Chapter 806 Oregon Laws 2003

 

AN ACT

 

HB 3072

 

Relating to tax compliance; creating new provisions; amending ORS 118.010, 118.160 and 118.230; and prescribing an effective date.

 

Be It Enacted by the People of the State of Oregon:

 

          SECTION 1. Sections 1a, 2, 3, 9 and 10 of this 2003 Act are added to and made a part of ORS 118.005 to 118.840.

 

          SECTION 1a. The Legislative Assembly finds that significant recent changes have been made in federal estate tax laws. The Legislative Assembly further finds that an unintended consequence of these federal law changes has been to create difficulties in the administration and enforcement of the Oregon inheritance tax. The Legislative Assembly declares that sections 2 and 3 of this 2003 Act and the amendments to ORS 118.010, 118.160 and 118.230 by sections 6, 7 and 8 of this 2003 Act are needed to ensure that the level of tax compliance with the Oregon inheritance tax is at the level that Oregonians expect from a fair and balanced tax system.

 

          SECTION 2. Any term used in ORS 118.005 to 118.840 has the same meaning as when used in a comparable context in the laws of the federal Internal Revenue Code relating to federal estate taxes, unless a different meaning is clearly required or the term is specifically defined in ORS 118.005 to 118.840. Any reference in ORS 118.005 to 118.840 to the Internal Revenue Code means the federal Internal Revenue Code as amended and in effect on December 31, 2000, except where the Legislative Assembly has specifically provided otherwise.

 

          SECTION 3. (1) Section 2 of this 2003 Act applies to decedents dying on or after January 1, 1998, and to inheritance taxes imposed on transfers of property occurring due to decedents dying on or after January 1, 1998.

          (2) Except where the Legislative Assembly has provided otherwise, the effective and applicable dates, and the exceptions, special rules and coordination with the Internal Revenue Code, as amended, relative to those dates, contained in the Taxpayer Relief Act of 1997 (P.L. 105-34) and the Internal Revenue Service Restructuring and Reform Act of 1998 (P.L. 105-206), apply for purposes of ORS 118.005 to 118.840, to the extent they can be made applicable, in the same manner as they are applied under the Internal Revenue Code and related federal law.

          NOTE: Sections 4 and 5 were deleted by amendment. Subsequent sections were not renumbered.

 

          SECTION 6. ORS 118.010 is amended to read:

          118.010. (1) A tax is imposed upon a transfer of property and any interest therein, within the jurisdiction of the state, whether belonging to the inhabitants of this state or not, which passes to or vests in any person or persons, or any body or bodies politic or corporate, in trust or otherwise, or by reason whereof any person or body politic or corporate shall become beneficially entitled, in possession or expectation, to any property or interest therein or income thereof.

          (2) The tax imposed under this section shall equal the maximum amount of the state death tax credit allowable against the federal estate tax under section 2011 of the Internal Revenue Code.

          (3) In the case of a resident decedent owning property outside of the jurisdiction of this state at the time of death, the tax imposed under this section shall be the amount determined under subsection (2) of this section multiplied by a ratio. The numerator of the ratio shall be the sum of the appraised value of the decedent’s real property located in Oregon, tangible personal property located in Oregon and intangible personal property located both in and outside of Oregon. The denominator of the ratio shall be the total appraised value of the decedent’s gross estate.

          (4)(a) In the case of a nonresident decedent owning property within the jurisdiction of this state at the time of death, the tax imposed under this section shall be the amount determined under subsection (2) of this section multiplied by a ratio. The numerator of the ratio shall be the sum of the appraised value of the decedent’s real property located in Oregon, tangible personal property located in Oregon and intangible personal property located in Oregon. The denominator shall be the total appraised value of the decedent’s gross estate.

          (b) Intangible personal property of a nonresident decedent shall not be included in the numerator of the ratio used to determine the tax under this subsection if a similar exemption is made by the laws of the state or country of the decedent’s residence in favor of residents of this state.

