2018 -- S 2661

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LC004825

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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

     

     Introduced By: Senators Morgan, DiPalma, Raptakis, Gee, and Lombardi

     Date Introduced: March 20, 2018

     Referred To: Senate Finance

     It is enacted by the General Assembly as follows:

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     SECTION 1. Sections 44-22-1 and 44-22-1.1 of the General Laws in Chapter 44-22

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entitled "Estate and Transfer Taxes - Liability and Computation" are hereby repealed.

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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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     (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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     44-22-1.1. Tax on net estate of decedent.

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     (a) (1) For decedents whose death occurs on or after January 1, 1992, but prior to January

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1, 2002, 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 a sum equal to the maximum credit for

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state death taxes allowed by 26 U.S.C. § 2011.

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

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

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

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

 

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that the tax shall be imposed only if the net taxable estate shall exceed six hundred seventy-five

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thousand dollars ($675,000). Any scheduled increase in the unified credit provided in 26 U.S.C. §

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2010 in effect on January 1, 2001, or thereafter, shall not apply.

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

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

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

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

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that the tax shall be imposed only if the net taxable estate shall exceed eight hundred and fifty

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

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thereafter until January 1, 2015, said amount shall be adjusted by the percentage of increase in the

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Consumer Price Index for all Urban Consumers (CPI-U) as published by the United States

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Department of Labor Statistics determined as of September 30 of the prior calendar year; said

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adjustment shall be compounded annually and shall be rounded up to the nearest five dollar

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($5.00) increment. Any scheduled increase in the unified credit provided in 26 U.S.C. § 2010 in

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effect on January 1, 2003, or thereafter, shall not apply.

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

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the transfer of the net estate of every resident or nonresident decedent as a tax upon the right to

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transfer. The tax is a sum equal to the maximum credit for state death taxes allowed by 26 U.S.C.

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Section 2011, as it was in effect as of January 1, 2001; provided, however, that a Rhode Island

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

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hundred ($64,400). Any scheduled increase in the unified credit provided in 26 U.S.C. Section

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2010 in effect on January 1, 2003, or thereafter, shall not apply; provided, further, beginning on

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

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shall be adjusted by the percentage of increase in the Consumer Price Index for all Urban

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Consumers (CPI-U) as published by the United States Department of Labor Statistics determined

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as of September 30 of the prior calendar year; said adjustment shall be compounded annually and

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shall be rounded up to the nearest five dollar ($5.00) increment.

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

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

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

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

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

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

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

 

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

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

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

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

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

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

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

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

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

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

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Code or other laws of the United States means the Internal Revenue Code of 1954, 26 U.S.C. § 1

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

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

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

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     (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

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

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     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

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     This act would repeal the state estate tax.

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     This act would take effect upon passage.

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