HB 543-FN-A – AS INTRODUCED
2009 SESSION
09/04
HOUSE BILL 543-FN-A
AN ACT establishing an inheritance tax on property received by collateral heirs.
SPONSORS: Rep. Vachon, Straf 3; Rep. Osborne, Merr 12
This bill establishes an inheritance tax on property received by collateral heirs upon the death of the grantor or donor.
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Explanation: Matter added to current law appears in bold italics.
Matter removed from current law appears [in brackets and struckthrough.]
Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.
09-0487
09/04
STATE OF NEW HAMPSHIRE
In the Year of Our Lord Two Thousand Nine
AN ACT establishing an inheritance tax on property received by collateral heirs.
Be it Enacted by the Senate and House of Representatives in General Court convened:
1 New Chapter; Inheritance Tax. Amend RSA by inserting after chapter 86 the following new chapter:
CHAPTER 86-A
INHERITANCE TAX ON PROPERTY RECEIVED BY COLLATERAL HEIRS
86-A:1 Definitions. In this chapter:
I. “Collateral heir” means any person who is not a lineal ascendant, descendant, or member of the decedent’s household otherwise exempt from the tax imposed in this chapter.
II. “Commissioner” means the commissioner of the department of revenue administration.
III. “Department” means the department of revenue administration.
IV. “Decedent’s adopted child or children” means the individuals who were taken into the decedent’s family before reaching the age of majority through a state statutory process where the decedent assumed all the parental duties of a natural parent and the rights and duties existing between the individual and the natural parents were permanently terminated.
V. “Estate” means the probate and non-probate assets of a decedent.
VI. “Gross estate” means the total property or that portion of the total property owned by the decedent or which the decedent had an interest in at the time of death before any deductions are taken into account, whether such property is real or personal, tangible or intangible, wherever located.
VII. “Inheritance tax” means a tax imposed upon the act of receiving property from a decedent at death whether by legacy, devise, intestate succession, joint tenancy, trust, or operation of law.
86-A:2 Imposition of Inheritance Tax; Tax Rate. There is hereby levied and imposed, in addition to all other taxes now imposed by law, an inheritance tax on the receipt by collateral heirs of property upon the death of the grantor or donor in the amount of 18 percent of its fair market value for the use of the state, except as provided in this chapter.
86-A:3 Taxable Property; Rebuttable Presumption.
I. All property within the jurisdiction of the state, real or personal, and any interest therein, belonging to domiciliaries of the state; and all real estate within the state, or any interest therein, belonging to persons who are not domiciliaries of the state; which shall pass by will, or by the laws regulating intestate successions, or by deed, grant, bargain, sale, or gift, made in contemplation of death, or made or intended to take effect in possession or enjoyment at or after the death of the grantor or donor, to any person, absolutely or in trust, shall be subject to the tax imposed by this chapter, except as provided in this chapter.
II. Every deed, grant or completed gift, except in case of a bona fide transfer for reasonable consideration in money or money’s worth, made within 2 years prior to the death of the grantor or donor, shall, prima facie, be deemed to have been made in contemplation of the death of the grantor or donor.
86-A:4 Exemption for Non-Collateral Heirs. Real and personal property of the decedent shall be exempt from the tax imposed by this chapter, if it is received by or for the use of any of the following non-collateral heirs:
I. The decedent’s spouse;
II. The decedent’s domestic partner in a civil union recognized under the laws of this state;
III. The decedent’s lineal ascendants and the decedent’s lineal descendants together with the spouses of said ascendants and descendants, provided that such ascendants and descendants have not been adopted by another person;
IV. The decedent’s adopted children together with the spouses and lineal descendant of such adopted children;
V. A person who for 10 consecutive years prior to the person’s fifteenth birthday was a member of the household of the decedent; or
VI. The decedent’s stepchildren of the current marriage or of the most recent marriage together with the spouses and the lineal descendants of such stepchildren.
86-A:5 Exemption for Governmental and Charitable Purposes. Real and personal property of the decedent shall be exempt from the tax imposed by this chapter, if it is received by or for the use of any of the following governmental or charitable purposes:
I. A city or town in this state for public municipal purposes;
II. The care of cemetery lots in this state; or
III. Educational, religious, cemetery, or other institutions, societies, or associations of public charity in this state, or in any other state, territory, or country, the laws of which at the time of the death of the decedent:
(a) Do not impose a transfer or death tax of any kind; or
(b) Grant an exemption similar to that provided for in this section, to their domiciliaries, for the property passing to charities in this state.
86-A:6 Exemption for Sibling’s Homestead. The decedent’s share of or interest in a homestead shall be exempt from the tax imposed by this chapter if, for a period of at least one year immediately preceding the date of death of the decedent, it was owned in whole or in part by the decedent as the last and usual place of residence; provided that the homestead was occupied as the primary residence of one or more of the decedent’s siblings, but not necessarily by the decedent at the time of the decedent’s death, and to the extent that the interest in the homestead passes to or for the use of those siblings occupying the homestead on the date of the decedent’s death.
86-A:7 Joint Ownership. Whenever property, real or personal, is held in the joint names of 2 or more persons or is deposited in banks or other depositaries in the joint names of 2 or more persons and payable to either or the survivor, upon the death of one of such persons, the right of the survivor to the immediate ownership of such property shall be deemed a transfer taxable under this chapter. The transfer shall be in the same manner as though the whole property to which such transfer relates was owned by said parties as tenants in common and had been devised or bequeathed to the survivor by such deceased joint owner. The survivor shall file with the executor or administrator upon a form prescribed by the department, a report of all transfers of real and personal property held in the joint names of the deceased joint tenant and the survivor and shall notify the executor or administrator as to the amounts paid by such survivor or from said property for necessary expenses of the funeral of the deceased joint tenant, expenses of the last sickness, and medical expenses of the deceased joint tenant. In the computation of the tax under this chapter there shall be deducted from the value of the property so reported such amounts as were paid from said property for such funeral expenses, expenses of last sickness, and medical expenses. In addition, a joint account with less than $10,000 shall not be deemed a transfer taxable under this chapter, provided there is no other joint property or probate asset within the estate. The surviving joint tenant shall remit the appropriate tax liability to the executor or administrator, or if the estate is liable for the tax, the executor or administrator shall pay the tax liability from the assets being held by the executor or administrator. The executor or administrator shall incorporate the value of the joint assets and the tax liability into the inheritance tax return required under this chapter.
