Rhode Island 2023 Regular Session

Rhode Island House Bill H5631 Compare Versions

Only one version of the bill is available at this time.
OldNewDifferences
11
22
33
44
55 2023 -- H 5631
66 ========
77 LC001426
88 ========
99 S TATE OF RHODE IS LAND
1010 IN GENERAL ASSEMBLY
1111 JANUARY SESSION, A.D. 2023
1212 ____________
1313
1414 A N A C T
1515 RELATING TO TAXATION -- ESTATE AND TRANSFER TAXES--LIABILITY AND
1616 COMPUTATION
1717 Introduced By: Representatives P. Morgan, Fenton-Fung, Nardone, Roberts, Rea, Serpa,
1818 and Kennedy
1919 Date Introduced: February 15, 2023
2020 Referred To: House Finance
2121
2222
2323 It is enacted by the General Assembly as follows:
2424 SECTION 1. Chapter 44-22 of the General Laws entitled "Estate and Transfer Taxes — 1
2525 Liability and Computation" is hereby repealed in its entirety. 2
2626 CHAPTER 44-22 3
2727 Estate and Transfer Taxes — Liability and Computation 4
2828 44-22-1. Tax on net estate of decedents — Additional tax on postponed enjoyment — 5
2929 Deductions — Marital deduction. 6
3030 (a) A tax is imposed upon the transfer of the net estate of every resident or nonresident 7
3131 decedent as a tax upon the right to transfer. The tax is imposed at the rate of two percent (2%) upon 8
3232 all amounts not in excess of twenty-five thousand dollars ($25,000); at the rate of three percent 9
3333 (3%) upon all amounts in excess of twenty-five thousand dollars ($25,000) and not exceeding fifty 10
3434 thousand dollars ($50,000); at the rate of four percent (4%) upon all amounts in excess of fifty 11
3535 thousand dollars ($50,000) and not exceeding one hundred thousand dollars ($100,000); at the rate 12
3636 of five percent (5%) upon all amounts in excess of one hundred thousand dollars ($100,000) and 13
3737 not exceeding two hundred fifty thousand dollars ($250,000); at the rate of six percent (6%) upon 14
3838 all amounts in excess of two hundred fifty thousand dollars ($250,000) and not exceeding five 15
3939 hundred thousand dollars ($500,000); at the rate of seven percent (7%) upon all amounts in excess 16
4040 of five hundred thousand dollars ($500,000) and not exceeding seven hundred fifty thousand dollars 17
4141 ($750,000); at the rate of eight percent (8%) upon all amounts in excess of seven hundred fifty 18
4242
4343
4444 LC001426 - Page 2 of 6
4545 thousand dollars ($750,000) and not exceeding one million dollars ($1,000,000); at the rate of nine 1
4646 percent (9%) upon all amounts in excess of one million dollars ($1,000,000). An additional tax is 2
4747 imposed at the rate of two percent (2%) upon all or any part of each estate devised, bequeathed, or 3
4848 conveyed in such manner that it becomes necessary to postpone the assessment of taxes imposed 4
4949 by this chapter until the person entitled to the estate comes into beneficial enjoyment or possession 5
5050 of the estate; and provided, further, that an additional tax is not assessed and collected, as provided 6
5151 in §§ 44-23-9 — 44-23-12, in case a settlement of taxes is effected under the provisions of § 44-7
5252 23-25. 8
5353 (b) In computing the value of the net estate in subsection (a) of this section, there is 9
5454 deducted from the estate and exempted from the tax twenty-five thousand dollars ($25,000). 10
5555 (c) In computing the value of the net estate in subsection (a) of this section, there is 11
5656 deducted from the estate and exempted from the tax all property or interests transferred to any 12
5757 corporation, association, or institution located in Rhode Island which is exempt from taxation by 13
5858 charter or under the laws of this state; or to any corporation, association, or institution located 14
5959 outside of this state, which if located within this state, would be exempt from taxation; provided, 15
6060 that the state of domicile of the corporation, association, or institution allows a reciprocal 16
6161 exemption to any similar Rhode Island corporation, association, or institution; or to any person in 17
6262 trust for the same or for use by the same for charitable purposes; or to any city or town in this state 18
6363 for public purposes. 19
6464 (d) In computing the value of the net estate in subsection (a) of this section, there is 20
6565 deducted from the estate and exempted from the tax United States civil and federal military service 21
6666 annuity payments. 22
6767 (e) In computing the value of the net estate in subsection (a) of this section, there is 23
6868 deducted from the estate and exempted from the estate tax a marital deduction, as defined in 26 24
6969 U.S.C. § 2056, in the amount of one hundred seventy-five thousand dollars ($175,000), from 25
7070 property or beneficial interests which pass or have passed from the decedent to the surviving 26
7171 spouse, but only to the extent that the interests are included in determining the value of the gross 27
7272 estate. 28
7373 (f)(1) In computing the value of the net estate in subsection (a) of this section, there is 29
