2018 -- H 7844

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LC004449

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     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2018

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A N   A C T

RELATING TO TAXATION -- ESTATE AND TRANSFER TAXES--LIABILITY AND

COMPUTATION

     Introduced By: Representatives Cunha, Shanley, McLaughlin, Maldonado, and Barros

     Date Introduced: February 28, 2018

     Referred To: House 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. § 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. § 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. §

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. § 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 January 1, 2015, 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. § 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 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 a Rhode Island

credit shall be allowed against any tax so determined in the amount of sixty-four thousand four

hundred ($64,400). 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; provided, further, beginning on

January 1, 2016 and each January 1 thereafter, said Rhode Island credit amount under this section

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.

     (5) Notwithstanding any provision of the general laws contained in this chapter to the

contrary, in the event that the final state tax collection for any fiscal year exceeds the

recommended state tax collections figure published in the governor's proposed 2019 budget by an

amount greater than the governor's recommended estate and transfer tax revenue estimate in any

one year over the next five (5) years, no tax shall be imposed under this section upon any

decedent whose death occurs on or after January 1 of the following calendar year, and the state's

estate tax shall be permanently and completely repealed.

     For the purposes of calculating a tax pursuant to this section, the governor's 2019 budget

provides estimates which project that general revenues for the next five (5) years shall be as

follows: 2019 three billion, nine hundred forty-eight million, three hundred fifty-eight thousand,

eight dollars ($3,948,358,008); 2020 four billion, thirty million, three hundred ninety-six

thousand, two hundred forty-nine dollars ($4,030,396,249); 2021 four billion, one hundred

twenty-one million, eight hundred forty-six thousand, seven hundred ninety-five dollars

($4,121,846,795); 2022 four billion, one hundred seventy-six million, three hundred sixty-seven

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thousand, one hundred forty-nine dollars ($4,176,367,149); 2023 four billion, two hundred sixty-

one million, fifty-eight thousand, one hundred twenty-nine dollars ($4,261,058,129).

Furthermore, the same budget provides estimates which project the estate and transfer tax

revenues for the next five (5) years shall be as follows: 2019 twenty-nine million, five hundred

thousand dollars ($29,500,000); 2020 thirty million, four hundred thirty-six thousand, five

hundred forty-two dollars ($30,436,542); 2021 thirty-one million, seven hundred seventy-eight

thousand, seven hundred fifty-nine dollars ($31,778,759); 2022 thirty-three million, six hundred

fifty-eight thousand, eighty three dollars ($33,658,083); 2023 thirty five million, six hundred

forty-six thousand, four hundred forty-four dollars ($35,646,444).

     (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. § 1 et seq.

     (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. § 1

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

     (3) The term "state tax collections" means the sum of those taxes, departmental receipts,

and other general revenue sources (but excluding federal funds) for a given fiscal year as reported

by the Rhode Island department of revenue.

     (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

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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.

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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

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     This act would provide that the estate tax be eliminated if state revenues increase in any

given year beyond the governor's budget projections in an amount greater than the revenue that is

estimated to be generated by the estate tax.

     This act would take effect upon passage.

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