2020 -- S 2571

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LC005014

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     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2020

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A N   A C T

RELATING TO TAXATION - ESTATE AND TRANSFER TAXES - LIABILITY AND

COMPUTATION

     Introduced By: Senators Ciccone, Lombardo, Lombardi, and Lawson

     Date Introduced: February 25, 2020

     Referred To: Senate Judiciary

     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. Tax on net estate of decedent; portability of

credit.

     (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.

§ 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. § 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)(i) For purposes of this section, an additional credit against the tax computed under

subsection (a)(4) of this section shall be allowed with respect to a surviving spouse of a deceased

spouse dying after December 31, 2019. The additional credit shall be designated as the "deceased

spousal unused credit amount," and shall be equal to the lesser of:

     (A) The credit amount provided in subsection (4) of this section; or

     (B) The excess of:

     (I) The credit amount of the last deceased spouse of such surviving spouse, over

     (II) The amount of such credit amount with respect to which the tax is determined under

subsection (a)(4) of this section on the estate of such deceased spouse.

     (ii) A deceased spousal unused credit amount may not be taken by a surviving spouse

unless the executor of the estate of the deceased spouse files a Rhode Island estate tax return on

which such amount is computed, and unless the executor makes an election on such return that such

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

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be made if the return is filed after the time prescribed by law (including extensions) for filing the

return.

     (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.

     (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 estates of

decedents dying after December 31, 2019.

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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 establish portability of predeceasing spouse's unused credit against the

estate tax by a surviving spouse.

     This act would take effect upon passage and would apply to the estates of decedents dying

after December 31, 2019.

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