7474 deducted from the estate and exempted from the estate tax, an orphan’s deduction, provided, that: 30
7575 (i) the decedent does not have a surviving spouse, and (ii) the decedent is survived by a minor child 31
7676 who, immediately after the death of the decedent, has no known parent, an amount equal to the 32
7777 value of any interest in property which passes or has passed from the decedent to the child, but only 33
7878 to the extent that the interest is included in determining the value of the gross estate. The aggregate 34
7979
8080
8181 LC001426 - Page 3 of 6
8282 amount of the deductions allowed under this section (computed without regard to this subsection) 1
8383 with respect to interests in property passing to any minor child shall not exceed an amount equal to 2
8484 five thousand dollars ($5,000) multiplied by the excess of twenty-one (21) over the age (in years) 3
8585 which the child has attained on the date of the decedent’s death. 4
8686 (2) For purposes of this subsection, any term used in the subsection has the same meaning 5
8787 as when used in a comparable context in 26 U.S.C. § 2057 unless a different meaning is clearly 6
8888 required. 7
8989 (g) Notwithstanding any other provisions of this chapter, the total estate tax payment on 8
9090 account of the estate of a decedent whose death occurs on or after January 1, 1986, is that percentage 9
9191 of the estate tax which would be payable under this chapter determined in accordance with the 10
9292 following schedule: 11
9393 (1) Death prior to January 1, 1987. Ninety percent (90%) in the case of decedents whose 12
9494 deaths occur on or after January 1, 1986, and prior to January 1, 1987; 13
9595 (2) Death prior to January 1, 1988. Eighty percent (80%) in the case of decedents whose 14
9696 deaths occur on or after January 1, 1987, and prior to January 1, 1988; 15
9797 (3) Death prior to January 1, 1989. Sixty percent (60%) in the case of decedents whose 16
9898 deaths occur on or after January 1, 1988, and prior to January 1, 1989; 17
9999 (4) Death prior to January 1, 1990. Forty percent (40%) in the case of decedents whose 18
100100 deaths occur on or after January 1, 1989, and prior to January 1, 1990; 19
101101 (5) Death prior to June 1, 1990. Twenty percent (20%) in the case of decedents whose 20
102102 deaths occur on or after January 1, 1990, and prior to June 1, 1990; 21
103103 (6) Death prior to January 1, 1992. Forty percent (40%) in the case of decedents whose 22
104104 deaths occur on or after June 1, 1990, and prior to January 1, 1992. 23
105105 (7) Death on or after January 1, 1992. The estate tax payable on or account of the estate of 24
106106 a decedent whose death occurs on or after January 1, 1992, is determined in accordance with § 44-25
107107 22-1.1. 26
108108 (h) The estate tax payable under this section shall in no event be less than the estate tax due 27
109109 under § 44-22-1.1, computed without regard to the date of death. 28
110110 44-22-1.1. Tax on net estate of decedent. 29
111111 (a)(1) For decedents whose death occurs on or after January 1, 1992, but prior to January 30
112112 1, 2002, a tax is imposed upon the transfer of the net estate of every resident or nonresident decedent 31
113113 as a tax upon the right to transfer. The tax is a sum equal to the maximum credit for state death 32
114114 taxes allowed by 26 U.S.C. § 2011. 33
115115 (2) For decedents whose death occurs on or after January 1, 2002, but prior to January 1, 34
116116
117117
118118 LC001426 - Page 4 of 6
119119 2010, a tax is imposed upon the transfer of the net estate of every resident or nonresident decedent 1
120120 as a tax upon the right to transfer. The tax is a sum equal to the maximum credit for state death 2
121121 taxes allowed by 26 U.S.C. § 2011 as it was in effect as of January 1, 2001; provided, however, 3
122122 that the tax shall be imposed only if the net taxable estate shall exceed six hundred seventy-five 4
123123 thousand dollars ($675,000). Any scheduled increase in the unified credit provided in 26 U.S.C. § 5
124124 2010 in effect on January 1, 2001, or thereafter, shall not apply. 6
125125 (3) For decedents whose death occurs on or after January 1, 2010, and prior to January 1, 7
126126 2015, a tax is imposed upon the transfer of the net estate of every resident or nonresident decedent 8
127127 as a tax upon the right to transfer. The tax is a sum equal to the maximum credit for state death 9
128128 taxes allowed by 26 U.S.C. § 2011 as it was in effect as of January 1, 2001; provided, however, 10
129129 that the tax shall be imposed only if the net taxable estate shall exceed eight hundred and fifty 11
130130 thousand dollars ($850,000); provided, further, beginning on January 1, 2011, and each January 1 12
131131 thereafter until January 1, 2015, said amount shall be adjusted by the percentage of increase in the 13
132132 Consumer Price Index for all Urban Consumers (CPI-U) as published by the United States 14