86-A:8 Measure of Shares. To the extent that such joint account or property is acquired by the use of the funds of the persons to whom it is payable, or by whom it is held, the value of the separate interest of each for the purposes of this chapter shall be measured by his or her proportionate contribution to the fund or to the purchase price of the property.
86-A:9 Credit for Tax Paid on Prior Transfers Between Siblings.
I. The tax payable under RSA 86-A:2 or RSA 86-A:7 on property passing from a decedent, which has previously been subject to the tax because of a prior transfer by one sibling to another, shall be credited with all or part of the tax paid on a prior transfer if the siblings died within 10 years of each other.
II. The amount of credit shall be as follows:
(a) If the sibling died within 2 years of the prior decedent’s death, 100 percent.
(b) If within the third or fourth year, 80 percent.
(c) If within the fifth or sixth year, 60 percent.
(d) If within the seventh or eighth year, 40 percent.
(e) If within the ninth or tenth year, 20 percent.
III. The surviving sibling applying for a credit under this section shall file with the department, upon a form prescribed by it, a report of all prior transfers by one sibling to another which were previously subject to tax under RSA 86-A:2 or RSA 86-A:7 and shall satisfy the department as to the amount of tax previously paid on such transfers.
86-A:10 Each Taxable. When any interest in property less than an estate in fee shall pass by will or otherwise, as set forth in RSA 86-A:2, to one or more beneficiaries, with remainder to others, the several interests of such beneficiaries, except as they may be entitled to exemption under the foregoing provisions, shall be subject to the tax under RSA 86-A:2.
86-A:11 Life Interest; Remainder. The value of an annuity or life estate, any intermediate estate, and any remainder interest shall be determined in accordance with the applicable United States Internal Revenue Service regulations and tables in effect at the time of the death of the decedent.
86-A:12 Contingent Interest. Whenever an intermediate estate or remainder is conditioned upon the happening of a contingency, or dependent upon the exercise of a discretion, so that the value of either cannot be determined by the tables as provided in RSA 86-A:11, the value of the property which is the subject of the bequest shall be determined as provided in RSA 86-A:24, RSA 86-A:37, and RSA 86-A:38 and, such value having thus been ascertained, the department shall, upon such evidence as may be furnished by the will and the executor’s statement or by the beneficiaries or otherwise, determine the value of the interests of the several beneficiaries, and the values thus determined shall be deemed to be the values of such several interests for the purpose of the assessment of the tax, except insofar as they shall be changed upon appeal.
86-A:13 Identity Conditional. Whenever the identity of the beneficiary who is to take the remainder is conditioned upon the happening of a contingency, or is dependent upon the exercise of a discretion, the department shall assess and collect the tax upon such remainder at the highest amount, which, on the happening of any of the said contingencies or conditions, or by the exercise of such discretion, would be possible under the provisions of RSA 86-A:2.
86-A:14 Abatement for Exempt Remainders. If, at the termination of the intermediate estate, such remainder or any portion thereof shall pass to a person or corporation which at the time of the death of the decedent was exempt from such tax, such person or corporation may, at any time within one year after the termination of the intermediate estate, but not afterwards, apply to the department for an abatement of the tax on such remainder, and the state treasurer upon the certification of the department shall repay the amount determined to have been overpaid, with interest thereon as determined in accordance with RSA 21-J:28. Whenever a tax shall hereafter be collected under the provisions of RSA 86:13 and RSA 86-A:15 in a case where the intermediate estate shall pass to a husband or wife with the right to use or expend such portions of the principal as may be necessary for the surviving spouse’s reasonable support and maintenance and the principal shall prove to be insufficient for that purpose, and the surviving spouse is without other means of support, then such spouse may apply to the department for an abatement of the entire tax on such remainder, and upon such abatement the state treasurer upon the certification of the department shall repay the amount so collected with interest as determined in accordance with RSA 21-J:28.
86-A:15 Bequests as Compensation. If a testator gives, bequeaths, or devises to the testator’s executors or trustees any property otherwise liable to said tax, in lieu of their compensation, the value thereof in excess of reasonable compensation, as determined by the department, shall nevertheless be subject to the provisions of this chapter.
Lists of Heirs, Inventories, Accounts
86-A:16 Lists of Heirs and Legatees. Every administrator shall prepare a statement in duplicate, showing as far as can be ascertained the names of all the heirs-at-law, and every executor shall prepare a like statement showing the names of all legatees named in the will or entitled to take thereunder, and stating whether or not the same were living at the time of the decedent’s death, and shall file the same with the register of probate at the time of such administrator’s appointment.
86-A:17 Relationship; Age. The statements prepared under RSA 86:16 shall also show the relationship to the decedent of all heirs-at-law or legatees, and the age at the time of the death of the decedent, of all legatees to whom property is bequeathed or devised for life or for a term of years, or subject to a contingency or the exercise of discretion.
86-A:18 Prerequisite to Administration. Letters of administration shall not be issued to any executor or administrator until he or she has filed such statement in duplicate and has given bond to the judge of probate with sufficient sureties containing, in addition to the other conditions required by law, a condition in terms that he or she shall “pay all taxes for which he or she may be or become liable under the provisions of chapter 86-A of the Revised Statutes Annotated, and comply with all the provisions of said chapter.”
86-A:19 Inventory; Appraisal. An inventory and appraisal under oath of the whole of every estate, any part of which may be subject to a tax hereunder, in the form prescribed by the probate court, shall be filed in probate court by the executor, administrator, or trustee within 3 months after appointment and a copy of such inventory shall be provided to the department by the executor, administrator, or trustee at such time.
86-A:20 Report of Gifts and Transfers, Joint Tenancies, and Trusts.
I. Except as provided in paragraph II, every executor and administrator shall, within 6 months from the date of the decedent’s death or within 6 months of when the petition for administration is filed with the probate court, whichever is later, file with the appropriate register of probate and with the department, upon a form prescribed by the department, a report of the following:
(a) A report of all transfers of real and personal property, except bona fide sales at an arms-length price and transfers of under $1,000, made by the decedent within 2 years prior to the date of death or transfers to take effect in possession or enjoyment at or after death including transfers of property through partnership agreements or other agreement between the decedent and one or more other persons.
(b) A report of all real and personal property held in joint tenancy by the decedent at the time of the decedent’s death, and the names, addresses, and the relationship, if known, to the decedent of the surviving joint tenants.
