2013 -- H 5307

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LC00853

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STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2013

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A N A C T

RELATING TO TAXATION -- ESTATE TAX

     Introduced By: Representatives Morgan, Chippendale, Giarrusso, Costa, and Newberry

     Date Introduced: February 07, 2013

     Referred To: House Finance

It is enacted by the General Assembly as follows:

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     SECTION 1. 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. -- (a) A tax is imposed upon the transfer of the net estate of

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every resident or nonresident decedent as a tax upon the right to transfer. The tax is imposed at

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the rate of two percent (2%) upon all amounts not in excess of twenty-five thousand dollars

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($25,000); at the rate of three percent (3%) upon all amounts in excess of twenty-five thousand

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dollars ($25,000) and not exceeding fifty thousand dollars ($50,000); at the rate of four percent

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(4%) upon all amounts in excess of fifty thousand dollars ($50,000) and not exceeding one

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

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of one hundred thousand dollars ($100,000) and not exceeding two hundred fifty thousand dollars

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($250,000); at the rate of six percent (6%) upon all amounts in excess of two hundred fifty

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thousand dollars ($250,000) and not exceeding five hundred thousand dollars ($500,000); at the

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rate of seven percent (7%) upon all amounts in excess of five hundred thousand dollars

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($500,000) and not exceeding seven hundred fifty thousand dollars ($750,000); at the rate of eight

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percent (8%) upon all amounts in excess of seven hundred fifty thousand dollars ($750,000) and

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not exceeding one million dollars ($1,000,000); at the rate of nine percent (9%) upon all amounts

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in excess of one million dollars ($1,000,000). An additional tax is imposed at the rate of two

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percent (2%) upon all or any part of each estate devised, bequeathed, or conveyed in such manner

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that it becomes necessary to postpone the assessment of taxes imposed by this chapter until the

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person entitled to the estate comes into beneficial enjoyment or possession of the estate; and

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provided, further, that an additional tax is not assessed and collected, as provided in sections 44-

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23-9 -- 44-23-12, in case a settlement of taxes is effected under the provisions of section 44-23-

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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. section 2056, in the amount of one hundred seventy-five thousand dollars ($175,000),

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from 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

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

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meaning is clearly required.

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     (3) In computing the value of the net estate in subsection (a) of this section, the full and

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fair cash value of a decedent's estate shall not include real estate used for farming for at least the

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next ten (10) years, that farm land excluded from the value of the decedent's estate, may only be

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used for farming. Should the land cease to be used for farming, then the state shall have the

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authority to enforce this farming restriction in superior court.

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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

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whose 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

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whose 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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section 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 section 44-22-1.1, computed without regard to the date of death.

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     SECTION 2. This act shall take effect upon passage.

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LC00853

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N A C T

RELATING TO TAXATION -- ESTATE TAX

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     This act would exclude land used for farming in a decedent's estate for purposes of

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inheritance taxes.

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     This act would take effect upon passage.

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LC00853

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