2018 -- S 2146

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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: Senators Archambault, Conley, Coyne, Gee, and Lombardi

     Date Introduced: January 23, 2018

     Referred To: Senate Judiciary

     It is enacted by the General Assembly as follows:

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     SECTION 1. Chapter 44-22 of the General Laws entitled "Estate and Transfer Taxes -

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Liability and Computation" is hereby amended by adding thereto the following section:

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     44-22-1.2. Deceased spousal unused exclusion amount.

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     (a) Definition of terms.

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     For purposes of this chapter, with respect to a surviving spouse of a deceased spouse

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dying after December 31, 2018, the term "deceased spousal unused exclusion amount" means the

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lesser of:

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     (1) The basic exclusion amount; or

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     (2) The excess of:

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     (i) The applicable exclusion amount of the last such deceased spouse of such surviving

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spouse, over: The amount with respect to which the tentative tax is determined under this chapter

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on the estate of such deceased spouse.

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     (b) Unused exclusion amount deduction permitted. In calculating the marital deduction

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pursuant to §§ 44-22-1 and 44-22-1.2, a deceased spousal unused exclusion amount shall be taken

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into account and added to said deduction if the proper election is made pursuant to this section.

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     (c) Election required. A deceased spousal unused exclusion amount may not be taken into

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account by a surviving spouse under subsections (a) and (b) of this section unless the executor of

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the estate of the deceased spouse files a Rhode Island state estate tax return with the division of

 

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taxation on which such amount is computed and makes an election on such return that such

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amount may be so taken into account. Such election, once made, shall be irrevocable. No election

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may be made under this subsection if such return is filed after the expiration of any time

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prescribed by law, including extensions, for filing such return. The division of taxation shall

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revise the appropriate decedent's estate tax return forms to permit this election to be made.

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     (d) Examination of prior returns after expiration of period of limitations with respect to

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deceased spousal unused exclusion amount. Notwithstanding any applicable period of limitation

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for filing a Rhode Island estate tax return, after the time has expired within which a tax may be

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assessed under this chapter with respect to a deceased spousal unused exclusion amount, the tax

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administrator may examine a return of the deceased spouse to make determinations with respect

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to such amount for purposes of carrying out this section.

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     SECTION 2. Section 44-22-1 of the General Laws in Chapter 44-22 entitled "Estate and

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

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     44-22-1. Tax on net estate of decedents -- Additional tax on postponed enjoyment --

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Deductions -- Marital deduction.

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     (a) A tax is imposed upon the transfer of the net estate of every resident or nonresident

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decedent as a tax upon the right to transfer. The tax is imposed at the rate of two percent (2%)

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upon all amounts not in excess of twenty-five thousand dollars ($25,000); at the rate of three

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percent (3%) upon all amounts in excess of twenty-five thousand dollars ($25,000) and not

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exceeding fifty thousand dollars ($50,000); at the rate of four percent (4%) upon all amounts in

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excess of fifty thousand dollars ($50,000) and not exceeding one hundred thousand dollars

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($100,000); at the rate of five percent (5%) upon all amounts in excess of one hundred thousand

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dollars ($100,000) and not exceeding two hundred fifty thousand dollars ($250,000); at the rate of

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six percent (6%) upon all amounts in excess of two hundred fifty thousand dollars ($250,000) and

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not exceeding five hundred thousand dollars ($500,000); at the rate of seven percent (7%) upon

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all amounts in excess of five hundred thousand dollars ($500,000) and not exceeding seven

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hundred fifty thousand dollars ($750,000); at the rate of eight percent (8%) upon all amounts in

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excess of seven hundred fifty thousand dollars ($750,000) and not exceeding one million dollars

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($1,000,000); at the rate of nine percent (9%) upon all amounts in excess of one million dollars

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($1,000,000). An additional tax is imposed at the rate of two percent (2%) upon all or any part of

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each estate devised, bequeathed, or conveyed in such manner that it becomes necessary to

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postpone the assessment of taxes imposed by this chapter until the person entitled to the estate

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comes into beneficial enjoyment or possession of the estate; and provided, further, that an

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additional tax is not assessed and collected, as provided in §§ 44-23-9 -- 44-23-12, in case a

 

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settlement of taxes is effected under the provisions of § 44-23-25.