II. A report pursuant to paragraphs I, III, and IV of this section shall describe the location and title reference of real property and need not state the nature or amount of personal property in the case of any transfers of real or personal property or joint tenancies in which all transferees or surviving joint tenants are exempt under RSA 86-A:4.
III. Except as provided in paragraph II and within 6 months of the decedent’s death, every executor, administrator, trustee, fiduciary, or custodian having knowledge of the existence of a trust funded either prior to or as a result of the decedent’s death in whole or in part with property of a decedent and which transfers a beneficial interest in property of the decedent to another effectively in the same manner as a will or other testamentary instrument shall notify the department of its existence and provide a copy of such trust document, including any schedule of beneficiaries, to the department.
IV. Except as provided in paragraph II and within 6 months of a decedent’s death, every executor, administrator, trustee, fiduciary, or custodian having knowledge of the transfer of any property, whether real or personal, by operation of law as a result of the decedent’s death shall notify the department of such transfer, unless reported under paragraphs I or III, providing the name of the transferee, the relationship of the transferee to the decedent, and the nature and fair market value of the property.
86-A:21 Penalty. If an executor, administrator, trustee, fiduciary, or custodian neglects or refuses to comply with any of the requirements of RSA 86-A:16 – RSA 86-A:20, such person shall be assessed a penalty of not more than $1,000, to be recovered by the department for the use of the state, and, upon petition by the department, notice and hearing, the probate court may remove such person, and appoint another person administrator with the will annexed, or administrator, as the case may be.
86-A:22 Notification of Department of Revenue Administration. The register of probate shall notify the department, within 30 days after the expiration of the 6-month period for filing prescribed in RSA 86-A:20, of the failure of any executor, administrator, or trustee to file such inventory and appraisal in his or her office.
86-A:23 Copies to Department of Revenue Administration. The register of probate shall send to the department, by mail, one copy of every statement filed with him or her by executors and administrators as provided in RSA 86-A:16 and RSA 86-A:17; a copy of every will containing legacies which are subject to a tax under this chapter; a copy of the inventory and appraisal of every estate any part of which may be subject to such tax within 30 days after it is filed; and a copy of every account of an executor or administrator of such an estate within 7 days after it is filed; unless notified by the department that such copies will not be required. The register of probate shall also furnish copies of papers and information as to the records and files in his or her office, in such form as the department may require. A refusal or neglect by the register to send such copies or to furnish such information shall be a breach of his or her official bond.
86-A:24 Special Appraisal. If an executor or administrator shall fail to file an inventory and appraisal in the probate court as provided in RSA 86-A:19, or if the department is not satisfied with the inventory and appraisal which is filed, the department may employ a suitable person to appraise the property and the executor or administrator shall show the property of the decedent to such appraiser upon demand, and shall make and subscribe his or her oath that the property thus shown includes all the property of the decedent that has come to his or her knowledge or possession. Such appraiser shall prepare an inventory of said property, and shall appraise it at its actual market value at the time of the decedent’s death, and shall return such inventory and appraisal to the department.
86-A:25 Expense of Appraisal. The expense of such appraisal shall be a charge upon the estate of the decedent, as an expense of administration, in all cases where an inventory and appraisal has not been filed as provided in RSA 86-A:19; otherwise the expense shall be paid by the state treasurer.
86-A:26 Penalty for Failure to Cooperate. An executor or administrator who shall neglect or refuse to show the property of the decedent to the appraiser under RSA 86-A:24 upon demand, or to make and subscribe the oath required under RSA 86-A:24, shall be assessed a penalty as provided in RSA 86-A:21.
86-A:27 Notice of Real Estate Passing. If real estate of a decedent passes to another person and becomes subject to the inheritance tax, his or her executor, administrator, or trustee shall inform the department thereof within 6 months after his or her appointment, or, if the fact is not known to him or her within that time, then within one month after the fact becomes known to him or her.
86-A:28 Conditions of Allowance of Account or Motion for Summary Administration. No final account or motion for summary administration of an executor, administrator, or trustee shall be allowed by the probate court until the certificate of the department of revenue administration has been filed in the probate court, stating that all tax returns required by the provisions of this chapter have been filed and that the amounts of self-assessed taxes have been paid, and that provision has been made for any taxes which may become due on said property or interest, or that the payment thereof to the state is assumed by the legatee receiving such property or interest secured by deposit, or by lien on real estate.
86-A:29 Certificate and Receipt. A certificate from the department verifying that the required returns have been filed and the amount of the self-assessed tax reported has been paid may be requested by the executor, administrator, legatee, the register of probate, or the judge of the probate court having jurisdiction over the estate.
86-A:30 Continuance of Account. Whenever a final account is otherwise in order for allowance by the court, but the certificate of the department, as provided in RSA 86-A:29, is not produced or on file in the probate court, the account shall be continued by the judge of probate until the certificate of the department is filed with the court.
86-A:31 Real Estate of Nonresident. When real estate within the state, or any interest therein, belonging to a person who is not domiciled in the state, shall pass by will or otherwise so that it may be subject to tax under the provisions of this chapter, and an executor or administrator of the estate of the decedent is appointed by a probate court of this state upon ancillary proceedings, or otherwise, such executor or administrator shall, for the purposes of this chapter, have the same powers, and be subject to the same duties and liabilities with reference to such real estate, as though the decedent had been a domiciliary of this state.
Administration on Petition of the State
86-A:32 Appointment of Administrator. If, upon the death of a person leaving an estate liable to a tax under the provisions of this chapter, a will disposing of such estate is not offered for probate, or an application for administration is not made within 4 months after death, the probate court, upon application by the department, shall appoint an administrator.
86-A:33 Expenses of Administration. Whenever an administrator is appointed under RSA 86-A:32, the expenses of administration, including the reasonable compensation of the administrator and the expenses of such litigation as the administrator may undertake upon the request or with the approval of the department to obtain title to or possession of property subject to tax, under the provisions of this chapter, or to recover such taxes from persons liable therefor, may be paid by the state treasurer upon the certification of the department. The governor is hereby authorized to draw a warrant against any money in the treasury not otherwise appropriated for the payment of such expenses.
86-A:34 Repayment. All sums paid under RSA 86-A:33 shall be a charge upon any property of the estate which may come into the hands of the administrator, and shall be repaid to the state treasurer from such property or the proceeds thereof.
