SPONSOR:   

Rep. Hudson & Sen. Simpson;

 

Reps. Cathcart, D. Short, Carey, Hocker, Lavelle, Lee, Miro, Oberle, Ramone, Wilson

 

HOUSE OF REPRESENTATIVES

145th GENERAL ASSEMBLY

 

HOUSE BILL NO. 492

 

 

AN ACT TO AMEND TITLES 30, 12, AND 3 OF THE DELAWARE CODE RELATING TO THE DELAWARE ESTATE TAX.

 

BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF DELAWARE:

 

Section 1.  Amend § 1501(2), Title 30 of the Delaware Code by striking § 1501(2) and by substituting in lieu thereof the following:

“(2)         ‘Federal estate tax’ shall mean the tax imposed under the United States Internal Revenue Code (26 U.S.C. § 2001 et seq.), as amended.”.

Section 2.  Amend § 1502(b), Title 30 of the Delaware Code by striking subsection (b) and by substituting in lieu thereof the following:

“(b)         Amount of Tax. – Except as provided in § 1503 of this title, the amount of the tax shall be the amount of credit allowable under the provisions of the federal estate tax laws for estate, inheritance, legacy, and succession taxes paid to any state.”.

Section 3.  Amend § 1502(c), Title 30 of the Delaware Code by striking subsection (c) in its entirety.

Section 4.  Amend § 1504, Title 30 of the Delaware Code by striking § 1504 in its entirety and by substituting in lieu thereof the following:

“§ 1504.  Tax on transfers of nonresident estates.

(a)           Imposition of tax. – A tax is imposed upon the transfer of the estate of every decedent who at the time of death was a nonresident of this State of that part of the property which is taxable for federal estate tax purposes and which consists of real and tangible personal property situated in this State.

(b)           Amount of tax. – The amount of the tax shall be computed by multiplying the credit allowable under the provisions of the federal estate tax laws for estate, inheritance, legacy, and succession taxes paid to any state by a fraction,

                (1)           the numerator of which is the value of that part of the decedent’s taxable estate for federal estate tax purposes consisting of real and tangible personal property located in this State, and

                (2)           the denominator of which is the value of the decedent’s taxable estate for federal estate tax purposes, excluding real and tangible personal property not located in any state.”.

Section 5.  Amend § 1505(a) and (b), Title 30 of the Delaware Code by striking subsections (a) and (b) and by substituting in lieu thereof the following:

“(a)         Duty to file return. – An estate tax return shall be filed pursuant to this chapter in all cases when:

                (1)           A resident decedent or a nonresident decedent having real or tangible personal property situated in this State is required to file a federal estate tax return; and

                (2)           The federal estate tax laws allow a credit for state death taxes paid for estates of decedents dying on the date of death of such resident and nonresident decedent, regardless of whether a credit is allowed on the federal estate tax return of such resident or nonresident decedent.

(b)           Time to file return. – The estate tax returns required by this chapter shall be filed on or before the due date for the federal estate tax return, with regard to extensions.”.

Section 6.  Amend § 1507, Title 30 of the Delaware Code by adding thereto a new subsection (d) to read:

“(d)         Notwithstanding the preceding subsection (b) of this section, there shall be no special lien upon the gross estate of a resident decedent and upon the real and tangible personal property of a nonresident decedent who dies on a date on which the federal estate tax does not allow a credit for state death taxes paid.”.

Section 7.  Amend § 2304, Title 12 of the Delaware Code by adding thereto a new subsection (c) to read:

“(c)         The affidavit required by subsection (b) of this section shall not be required with respect to a decedent who dies on a date on which the federal estate tax laws do not allow a credit for state death taxes paid.”.

Section 8.  Amend § 918, Title 3 of the Delaware Code by striking § 918 in its entirety.

Section 9.  This Act shall be effective for decedents dying after June 30, 2010.

SYNOPSIS

Many Delaware domiciliaries own homes in other states that have no estate tax.  The Delaware estate tax law could have the unintended effect of causing these Delaware domiciliaries, who currently pay Delaware income tax, to change their state of domicile to another state to avoid the Delaware estate tax, thereby reducing the amount of income tax collected by the State.  For this reason, the bill’s provisions will return as they were immediately prior to the date when the present statute was enacted.