2016 -- H 7732 | |
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LC003525 | |
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STATE OF RHODE ISLAND | |
IN GENERAL ASSEMBLY | |
JANUARY SESSION, A.D. 2016 | |
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A N A C T | |
RELATING TO TAXATION | |
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Introduced By: Representatives Morgan, Filippi, Giarrusso, Price, and Chippendale | |
Date Introduced: February 24, 2016 | |
Referred To: House Finance | |
It is enacted by the General Assembly as follows: | |
1 | SECTION 1. Section 44-22-1 of the General Laws in Chapter 44-22 entitled "Estate and |
2 | Transfer Taxes - Liability and Computation" is hereby amended to read as follows: |
3 | 44-22-1. Tax on net estate of decedents -- Additional tax on postponed enjoyment -- |
4 | Deductions -- Marital deduction. -- (a) A tax is imposed upon the transfer of the net estate of |
5 | every resident or nonresident decedent as a tax upon the right to transfer. The tax is imposed at |
6 | the rate of two percent (2%) upon all amounts not in excess of twenty-five thousand dollars |
7 | ($25,000); at the rate of three percent (3%) upon all amounts in excess of twenty-five thousand |
8 | dollars ($25,000) and not exceeding fifty thousand dollars ($50,000); at the rate of four percent |
9 | (4%) upon all amounts in excess of fifty thousand dollars ($50,000) and not exceeding one |
10 | hundred thousand dollars ($100,000); at the rate of five percent (5%) upon all amounts in excess |
11 | of one hundred thousand dollars ($100,000) and not exceeding two hundred fifty thousand dollars |
12 | ($250,000); at the rate of six percent (6%) upon all amounts in excess of two hundred fifty |
13 | thousand dollars ($250,000) and not exceeding five hundred thousand dollars ($500,000); at the |
14 | rate of seven percent (7%) upon all amounts in excess of five hundred thousand dollars |
15 | ($500,000) and not exceeding seven hundred fifty thousand dollars ($750,000); at the rate of eight |
16 | percent (8%) upon all amounts in excess of seven hundred fifty thousand dollars ($750,000) and |
17 | not exceeding one million dollars ($1,000,000); at the rate of nine percent (9%) upon all amounts |
18 | in excess of one million dollars ($1,000,000). An additional tax is imposed at the rate of two |
19 | percent (2%) upon all or any part of each estate devised, bequeathed, or conveyed in such manner |
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1 | that it becomes necessary to postpone the assessment of taxes imposed by this chapter until the |
2 | person entitled to the estate comes into beneficial enjoyment or possession of the estate; and |
3 | provided, further, that an additional tax is not assessed and collected, as provided in §§ 44-23-9 -- |
4 | 44-23-12, in case a settlement of taxes is effected under the provisions of § 44-23-25. |
5 | (b) In computing the value of the net estate in subsection (a) of this section, there is |
6 | deducted from the estate and exempted from the tax twenty-five thousand dollars ($25,000). |
7 | (c) In computing the value of the net estate in subsection (a) of this section, there is |
8 | deducted from the estate and exempted from the tax all property or interests transferred to any |
9 | corporation, association, or institution located in Rhode Island which is exempt from taxation by |
10 | charter or under the laws of this state; or to any corporation, association, or institution located |
11 | outside of this state, which if located within this state, would be exempt from taxation; provided, |
12 | that the state of domicile of the corporation, association, or institution allows a reciprocal |
13 | exemption to any similar Rhode Island corporation, association, or institution; or to any person in |
14 | trust for the same or for use by the same for charitable purposes; or to any city or town in this |
15 | state for public purposes. |
16 | (d) In computing the value of the net estate in subsection (a) of this section, there is |
17 | deducted from the estate and exempted from the tax United States civil and federal military |
18 | service annuity payments. |
19 | (e) In computing the value of the net estate in subsection (a) of this section, there is |
20 | deducted from the estate and exempted from the estate tax a marital deduction, as defined in 26 |
21 | U.S.C. § 2056, in the amount of one hundred seventy-five thousand dollars ($175,000), from |
22 | property or beneficial interests which pass or have passed from the decedent to the surviving |
23 | spouse, but only to the extent that the interests are included in determining the value of the gross |
24 | estate. |
25 | (f) (1) In computing the value of the net estate in subsection (a) of this section, there is |
26 | deducted from the estate and exempted from the estate tax, an orphan's deduction, provided, that: |
27 | (i) the decedent does not have a surviving spouse, and (ii) the decedent is survived by a minor |
28 | child who, immediately after the death of the decedent, has no known parent, an amount equal to |
29 | the value of any interest in property which passes or has passed from the decedent to the child, |
30 | but only to the extent that the interest is included in determining the value of the gross estate. The |
