assessed in relation to the estate tax or the
decedent's generation-skipping tax is due to delay caused by the
negligence of the fiduciary, the court may charge the fiduciary
with the amount of the assessed penalties and interest.

(4) In any action to recover from any person interested in
the estate the amount of the estate tax or of the decedent's
generation-skipping tax apportioned to the person in accordance
with this section the determination of the court in respect
thereto shall be prima facie correct.

(d)(1) The personal representative or other person in
possession of the property of the decedent required to pay the
estate tax or the decedent's generation-skipping tax may
withhold from any property distributable to any person
interested in the estate, upon its distribution, the amount of
any taxes attributable to the person's interest. If the
property in possession of the personal representative or other
person required to pay any taxes and distributable to any person
interested in the estate is insufficient to satisfy the
proportionate amount of the taxes determined to be due from the
person, the personal representative or other person required to
pay any taxes may recover the deficiency from the person
interested in the estate. If the property is not in the
possession of the personal representative or the other person
required to pay any taxes, the personal representative or the
other person required to pay any taxes may recover from any
person interested in the estate the amount of any taxes
apportioned to the person in accordance with this section.

(2) If property held by the personal representative or
other person in possession of the property of the decedent
required to pay the estate tax or the decedent's
generation-skipping tax is distributed prior to final
apportionment of the estate tax or the decedent's
generation-skipping tax, the distributee shall provide a bond or
other security for the apportionment liability in the form and
amount prescribed by the personal representative or other
person, as the case may be.

(e)(1) In making an apportionment, allowances shall be made
for any exemptions granted, any classification made of persons
interested in the estate and for any deductions and credits
allowed by the law imposing the tax.

(2) Any exemption or deduction allowed by reason of the
relationship of any person to the decedent, by reason of the
purposes of the gift, or by allocation to the gift (either by
election by the fiduciary or by operation of federal law),
inures to the benefit of the person bearing such relationship or
receiving the gift; but if an interest is subject to a prior
present interest which is not allowable as a deduction, the tax
apportionable against the present interest shall be paid from
principal.

(3) Any deduction for property previously taxed and any
credit for gift taxes or death taxes of a foreign country paid
by the decedent or the decedent's estate inures to the
proportionate benefit of all persons liable to apportionment.

(4) Any credit for inheritance, succession or estate taxes
or taxes in the nature thereof applicable to property or
interests includable in the estate, inures to the benefit of the
persons or interests chargeable with the payment thereof to the
extent proportionately that the credit reduces the tax.

(5) To the extent that property passing to or in trust for
a surviving spouse or any charitable, public or similar gift or
devise is not an allowable deduction for purposes of the estate
tax solely by reason of an estate tax imposed upon and
deductible from the property, the property is not included in
the computation provided for in subsection (b)(1) hereof, and to
that extent no apportionment is made against the property. The
sentence immediately preceding does not apply to any case if the
result would be to deprive the estate of a deduction otherwise
allowable under section 2053(d) of the Internal Revenue Code of
1986, as amended, of the United States, relating to deduction
for state death taxes on transfers for public, charitable, or
religious uses.

(f) No interest in income and no estate for years or for
life or other temporary interest in any property or fund is
subject to apportionment as between the temporary interest and
the remainder. The estate tax on the temporary interest and the
estate tax, if any, on the remainder is chargeable against the
corpus of the property or funds subject to the temporary
interest and remainder. The decedent's generation-skipping tax
is chargeable against the property which constitutes the
decedent's generation-skipping transfer.

(g) Neither the personal representative nor other person
required to pay the tax is under any duty to institute any
action to recover from any person interested in the estate the
amount of the estate tax or of the decedent's
generation-skipping tax apportioned to the person until the
final determination of the tax. A personal representative or
other person required to pay the estate tax or decedent's
generation-skipping tax who institutes the action within a
reasonable time after final determination of the tax is not
subject to any liability or surcharge because any portion of the
tax apportioned to any person interested in the estate was
collectible at a time following the death of the decedent but
thereafter became uncollectible. If the personal representative
or other person required to pay the estate tax or decedent's
generation-skipping tax cannot collect from any person
interested in the estate the amount of the tax apportioned to
the person, the amount not recoverable shall be equitably
apportioned among the other persons interested in the estate who
are subject to apportionment of the tax involved.

(h) A personal representative acting in another state or a
person required to pay the estate tax or decedent's
generation-skipping tax domiciled in another state may institute
an action in the courts of this state and may recover a
proportionate amount of the federal estate tax, of an estate tax
payable to another state or of a death duty due by a decedent's
estate to another state, or of the decedent's
generation-skipping tax, from a person interested in the estate
who is either domiciled in this state or who owns property in
this state subject to attachment or execution. For the purposes
of the action the determination of apportionment by the court
having jurisdiction of the administration of the decedent's
estate in the other state is prima facie correct.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for estates of
decedents dying after December 31, 2005.
new text end

Sec. 4. new text begin REPEALER.
new text end

new text begin Minnesota Statutes 2004, sections 289A.10; 289A.18,
subdivision 3; 289A.19, subdivision 4; 289A.20, subdivision 3;
289A.30, subdivision 2; 289A.31, subdivision 6; 289A.38,
subdivision 3; 291.005; 291.01; 291.03; 291.075; 291.12; 291.13;
291.16; 291.21; 291.215; 291.27; 291.41; 291.42; 291.43; 291.44;
291.45; 291.46; and 291.47, are repealed.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for estates of
decedents dying after December 31, 2005.
new text end