86-A:35 Liability of Administrator. The personal liability of administrator for the payment of taxes shall be limited to such taxes as he or she may, by the exercise of reasonable diligence, recover from property of the estate, or from persons liable therefor.
Assessment and Abatement of Tax
86-A:36 Determination of Amount. The executor or administrator shall compute the amount of all taxes due and payable under the provisions of this chapter, and shall prepare and submit the required returns to the department.
86-A:37 Basis of Assessment.
I. Except as provided in paragraph II, the tax shall be assessed upon the fair market value of the property at the time of decedent’s death or the alternate valuation as determined by section 2032 of the United States Internal Revenue Code of 1986 as amended, and gains or losses on sales made afterward for any purpose shall be disregarded.
II. In instances in which the decedent’s will requires the sale of property or where such sale is required to pay the enforceable claims against the decedent, the value of such property shall be the fair market value of the property at the time of sale.
86-A:38 Subsequent Appraisal. Upon the application of any party interested in the succession, or of the executor, administrator, or trustee, made at any time within 3 months after notice of such determination, the probate court shall appoint 3 disinterested appraisers, or, with the consent of the department, one disinterested appraiser, who, first being sworn, shall appraise such property at its fair market value as of the date of the death of the decedent, and shall make return thereof to the probate court.
86-A:39 Fees of Appraisers. The fees of appraisers, as determined by the probate court, shall be paid by the party requesting the subsequent appraisal and, if such party is the department, by the state treasurer from funds not otherwise appropriated upon the certification of the department.
86-A:40 Deductions.
I. In the computation of taxes the executor, administrator, trustee, or legatee may deduct the following from the assets of the gross estate or the trust provided such deductions were legal obligations of the estate or trust and paid from or payable from such assets and were not deductible under RSA 86-A:7:
(a) All debts owed by the decedent at the date of death.
(b) Funeral and burial expenses not covered by a prepaid mortuary trust account.
(c) Expenses of the last illness which are not payable by insurance or other medical reimbursement plans.
(d) Expenses required to maintain property of the decedent, provided the property is assessed under the provisions of RSA 86-A:37, II.
(e) Reasonable compensation paid to an executor or administrator for personal services in the administration of the estate.
(f) Reasonable compensation paid to a trustee of a trust the assets of which become subject to taxation under this chapter for services actually performed by the trustee that are comparable to those services performed by an executor or administrator in the administration of an estate.
(g) Federal or state estate taxes other than New Hampshire assessed and paid by the estate.
(h) In the event that the decedent’s will provides that all taxes be paid from the estate, the payment of inheritance taxes by the estate will be presumed to be made from the residuary in which case a deduction will be allowed against the residuary for all legacy and succession taxes on all other bequests with the exception of taxes on the residuary and the taxes assessed under this chapter on the assets of a trust. However, if non-New Hampshire real estate is sold, the taxes imposed by the state where the real estate is located shall be a reduction of the proceeds of such sale and not a deduction against the New Hampshire estate under this section.
(i) In the event that the trust agreement provides that all taxes be paid from the trust, the payment of inheritance taxes by the trust will be presumed to be made from the residuary in which case a deduction will be allowed against the residuary for all inheritance taxes on all other trust bequests with the exception of the residuary, except for the taxes assessed, under this chapter on the assets of the probate estate. However, if non-New Hampshire real estate is sold the taxes imposed by the state where the real estate is located shall be a reduction of the proceeds of such sale and not a deduction against the New Hampshire trust under this section.
(j) Taxes and preparation fees for all federal and state tax returns for all tax years up to and including the year of death.
(k) Expenses of administration, provided such expenses are essential for the proper settlement of the estate and not incurred for the benefit of the heirs, legatees, or devisees. Administration expenses include, but are not limited to, cost of fiduciary bond, postage, required notices, certified copies of wills, fees for recording instruments, appraisal fees, and legal fees unless such fees are incurred for the specific benefit of the legatees, heirs, or devisees.
II. In the computation of this tax on the residuary probate or trust estate it shall be calculated on the balance of the residuary after subtracting the deductions provided in paragraph I.
86-A:41 Claims for Care. The amount due upon the claim of any legatee named in the will, or of any person who is, or, in the absence of a will, would be an heir-at-law of a deceased person, arising under a contract for board, lodging, support, maintenance, or personal care and attention, covering a period of more than 6 months, shall be subject to the same tax imposed by this chapter upon a legacy or succession of like amount, except to the extent that such claim is evidenced by a writing signed by the decedent containing an agreement for payment at some specified time or times within the decedent’s lifetime.
Settlement Without Local Administration
86-A:42 Estate of Nonresident.
I. In the absence of administration in this state, the department may, at the request of an executor or administrator duly appointed and qualified in the state of the decedent’s domicile, or of a grantee or donee under a conveyance made during the grantor’s lifetime, and upon satisfactory evidence furnished it by such executor, administrator, grantee, donee, or otherwise, determine whether or not any real estate of said decedent within this state is subject to tax under the provisions of this chapter, and if so may determine the amount of such tax and adjust the same with such executor, administrator, grantee, or donee and for that purpose may appoint an appraiser to appraise said property as provided in RSA 86-A:24; and the expense of such appraisal shall be a charge upon the real estate in addition to the tax.
II. The executor, administrator, grantee, or donee shall be required to prepare and file all forms required by this chapter with the department. The information required by RSA 86-A:16 – RSA 86-A:20 shall relate only to the real property located in New Hampshire.
86-A:43 Certificate and Receipt. A certificate from the department verifying that the required returns have been filed and that the amount of the self-assessed tax reported has been paid may be requested by the executor, administrator, grantee, or donee and may be filed in the office of the register of probate in the county where the real estate is located, and when so filed shall be conclusive evidence of the filing of the required return and payment of the self-assessed tax.
86-A:44 Overdue Tax. Whenever in such a case the tax return is not filed within 9 months after the death of the decedent, the probate court, upon application of the department, shall appoint an administrator as provided in RSA 86-A:32.
Payment and Collection of Tax
86-A:45 When Payable. All taxes imposed by the provisions of this chapter, including taxes on intermediate estates and remainders, shall be due and payable to the department 9 months after date of the decedent’s death.
86-A:46 Suspension of Payment. If the probate court has ordered the executor or administrator to retain funds to satisfy a claim of a creditor, the payment of the tax may be suspended by the court to await the disposition of such claim.