31 | aggregate amount of the deductions allowed under this section (computed without regard to this |
32 | subsection) with respect to interests in property passing to any minor child shall not exceed an |
33 | amount equal to five thousand dollars ($5,000) multiplied by the excess of twenty-one (21) over |
34 | the age (in years) which the child has attained on the date of the decedent's death. |
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1 | (2) For purposes of this subsection, any term used in the subsection has the same |
2 | meaning as when used in a comparable context in 26 U.S.C. § 2057 unless a different meaning is |
3 | clearly required. |
4 | (1) A transfer of a qualified small business interest to one or more qualified transferees is |
5 | exempt from estate tax, if the qualified small business interest: |
6 | (i) Continues to be owned by a qualified transferee for a minimum of five (5) years after |
7 | the decedent's date of death; and |
8 | (ii) Is reported on a timely filed tax return. |
9 | (2) A qualified small business interest exempted from estate tax hereunder that is no |
10 | longer owned by a qualified transferee at any time within five (5) years after the decedent's date |
11 | of death shall be subject to estate tax under this chapter. |
12 | (3) Each owner of a qualified family-owned business interest exempted from estate tax |
13 | hereunder shall certify to the department, on an annual basis, for five (5) years after the |
14 | decedent's date of death, that the qualified small business interest continues to be owned by a |
15 | qualified transferee, and shall notify the department within thirty (30) days of any transaction, or |
16 | occurrence causing the qualified small business interest to fail to qualify for the exemption. Each |
17 | year, the department shall inform all owners of a qualified small business interest exempted from |
18 | estate tax of their obligation to provide an annual certification under this subsection. The |
19 | certification and notification shall be completed in the form and manner as provided by the |
20 | department. An owner's failure to comply with the certification or notification requirements shall |
21 | result in the loss of the exemption and the qualified small business interest shall be subject to |
22 | estate tax due under this chapter. |
23 | (4) For purposes of this subsection, the following terms shall have the following |
24 | meanings: |
25 | (i) "Qualified transferee" means a decedent's: |
26 | (A) Husband or wife; |
27 | (B) Lineal descendants; and |
28 | (C) Siblings and the sibling's lineal descendants. |
29 | (ii) "Qualified small business interest" means an ownership interest in a trade or business |
30 | if the business has a net book value of assets totaling an amount not greater than five million |
31 | dollars ($5,000,000) as of the date of the decedent's death. |
32 | (g) Notwithstanding any other provisions of this chapter, the total estate tax payment on |
33 | account of the estate of a decedent whose death occurs on or after January 1, 1986, is that |
34 | percentage of the estate tax which would be payable under this chapter determined in accordance |
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1 | with the following schedule: |
2 | (1) Death prior to January 1, 1987. - Ninety percent (90%) in the case of decedents |
3 | whose deaths occur on or after January 1, 1986, and prior to January 1, 1987; |
4 | (2) Death prior to January 1, 1988. - Eighty percent (80%) in the case of decedents |
5 | whose deaths occur on or after January 1, 1987, and prior to January 1, 1988; |
6 | (3) Death prior to January 1, 1989. - Sixty percent (60%) in the case of decedents whose |
7 | deaths occur on or after January 1, 1988, and prior to January 1, 1989; |
8 | (4) Death prior to January 1, 1990. - Forty percent (40%) in the case of decedents whose |
9 | deaths occur on or after January 1, 1989, and prior to January 1, 1990; |
10 | (5) Death prior to June 1, 1990. - Twenty percent (20%) in the case of decedents whose |
11 | deaths occur on or after January 1, 1990, and prior to June 1, 1990; |
12 | (6) Death prior to January 1, 1992. - Forty percent (40%) in the case of decedents whose |
13 | deaths occur on or after June 1, 1990, and prior to January 1, 1992. |
14 | (7) Death on or after January 1, 1992. - The estate tax payable on or account of the estate |
15 | of a decedent whose death occurs on or after January 1, 1992, is determined in accordance with § |
16 | 44-22-1.1. |
17 | (h) The estate tax payable under this section shall in no event be less than the estate tax |
18 | due under § 44-22-1.1, computed without regard to the date of death. |
19 | (i) In computing the value of the net estate in subsection (a) of this section, there is |
20 | deducted from the estate and exempted from the tax, the value of a qualified small business. |
21 | SECTION 2. This act shall take effect upon passage. |
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EXPLANATION | |
BY THE LEGISLATIVE COUNCIL | |
OF | |
A N A C T | |
RELATING TO TAXATION | |
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1 | This act would exempt from the estate tax the value of a qualified small business valued |
2 | at an amount not greater than $5,000,000. |
3 | This act would take effect upon passage. |
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