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     (b) In computing the value of the net estate in subsection (a) of this section, there is

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deducted from the estate and exempted from the tax twenty-five thousand dollars ($25,000).

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     (c) In computing the value of the net estate in subsection (a) of this section, there is

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deducted from the estate and exempted from the tax all property or interests transferred to any

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corporation, association, or institution located in Rhode Island which is exempt from taxation by

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charter or under the laws of this state; or to any corporation, association, or institution located

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outside of this state, which if located within this state, would be exempt from taxation; provided,

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that the state of domicile of the corporation, association, or institution allows a reciprocal

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exemption to any similar Rhode Island corporation, association, or institution; or to any person in

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trust for the same or for use by the same for charitable purposes; or to any city or town in this

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state for public purposes.

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     (d) In computing the value of the net estate in subsection (a) of this section, there is

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deducted from the estate and exempted from the tax United States civil and federal military

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service annuity payments.

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     (e) In computing the value of the net estate in subsection (a) of this section, there is

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deducted from the estate and exempted from the estate tax a marital deduction, as defined in 26

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U.S.C. § 2056, in the amount of one hundred seventy-five thousand dollars ($175,000), from

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property or beneficial interests which pass or have passed from the decedent to the surviving

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spouse, but only to the extent that the interests are included in determining the value of the gross

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estate.

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     Provided, a deceased spousal unused exclusion amount may be taken into account if the

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proper election is made pursuant to § 44-22-1.2.

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     (f) (1) In computing the value of the net estate in subsection (a) of this section, there is

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deducted from the estate and exempted from the estate tax, an orphan's deduction, provided, that:

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(i) the decedent does not have a surviving spouse, and (ii) the decedent is survived by a minor

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child who, immediately after the death of the decedent, has no known parent, an amount equal to

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the value of any interest in property which passes or has passed from the decedent to the child,

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but only to the extent that the interest is included in determining the value of the gross estate. The

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aggregate amount of the deductions allowed under this section (computed without regard to this

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subsection) with respect to interests in property passing to any minor child shall not exceed an

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amount equal to five thousand dollars ($5,000) multiplied by the excess of twenty-one (21) over

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the age (in years) which the child has attained on the date of the decedent's death.

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     (2) For purposes of this subsection, any term used in the subsection has the same meaning

 

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as when used in a comparable context in 26 U.S.C. § 2057 unless a different meaning is clearly

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required.

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     (g) Notwithstanding any other provisions of this chapter, the total estate tax payment on

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account of the estate of a decedent whose death occurs on or after January 1, 1986, is that

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percentage of the estate tax which would be payable under this chapter determined in accordance

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with the following schedule:

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     (1) Death prior to January 1, 1987. Ninety percent (90%) in the case of decedents whose

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deaths occur on or after January 1, 1986, and prior to January 1, 1987;

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     (2) Death prior to January 1, 1988. Eighty percent (80%) in the case of decedents whose

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deaths occur on or after January 1, 1987, and prior to January 1, 1988;

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     (3) Death prior to January 1, 1989. Sixty percent (60%) in the case of decedents whose

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deaths occur on or after January 1, 1988, and prior to January 1, 1989;

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     (4) Death prior to January 1, 1990. Forty percent (40%) in the case of decedents whose

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deaths occur on or after January 1, 1989, and prior to January 1, 1990;

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     (5) Death prior to June 1, 1990. Twenty percent (20%) in the case of decedents whose

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deaths occur on or after January 1, 1990, and prior to June 1, 1990;

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     (6) Death prior to January 1, 1992. Forty percent (40%) in the case of decedents whose

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deaths occur on or after June 1, 1990, and prior to January 1, 1992.

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     (7) Death on or after January 1, 1992. The estate tax payable on or account of the estate

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of a decedent whose death occurs on or after January 1, 1992, is determined in accordance with §

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44-22-1.1.

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     (h) The estate tax payable under this section shall in no event be less than the estate tax

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due under § 44-22-1.1, computed without regard to the date of death.

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     SECTION 3. 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 for an increase in the marital estate deduction available to a

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surviving spouse if a proper election were made by the estate of the first spouse to die, and would

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allow a decedent to transfer any unused portion of their estate tax exemption to their spouse for

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purposes of the Rhode Island estate tax.

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     This act would take effect upon passage.

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