86-A:47 Interest. If the taxes are not paid when due, interest shall be paid as prescribed in RSA 21-J:28.
86-A:48 Liability. Administrators, executors, trustees, grantees, and donees under a conveyance made during the grantor’s life and taxable under this chapter, shall be liable for such taxes, with interest, until the taxes have been paid.
86-A:49 Lien. Taxes and interest owed under this chapter shall be a lien on the property subject to the taxes until the same are paid; however, commencing with the date of decedent’s death there shall be a 20-year statute of limitations for the lien.
86-A:50 Discharge of Lien. Whenever any real estate or separate parcel thereof is subject to a lien created by this chapter, the probate court shall have jurisdiction to make such order or decree as will otherwise secure to the state the payment of any tax due, or to become due, on such real estate or separate parcel thereof, and, upon the performance of such order or decree, to discharge such lien.
86-A:51 Collection. An executor, administrator, trustee, grantee or donee holding property subject to tax under this chapter shall deduct the tax therefrom, or collect it from the legatee or person entitled to such property, and he or she shall not deliver property or a specific legacy subject to the tax until he or she has collected the tax thereon.
86-A:52 Sale of Personal Property. When a specific bequest of personal property other than money is subject to a tax under this chapter, and the legatee neglects or refuses to pay the tax upon demand, the executor or trustee may, upon such notice as the probate court may direct, be authorized to sell such property, or, if the same can be divided, such portion thereof as may be necessary, and shall deduct the tax from the proceeds of such sale, and shall account to the legatee for the balance, if any, of such proceeds, in lieu of the property.
86-A:53 Sale of Real Estate. An executor or administrator shall collect taxes, due upon the land which is subject to tax under the provisions of this chapter, from the heirs or devisees entitled to the land, and he or she may be authorized to sell such land according to the provisions of RSA 86-A:57 if they refuse or neglect to pay such tax.
86-A:54 Property Out of the State. When a conveyance made by a decedent in his or her lifetime is subject to the inheritance tax, and the property thus conveyed, being personal property, is without the state, or is removed from the state before the tax is paid, such tax shall become a lien upon all property of the decedent, and shall be chargeable as an expense of administration; and the executor or administrator shall collect taxes due on account of such conveyances, and may be authorized to sell any property subject to the lien of such tax for the payment thereof, as in other cases.
86-A:55 Charges Upon Land. If a legacy subject to the inheritance tax is charged upon or payable out of real estate, the heir or devisee, before paying it, shall deduct the tax therefrom and pay it to the executor, administrator, or trustee, and the tax shall remain a charge upon said real estate until it is paid. Payment of the tax may be enforced by the executor, administrator, or trustee in the same manner as the payment of the legacy itself could be enforced.
86-A:56 Less Than Fee. When any interest in property less than an estate in fee is devised or bequeathed to one or more beneficiaries with remainder to others, and the interest of one or more of the beneficiaries is subject to the inheritance tax, the executor shall deduct the tax upon such taxable interests from the whole property thus devised or bequeathed, and whenever property other than money is so devised or bequeathed he or she may, unless the taxes upon all the taxable interests are paid when due by the beneficiaries, be authorized to sell such property, or such portion thereof as may be necessary, as provided in RSA 86-A:52 and RSA 86-A:57, and, having deducted the unpaid taxes on such taxable interests from the proceeds of such sale, he or she shall account for the balance in lieu of the property sold as in other cases.
86-A:57 Authority to Sell Real Estate. The probate court may authorize executors, administrators, and trustees to sell the real estate of a decedent for the payment of said tax, in the same manner as it may authorize them to sell real estate for the payment of debts.
86-A:58 Suit for Tax. The department may commence an action for the recovery of any of said taxes at any time after the taxes become payable; and shall do so whenever the judge of probate certifies to the department that the final account of an executor, administrator, or trustee has been filed in such court, and that the settlement of the estate is delayed because of the nonpayment of said tax.
86-A:59 Extension of Time.
I. The probate court shall certify any extension of time granted upon the application of any heir, legatee, or other person interested therein, and may extend the time of payment of the inheritance tax whenever the circumstances of the case require.
II. Except as provided in paragraph III, interest, as prescribed in RSA 86-A:47, shall apply on the tax due throughout the term of an extension of time for payment of the tax granted pursuant to this section.
III. Any heir, legatee, or other interested person, who has been granted an extension of time for payment of the tax under paragraph I, may apply to the commissioner for a waiver of the interest applied under paragraph II. The commissioner may grant such waiver, for good cause shown.
Adjustment of Tax by Compromise
86-A:60 Who May Adjust. In every case where there is a devise, descent, or bequest liable to a tax under the provisions of this chapter, conditioned upon the happening of a contingency or dependent upon the exercise of a discretion, or where the right of the department to recover the tax is in question, or where the department deems it advisable, the department may effect such settlement of the tax as it may deem to be for the best interests of the state, and the payment of the sum so agreed upon shall be a full satisfaction of such tax.
86-A:61 Tax on Interest of Unascertained Appointees, etc. In all cases of a bequest or devise of property for life or for a term of years, which gives to the tenant for life or term of years the power of appointing by deed or will, or both, the further disposition of such property or any part thereof, the department may effect such settlement of the tax on the interest of any unascertained appointees under such power, or any unascertained person who may take in default of appointment under such power, as it shall deem to be for the best interests of the state; and payment of the sum so agreed upon shall be a full satisfaction of such tax.
86-A:62 Dispute as to Domicile. Where the department claims that a decedent was domiciled in this state at the time of death and the taxing authorities of another state or states make a similar claim with respect to their state or states, such department may enter into a written agreement with such taxing officials and with the executor or administrator that a certain sum shall be accepted in full payment of the tax, together with interest and penalties, imposed by this chapter, provided that said agreement also fixes the amount to be paid to such other state or states in full payment of inheritance or estate taxes thereof. Full power and authority is hereby conferred upon the executor or administrator to enter into such agreement. Upon the filing of such agreement or duplicate of such agreement with the probate court which would have jurisdiction over the estate if the decedent had died domiciled in this state, an order fixing the tax shall be made in accordance with such agreement, and such order shall finally and conclusively fix and determine the amount of tax imposed by this chapter.
Duties of Depositaries and Corporations
86-A:63 Deposit Boxes.