          (5) In the case of decedents dying before January 1, 2003, if federal estate tax credits other than the state death tax credit result in no federal estate tax, no tax shall be imposed under this section.

          (6) Payment, in whole or in part, of inheritance and estate taxes from funds of an estate or trust on any benefit subject to tax under ORS 118.005 to 118.840 is not to be considered as a further taxable benefit, when such payment is directed by decedent’s will or by a trust agreement.

          (7) If the federal taxable estate is determined by making an election under section 2032 or 2056 of the Internal Revenue Code or another provision of the Internal Revenue Code, or if a federal estate tax return is not required under the Internal Revenue Code, the Department of Revenue may adopt rules providing for a separate election for state inheritance tax purposes.

 

          SECTION 7. ORS 118.160 is amended to read:

          118.160. (1) Except as provided in subsection (2) of this section[,]:

          (a) [no inheritance tax return shall be] An inheritance tax return is not required with respect to the estates of decedents dying on or after January 1, 1987, and before January 1, 2003, unless a federal estate tax return is required to be filed; and

          (b) An inheritance tax return is not required with respect to the estates of decedents dying on or after:

          (A) January 1, 2003, and before January 1, 2004, unless the value of the gross estate is $700,000 or more;

          (B) January 1, 2004, and before January 1, 2005, unless the value of the gross estate is $850,000 or more;

          (C) January 1, 2005, and before January 1, 2006, unless the value of the gross estate is $950,000 or more; or

          (D) January 1, 2006, unless the value of the gross estate is $1 million or more.

          (2) In every estate, whether or not subject to administration and whether or not a federal estate tax return is required to be filed, the executor shall at such times and in such manner as required by rules of the Department of Revenue, file with the department a return in a form provided by the department setting forth a list and description of all transfers of property, in trust or otherwise, made by the decedent in the lifetime of the decedent as a division or distribution of the estate of the decedent made within the three-year period ending on the date of death or intended to take effect at or after death and any further data that the department requires to determine inheritance tax under this chapter.

 

          SECTION 8. ORS 118.230 is amended to read:

          118.230. (1) Every tax imposed by ORS 118.005 to 118.840 is a lien upon the property embraced in any inheritance, devise, bequest, legacy or gift until paid, and the person to whom such property is transferred, and the personal representatives and trustees of every estate embracing such property are personally liable for such tax until its payment, to the extent of the value of such property.

          (2) Taxes imposed under ORS 118.005 to 118.840 may be assessed and collected by the Department of Revenue in the same manner as income taxes are assessed and collected under ORS chapter 314. The department may issue a warrant as provided in ORS 314.430[,] and record the warrant in the County Clerk Lien Record maintained under ORS 205.130. A warrant issued under this section has the same force and effect as a warrant issued under ORS 314.430.

 

          SECTION 9. (1) In the case of a decedent who dies on or after January 1, 2002, and before January 1, 2004, the Department of Revenue may extend the time for the filing of a return and for the payment of any tax due under ORS 118.005 to 118.840 for a reasonable period not to exceed four years from the date otherwise fixed for the filing of a return and the payment of the tax due.

          (2) The department may prescribe rules and forms for granting an extension under this section.

 

          SECTION 10. Notwithstanding any other provision of ORS 118.005 to 118.840, in the case of decedents dying on or after January 1, 2002, and before January 1, 2003:

          (1) A return under ORS 118.005 to 118.840 is not required and no tax is due under ORS 118.005 to 118.840 if the taxable estate of the decedent is less than $1 million; and

          (2) If a return is required under subsection (1) of this section, the tax due under ORS 118.005 to 118.840 shall be determined under the Internal Revenue Code as amended and in effect on December 31, 2000, using a unified credit that does not exceed $192,800.

 

          SECTION 11. This 2003 Act takes effect on the 91st day after the date on which the regular session of the Seventy-second Legislative Assembly adjourns sine die.

 

Approved by the Governor September 24, 2003

 

Filed in the office of Secretary of State September 24, 2003

 

Effective date November 26, 2003

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