133133 Department of Labor Statistics determined as of September 30 of the prior calendar year; said 15
134134 adjustment shall be compounded annually and shall be rounded up to the nearest five dollar ($5.00) 16
135135 increment. Any scheduled increase in the unified credit provided in 26 U.S.C. § 2010 in effect on 17
136136 January 1, 2003, or thereafter, shall not apply. 18
137137 (4) For decedents whose death occurs on or after January 1, 2015, a tax is imposed upon 19
138138 the transfer of the net estate of every resident or nonresident decedent as a tax upon the right to 20
139139 transfer. The tax is a sum equal to the maximum credit for state death taxes allowed by 26 U.S.C. 21
140140 § 2011, as it was in effect as of January 1, 2001; provided, however, that a Rhode Island credit shall 22
141141 be allowed against any tax so determined in the amount of sixty-four thousand four hundred 23
142142 ($64,400). Any scheduled increase in the unified credit provided in 26 U.S.C. § 2010 in effect on 24
143143 January 1, 2003, or thereafter, shall not apply; provided, further, beginning on January 1, 2016, and 25
144144 each January 1 thereafter, said Rhode Island credit amount under this section shall be adjusted by 26
145145 the percentage of increase in the Consumer Price Index for all Urban Consumers (CPI-U) as 27
146146 published by the United States Department of Labor Statistics determined as of September 30 of 28
147147 the prior calendar year; said adjustment shall be compounded annually and shall be rounded up to 29
148148 the nearest five dollar ($5.00) increment. 30
149149 (b) If the decedent’s estate contains property having a tax situs not within the state, then 31
150150 the tax determined by this section is reduced to an amount determined by multiplying the tax by a 32
151151 fraction whose numerator is the gross estate excluding all property having a tax situs not within the 33
152152 state at the decedent’s death and whose denominator is the gross estate. In determining the fraction, 34
153153
154154
155155 LC001426 - Page 5 of 6
156156 no deductions are considered and the gross estate is not reduced by a mortgage or other 1
157157 indebtedness for which the decedent’s estate is not liable. 2
158158 (c)(1) The terms “gross taxable estate,” “federal gross estate” or “net taxable estate” used 3
159159 in this chapter or chapter 23 of this title has the same meaning as when used in a comparable context 4
160160 in the laws of the United States, unless a different meaning is clearly required by the provisions of 5
161161 this chapter or chapter 23 of this title. Any reference in this chapter or chapter 23 of this title to the 6
162162 Internal Revenue Code or other laws of the United States means the Internal Revenue Code of 7
163163 1954, 26 U.S.C. § 1 et seq. 8
164164 (2) For decedents whose death occurs on or after January 1, 2002, the terms “gross taxable 9
165165 estate” “federal gross estate” or “net taxable estate” used in this chapter or chapter 23 of this title 10
166166 has the same meaning as when used in a comparable context in the laws of the United States, unless 11
167167 a different meaning is clearly required by the provisions of this chapter or chapter 23 of this title. 12
168168 Any reference in this chapter or chapter 23 of this title to the Internal Revenue Code or other laws 13
169169 of the United States means the Internal Revenue Code of 1954, 26 U.S.C. § 1 et seq., as they were 14
170170 in effect as of January 1, 2001, unless otherwise provided. 15
171171 (d) All values are as finally determined for federal estate tax purposes. 16
172172 (e) Property has a tax situs within the state of Rhode Island: 17
173173 (1) If it is real estate or tangible personal property and has actual situs within the state of 18
174174 Rhode Island; or 19
175175 (2) If it is intangible personal property and the decedent was a resident. 20
176176 44-22-2. Exemption — Missing persons in military action. 21
177177 An estate of a serviceman or servicewoman who has been classified by the armed forces 22
178178 of the United States as missing in action is exempt from provisions of this chapter pertaining to 23
179179 taxation. 24
180180 44-22-3 — 44-22-7. Repealed. 25
181181 44-22-8 — 44-22-11. Repealed. 26
182182 44-22-12 — 44-22-20. Repealed. 27
183183 44-22-21. Repealed. 28
184184 44-22-22 — 44-22-24. Repealed. 29
185185 44-22-25. Repealed. 30
186186 44-22-26. [Renumbered.] 31
187187 SECTION 2. This act shall take effect upon passage. 32
188188 ========
189189 LC001426
190190 ========
191191
192192
193193 LC001426 - Page 6 of 6
194194 EXPLANATION
195195 BY THE LEGISLATIVE COUNCIL
196196 OF
197197 A N A C T
198198 RELATING TO TAXATION -- ESTATE AND TRANSFER TAXES--LIABILITY AND
199199 COMPUTATION
200200 ***
201201 This act would eliminate the estate tax in Rhode Island. 1
202202 This act would take effect upon passage. 2
203203 ========
204204 LC001426
205205 ========