I. No person or corporation engaged in the business of renting or furnishing safety deposit boxes to its customers or others, for the safekeeping of securities or other papers may, except as provided in paragraph II, without the consent in writing of the department, permit any person, except an executor or administrator duly appointed and qualified in this state, to remove any of the contents of any such safety deposit box after knowledge of the death of any person having the right of access to the same, whether such deceased person was a resident of this state or not, except the will, if any, of the deceased which may be delivered to the executor named in the will.
II. If a safety deposit box is rented under either of the following arrangements:
(a) To 2 persons jointly, with separate right of access to either or the survivor, and one of the joint renters dies; or
(b) To a single renter, and such renter appoints a deputy on the records of the lessor by written power of attorney expressly providing that the deputy shall have a continued right of access to the box notwithstanding the death of the renter, and the renter dies survived by such deputy; and if the surviving joint renter or surviving deputy, as the case may be, is the spouse or a parent or natural or adopted child or grandchild or brother or sister of the decedent, the written consent of the department shall not be required for the removal, in whole or in part, of the contents of such safety deposit box by the surviving joint renter or surviving deputy. This paragraph shall be construed to create a joint tenancy in or otherwise establish ownership in any of the contents of such safety deposit box.
86-A:64 Transfers of Stock or Other Assets. No corporation organized and existing under the laws of this state shall transfer on its books, or issue a new certificate for, any share or shares of its capital stock standing in the name of a decedent, or in trust for a decedent or belonging to or standing in the joint names of a decedent and one or more persons, and no safe deposit company, trust company, corporation, bank or other institution, person or persons having in possession, or under control, or custody or partial custody, securities, deposits, assets, or property belonging to or standing in the joint names of such a decedent and one or more persons, or which was received from the decedent for delivery to any other person, or is marked or designated for such delivery, including the shares of capital stock of, or other interest in, said safe deposit company, trust company, corporation, bank, or other institution shall, except as hereinafter provided, deliver or transfer the same to any person except a duly appointed executor or administrator of the estate of the decedent without the written consent of the department. However, when the grantee, donee, beneficiary, and surviving joint tenant or tenants all stand in relation to the decedent as persons who, under the provisions of RSA 86-A:4 are exempt from the tax imposed by this chapter, such prior written consent shall not be required for the delivery or transfer by such safe deposit company, trust company, corporation, bank, or other institution of:
I. Any kind of security, deposit, asset, or property which was received from the decedent for delivery to any other person, or is marked or designated for such delivery; or
II. Any kind of account, deposit, security, asset, or property standing in the joint names of 2 or more persons and payable to either or to the survivor upon death of one of such persons.
86-A:65 Notification of Department. Every person or corporation having the custody or control of such property shall, within 10 days after receiving knowledge of the death of the owner or holder of title, notify the department and, whenever possible, prepare and transmit to the department an itemized schedule of the property. Joint accounts or deposits for transfer or delivery of which the prior written consent of the department is not required under RSA 86-A:63 and RSA 86-A:64 need not be reported to the department under this section.
86-A:66 Examination. Upon receipt of such notice, the department or other representative may examine such securities, deposits, assets, or the records of such safe deposit company, trust company, corporation, bank, or other institution or person, relative thereto, and shall as soon as possible notify the holder of the property whether or not a tax will be claimed upon its transfer, and may by an instrument in writing consent to the immediate transfer of such property if, in its judgment, the transfer is not subject to tax.
86-A:67 Delivery of Property to Personal Representative. If a tax is claimed by the department under the provisions of this chapter the property shall be delivered to the resident executor or administrator of the deceased, or held until the tax has been assessed and paid, as the circumstances of the case may require, unless the claim is overruled by the court in appropriate proceedings.
86-A:68 Joint Deposits. Savings banks, trust companies, and all other similar institutions shall, when receiving deposits in more than one name, ascertain and record the place of domicile of the parties, and shall, upon request of the department, furnish it with a list of all such deposits, together with the names and addresses of the depositors, and such other information as it may require and the institution is able to furnish.
86-A:69 Penalty. Whoever violates the provisions of RSA 86-A:63, RSA 86-A:64, RSA 86-A:65, RSA 86-A:66, RSA 86-A:67, or RSA 86-A:68 shall be guilty of a misdemeanor if a natural person, or guilty of a felony if any other person, and, in addition thereto, shall be liable for the amount of the taxes, interest, and penalties due under this chapter upon the passing or transfer of said securities, deposits, or other property; and such penalties and liabilities may be enforced in an action brought by the department. In cases of failure to comply with RSA 86-A:63, RSA 86-A:64, and RSA 86-A:67 involving the delivery or transfer of joint accounts or deposits by a trust company, bank, or other similar institution, the penalty shall not apply and the other liability of such institutions under this section shall not exceed the amount of the taxes and interest due under this chapter upon the passing or transfer of such joint accounts or deposits; and no such institution shall be deemed to have violated said sections if the institution shall have withheld from transfer, as provided in RSA 86-A:67, a portion of such joint account or deposit at least equal to the amount of the tax assessed thereon under this chapter.
86-A:70 Application of Provisions. The provisions of RSA 86-A:64 – RSA 86-A:69 shall not apply to the transfer or registration of a transfer by a corporation, not organized under the laws of this state, of its own stock or other registered securities belonging to the estate of a nonresident, or to or upon the order or assignment of a duly appointed executor or administrator.
Miscellaneous Provisions
86-A:71 Notice to Appear. Whenever the department requires the attendance of an executor, administrator, or beneficiary as provided in this chapter, the department shall issue an administrative summons to appear, give testimony, or produce documentation as provided in RSA 21-J:3 or RSA 21-J:5, to such person or corporation, 14 days prior to the date when such person or corporation is required to appear.
86-A:72 Appearance by Department. The department shall be entitled to appear and shall represent the state in any proceeding in any court in which the decree may in any way affect the inheritance tax. No decree in any such proceeding, or upon appeal therefrom, shall be binding upon the state, or upon a probate appeal, unless personal notice of such proceeding shall have been given to the department.
Nonresident Estates
86-A:73 Administration of Estates of Nonresidents. At any time before the expiration of 15 months after the qualification in any probate court in this state of any executor or administrator of the estate of any nonresident decedent, such executor or administrator shall file with the court proof that all inheritance taxes, together with interest or penalties thereon, which are due to the state of domicile of such decedent, or to any political subdivision thereof, have been paid or secured, or that no such taxes, interest, or penalties are due, as the case may be, unless it appears that letters have been issued in the state of domicile.
