2014 -- S 2320

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LC004387

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     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2014

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A N   A C T

RELATING TO TAXATION - ESTATE AND TRANSFER TAXES - LIABILITY AND

COMPUTATION

     Introduced By: Senators Jabour, Picard, Lombardi, Nesselbush, and Felag

     Date Introduced: February 12, 2014

     Referred To: Senate Finance

     It is enacted by the General Assembly as follows:

     SECTION 1. Section 44-22-1.1 of the General Laws in Chapter 44-22 entitled "Estate

and Transfer Taxes - Liability and Computation" is hereby amended to read as follows:

     44-22-1.1. Tax on net estate of decedent. -- (a) (1) For decedents whose death occurs on

or after January 1, 1992, but prior to January 1, 2002, a tax is imposed upon the transfer of the net

estate of every resident or nonresident decedent as a tax upon the right to transfer. The tax is a

sum equal to the maximum credit for state death taxes allowed by 26 U.S.C. section 2011.

      (2) For decedents whose death occurs on or after January 1, 2002, but prior to January 1,

2010 a tax is imposed upon the transfer of the net estate of every resident or nonresident decedent

as a tax upon the right to transfer. The tax is a sum equal to the maximum credit for state death

taxes allowed by 26 U.S.C. section 2011 as it was in effect as of January 1, 2001; provided,

however, that the tax shall be imposed only if the net taxable estate shall exceed six hundred

seventy-five thousand dollars ($675,000). Any scheduled increase in the unified credit provided

in 26 U.S.C. section 2010 in effect on January 1, 2001, or thereafter, shall not apply.

      (3) For decedents whose death occurs on or after January 1, 2010 and prior to January 1,

2015, a tax is imposed upon the transfer of the net estate of every resident or nonresident

decedent as a tax upon the right to transfer. The tax is a sum equal to the maximum credit for

state death taxes allowed by 26 U.S.C. section 2011 as it was in effect as of January 1, 2001;

provided, however, that the tax shall be imposed only if the net taxable estate shall exceed eight

hundred and fifty thousand dollars ($850,000); provided, further, beginning on January 1, 2011

and each January 1 thereafter until December 31, 2014, said amount shall be adjusted by the

percentage of increase in the Consumer Price Index for all Urban Consumers (CPI-U) as

published by the United States Department of Labor Statistics determined as of September 30 of

the prior calendar year; said adjustment shall be compounded annually and shall be rounded up to

the nearest five dollar ($5.00) increment. Any scheduled increase in the unified credit provided in

26 U.S.C. section 2010 in effect on January 1, 2003, or thereafter, shall not apply.

     (4) For decedents whose death occurs on or after January 1, 2015, a tax is imposed upon

the transfer of the net Rhode Island estate of every resident or nonresident decedent as a tax upon

the right to transfer. The amount of tax is determined as follows:

     (i) If the Rhode Island taxable estate is two million dollars ($2,000,000) or less, the tax is

zero dollars ($0).

     (ii) If the Rhode Island taxable estate is more than two million dollars ($2,000,000) but

not more than five million dollars ($5,000,000), the tax is eight percent (8%) of the amount of the

excess over two million dollars ($2,000,000).

     (iii) If the Rhode Island taxable estate is more than five million dollars ($5,000,000) but

not more than eight million dollars ($8,000,000), the tax is two hundred forty thousand dollars

($240,000) plus ten percent (10%) of the amount of the excess over five million dollars

($5,000,000).

     (iv) If the Rhode Island taxable estate is more than eight million dollars ($8,000,000), the

tax is five hundred forty thousand dollars ($540,000) plus twelve percent (12%) of the amount of

the excess over eight million dollars ($8,000,000).

      (b) If the decedent's estate contains property having a tax situs not within the state, then

the tax determined by this section is reduced to an amount determined by multiplying the tax by a

fraction whose numerator is the gross estate excluding all property having a tax situs not within

the state at the decedent's death and whose denominator is the gross estate. In determining the

fraction, no deductions are considered and the gross estate is not reduced by a mortgage or other

indebtedness for which the decedent's estate is not liable.

      (c) (1) The terms "gross taxable estate", "federal gross estate" or "net taxable estate" used

in this chapter or chapter 23 of this title has the same meaning as when used in a comparable

context in the laws of the United States, unless a different meaning is clearly required by the

provisions of this chapter or chapter 23 of this title. Any reference in this chapter or chapter 23 of

this title to the Internal Revenue Code or other laws of the United States means the Internal

Revenue Code of 1954, 26 U.S.C. section 1 et seq.

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      (2) For decedents whose death occurs on or after January 1, 2002, the terms "gross

taxable estate" "federal gross estate" or "net taxable estate" used in this chapter or chapter 23 of

this title has the same meaning as when used in a comparable context in the laws of the United

States, unless a different meaning is clearly required by the provisions of this chapter or chapter

23 of this title. Any reference in this chapter or chapter 23 of this title to the Internal Revenue

Code or other laws of the United States means the Internal Revenue Code of 1954, 26 U.S.C.

section 1 et seq., as they were in effect as of January 1, 2001, unless otherwise provided.

      (d) All values are as finally determined for federal estate tax purposes.

      (e) Property has a tax situs within the state of Rhode Island:

      (1) If it is real estate or tangible personal property and has actual situs within the state of

Rhode Island; or

      (2) If it is intangible personal property and the decedent was a resident.

     SECTION 2. This act shall take effect upon passage, and shall apply to the estate of any

decedent whose date of death is on or after January 1, 2015.

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N   A C T

RELATING TO TAXATION - ESTATE AND TRANSFER TAXES - LIABILITY AND

COMPUTATION

***

     This act would amend the provisions of the Rhode Island estate tax laws to apply a

graduated tax as follows: zero tax on estates $2,000,000 and below; for estates more than

$2,000,000 to $5,000,000, 8% on the amount over $2,000,000; for estates more than $5,000,000

to $8,000,000, 10% on the amount over $5,000,000 plus $240,000; and for estates more than

$8,000,000, 12% on the amount over $8,000,000 plus $540,000.

     This act would take effect upon passage, and would apply to the estate of any decedent

whose date of death is on or after January 1, 2015.

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