86-A:74 Notification to Domiciliary State. The proof required by RSA 86-A:73 may be in the form of a certificate issued by the official or body charged with the administration of the inheritance tax laws of the domiciliary state but if such proof is filed within the time period prescribed by law, the register of the probate court shall forthwith notify by mail the appropriate official or body of the domiciliary state of the fact that such executor or administrator has not filed the proof required by RSA 86-A:73. Said notice shall also state, insofar as are known to said register, the name, date of death, last domicile of the decedent, and value of the property belonging to such decedent at the time of his or her death. The register of probate shall attach to such notice a plain copy of the will of the decedent, if any, and also a list of heirs or legatees.
86-A:75 Petition for Accounting. Within 60 days after the mailing of such notice, the official or body charged with the administration of the inheritance tax laws of the domiciliary state may file with the probate court in this state a petition for an accounting of such estate. If the petition is filed within 60 days, the probate court shall order an account to be filed and, upon such account being filed and allowed, shall decree the remission to the fiduciary appointed by the domiciliary probate court of the balance of the intangible personalty after the payment of creditors and expenses of administration in this state.
86-A:76 Account Not Allowed. Unless the provisions of RSA 86-A:73 – RSA 86-A:75 have been complied with, no such executor or administrator shall be entitled to the allowance of his or her account or decree of distribution in this state.
86-A:77 Construction of Provisions. The provisions of RSA 86-A:73 – RSA 86-A:75 shall be liberally construed in order to insure that the state of domicile of any decedent shall receive any inheritance taxes, with interest and penalties thereon, due to it.
86-A:78 Application of Law. The provisions of RSA 86-A:73 – RSA 86-A:77 shall apply to the estate of any nonresident decedent, if the laws of the state or foreign country of his or her domicile contain a provision of any nature or however expressed whereby this state is given reasonable assurance of the collection of its inheritance taxes, interest, and penalties, from the estates of decedents dying domiciled in this state in cases where the estates of such decedents are being administered by the probate court of such other state, or if the state of domicile does not grant letters in nonresident estates until after letters have been issued by the state of domicile.
Administrative Duties
86-A:79 Returns.
I. The executor or administrator of the estate of every decedent whose death gives rise to a tax liability under this chapter shall, within 9 months after the date of the decedent’s death, file a return with the commissioner. The commissioner shall adopt rules, pursuant to RSA 541-A, relative to the form of such return and the data which it must contain for the correct computation of the inheritance tax. All returns shall be signed by the administrator or executor and the return preparer if other than the administrator or executor, subject to the pains and penalty of perjury.
II. In those estates in which no executor or administrator has been appointed, the person who receives immediate ownership shall make and file such return. If there is more than one person in immediate ownership, all such persons shall be jointly responsible for completing and filing one return reporting all of the assets of the estate. If there is more than one person in immediate ownership and any such person is unable to agree on or file a joint return, such person shall file an individual return with the department with a written explanation of why a joint return was not filed. The liability for the tax shall be individual and not joint.
III. For good cause, the commissioner may extend the time within which a taxpayer is required to file a return, and if such return is filed during the period of extension, no penalty for the failure to file under RSA 21-J:31 shall be imposed, but the executor or administrator shall be liable for interest as prescribed in RSA 21-J:28. An extension of time for filing a return shall not extend the time for the payment of the taxes due under this chapter. Failure to file the return within the period of the extension shall void such extension.
IV. Each executor or administrator shall report any change in the amount of the decedent’s assets, liabilities, income, or expenses as finally approved by the probate court with respect to any previous returns filed under this chapter. The changes shall be reported to the commissioner by filing an amended return with the department within 90 days of the approval of such amounts by the probate court.
V. When the commissioner has reason to believe that an executor or administrator has failed to file a return or include any part of the taxable property in a filed return, the commissioner may require the executor or administrator to file a return or a supplementary return showing such additional information as the commissioner prescribes. Upon receipt of the supplementary return, or if none is received within the time set by the commissioner, the commissioner may find and assess the amount due upon the information that is available. The making of such returns by the commissioner shall not relieve the executor or administrator of any penalty for the failure to make a correct original return or relieve them from the liability for interest imposed under RSA 21-J:28 or any other additional charges imposed by the commissioner.
VI. The failure to file returns, except for good cause shown, the filing of fraudulent returns, or the making, causing to be made, or permitting to be made any false entry in the books or records of the estate with the intent to defraud the state or to evade the payment of the tax or any part thereof shall subject the executor or administrator to the penalties provided in RSA 21-J for such actions; provided, however, that if a person fails to file a return within 9 months of the decedent’s death, that person may file an estimated tax payment of at least 90 percent of the total tax due and, even if the return cannot be completed, no further penalties shall accrue as of the date the estimated tax payment is made.
86-A:80 Records of the Estate. Every executor or administrator shall:
I. Keep such records as may be necessary to determine the amount of liability for tax under this chapter.
II. Preserve such records for a period of 3 years after the returns required by this chapter have been filed or until any litigation or prosecution under this chapter is finally determined, whichever is later.
III. Make such records available for inspection by the commissioner or his or her authorized agents, upon demand, at reasonable times during regular business hours. Whoever violates the provisions of this section shall be subject to the penalties provided in RSA 21-J for such actions.
86-A:81 Authority to Audit. The department shall have the authority to audit the returns required by this chapter to determine whether there has been an error in the assessment of the taxes imposed by this chapter in accordance with the following provisions:
I. An executor, administrator, legatee, or probate court may request in writing within 2 years of the decedent’s death an audit of the return.
II. The department may, on its own motion, undertake such an audit upon written notice to the executor, administrator, or legatee within the statute of limitations as provided in RSA 21-J:29, except that where a change is reported as provided in RSA 86-A:79, IV, such notice shall be provided within 6 months of the receipt of such amended return.
III. An executor, administrator, or legatee may request an administrative hearing pursuant to RSA 21-J:28-b, I, II, and III.
IV. Within 30 days after notice of any adjustment ordered by the commissioner as a result of an administrative hearing, an executor, administrator, or legatee may appeal the commissioner’s determination to the probate court having jurisdiction over the decedent’s estate. The probate court shall determine de novo the correctness of the commissioner’s action.
86-A:82 Administration; Rulemaking.
I. The commissioner shall collect the taxes, interest, additions to tax and penalties imposed under this chapter and RSA 21-J.
II. The commissioner shall provide the judges and registers of probate of the state with such forms and documents as are requisite for the execution of this chapter.
III. The expenses of the execution of this chapter shall be paid by the state treasurer upon the certification of the commissioner and charged to the appropriations for the department and the bills therefor shall be submitted to the governor and council for their approval.
IV. Whenever in the opinion of the commissioner any books, records or papers more than 6 years old are no longer required, the department may destroy or cause such records to be destroyed.
V. The commissioner shall adopt rules, pursuant to RSA 541-A, relative to:
(a) The administration of the tax under this chapter; and
(b) The recovery of any tax, interest or penalties imposed by this chapter and RSA 21-J.
VI. The commissioner may institute actions in the name of the state to recover any tax, interest, or penalties imposed by this chapter and RSA 21-J.
VII. In the collection of the tax imposed by this chapter, the commissioner may use all of the powers granted to tax collectors under RSA 80 for the collection of taxes. The commissioner shall also have all of the duties imposed on tax collectors by RSA 80 that are applicable to him.
VIII. The commissioner may take the oath of any person in the course of any hearing authorized under RSA 86-A:81, III. In connection with hearings, the commissioner and the executor or administrator shall have the power to compel attendance of witnesses and the production of books, records, papers, vouchers, accounts, or other documents. The commissioner and executor or administrator may take the deposition of witnesses residing within or without the state pertaining to any matter under this chapter, in the same way as depositions of witnesses are taken in civil actions in the superior court. Fees of witnesses are the same as those allowed to witnesses in the probate court and in the case of witnesses summoned by the commissioner shall be considered as an expense of administration of this chapter.
IX. Any notice required by this chapter to be given by the commissioner to an executor or administrator shall be made by first class mail to the last known address of the executor or administrator, but in the case of hearings, notice shall be given at least 10 days before the date of the hearing.
86-A:83 Liability of Executor or Administrator. Notwithstanding any other provision to the contrary:
I. The executor or administrator shall not be responsible for the accuracy of the value submitted for property passing to a joint tenant unless the estate is responsible for the tax thereon. Any dispute as to the value of such property shall be addressed between the department and the surviving joint tenant outside of the administration of the estate.
II. At the request of the executor or administrator, the department shall collect directly any tax due on joint property and the estate shall thereby be relieved of any responsibility of collection which would otherwise result under this chapter.
III. In any probate estate with a gross value not exceeding $25,000, the executor or administrator may elect to opt out of any responsibility concerning the tax liability for property passing outside of the estate other than to report to the department any information concerning such property of which the executor or administrator may be aware. Upon written notification of such election by the executor or administrator, the department shall assume all responsibilities for the ascertainment and collection of the tax due.
Disposition of Revenue
86-A:84 Disposition of Revenue. The state treasurer shall deposit all revenues collected by the commissioner under this chapter into the general fund as unrestricted revenue.
2 Effective Date. This act shall take effect July 1, 2009.
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HB 543-FN-A - FISCAL NOTE
AN ACT establishing an inheritance tax on property received by collateral heirs.
FISCAL IMPACT:
The Department of Revenue Administration, Judicial Branch, and Judicial Council state this bill will increase state revenues by $29 million in FY 2010 and each year thereafter and will increase state expenditures by an indeterminable amount. The New Hampshire Association of Counties states this bill may increase county expenditures by an indeterminable amount in FY 2010 and each year thereafter. This bill will have no effect on county and local revenues or local expenditures.
METHODOLOGY:
The Department of Revenue Administration states this bill establishes an inheritance tax of 18 percent on property bequeathed to collateral heirs upon the death of a grantor or donor. The Department assumes this law would take effect on July 1, 2009 and would require the Department to create and print forms, reprogram computer systems, and reallocate existing personnel or hire new personnel. The Department states these costs will increase state expenditures by at least $10,000 in FY 2010 and each year thereafter. The Department states this bill appears identical to the repealed RSA 86, the legacy and succession tax. Legacy and succession tax revenues were stable over time, averaging $29 million for the five years prior to repeal. Therefore, the Department assumes this bill will increase state revenues by approximately $29 million in FY 2010 and each year thereafter.
The Judicial Branch assumes this tax will operate similar to the legacy and succession tax. The Branch estimates between 25 and 33 percent of an average 4,000 new estate administrations will be subject to the tax each year, and each requires one-half hour of clerical time. The Branch estimates personnel costs associated with administration will be $13,590 in FY 2010 and each year therefore, without consideration of any future salary increases (4,000 estates x 30 percent = 1,200 estates x 30 minutes x $0.3775 cents per clerical minute). Also, proposed RSA 86-A:22 and 86-A:23 require the register of the probate court to send certain notices and copies to the Department of Revenue Administration. The Branch estimates this may increase state expenditures $3,535 in FY 2010 and each year thereafter (1,200 estates x 3 mailings x $0.93 postage = $3,348. Plus 1,200 estates x 3 mailings x 8 sheets of paper = 28,800 sheets @ $6.50 per
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1,000 = $187). The Branch assumes some estates will require proceedings before the probate judge, at $729 per day in FY 2010 and each year thereafter, without consideration of any future salary increases. The Branch anticipates the proposed bill will result in several days of judicial time annually, however, the Branch cannot estimate the total number of cases or judicial cost at this time. Finally, the proposed bill may result in criminal penalties for violations related to the tax. The Branch cannot estimate the number of criminal charges which will be brought as a result of the new legislation, however, the cost of processing each unspecified misdemeanor charge is $35.75, each class B misdemeanor is $36.89, and each routine felony is $335.98 in FY 2010 and each year thereafter, without consideration of any future salary increases.
The Judicial Council states this bill may result in a slight increase in state expenditures for indigent defense, but it is unlikely persons subject to this tax will be eligible for indigent defense. Because the Council cannot estimate the number of individuals charged with a violation and eligible for indigent defense, the impact on state expenditures cannot be determined at this time.
The New Hampshire Association of Counties states while cities and towns are exempt from the tax, counties are not specifically exempt. Therefore, counties receiving property from a decedent would be subject to the tax and county expenditures would increase. However, the Association is unable to estimate the number or value of properties which may be transferred to the counties, therefore the impact on county expenditures cannot be determined at this time.
This bill does not appropriate funds or establish positions.