HOUSE DOCKET, NO. 1616        FILED ON: 2/10/2021

HOUSE  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  No. 2881

The Commonwealth of Massachusetts

_________________

PRESENTED BY:

Shawn Dooley

_________________

To the Honorable Senate and House of Representatives of the Commonwealth of Massachusetts in General
Court assembled:

The undersigned legislators and/or citizens respectfully petition for the adoption of the accompanying bill:

An Act relative to the Massachusetts estate tax code.

_______________

PETITION OF:

HOUSE DOCKET, NO. 1616        FILED ON: 2/10/2021

HOUSE  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  No. 2881

[SIMILAR MATTER FILED IN PREVIOUS SESSION
SEE HOUSE, NO. 2446 OF 2019-2020.]

The Commonwealth of Massachusetts

_______________

In the One Hundred and Ninety-Second General Court
(2021-2022)

_______________

An Act relative to the Massachusetts estate tax code.

Be it enacted by the Senate and House of Representatives in General Court assembled, and by the authority of the same, as follows:
 

SECTION 1. Chapter 65C of the General Laws is hereby amended by striking out Section 1(a), as appearing in the 2012 Official Edition, and inserting in place thereof the following section:-

(a) “Code”, the Internal Revenue Code of the United States, in effect for the taxable year

SECTION 2. Chapter 65C of the General Laws is hereby amended by striking out Section 1(d), as appearing in the 2012 Official Edition, and inserting in place thereof the following section:-

(d) "Federal Gross Estate", the gross estate as defined under the code. 

SECTION 3. Chapter 65C of the General Laws is hereby amended by striking out Section 1(f), as appearing in the 2012 Official Edition, and inserting in place thereof the following section:-

(f) “Massachusetts gross estate”, the federal gross estate, whether or not a federal estate tax return is required to be filed, plus the value of any property: (i) in which the decedent had at death a qualifying income interest for life described in subsection (c) of section 3A, or to the extent of any such interest therein of which the decedent has at any time made a transfer, by trust or otherwise, under any circumstances which would require the property to be included in the gross estate under the provisions of this chapter; and (ii) for which a deduction was allowed for Massachusetts estate tax purposes with respect to the transfer of such property to the decedent; and less the value of real and tangible personal property having an actual situs outside the commonwealth, but not the value of the principal residence of the decedent unless elected pursuant to the provisions of subsection (f) of section 2. The Massachusetts gross estate shall not include the value of any property in which the decedent had a qualifying income interest for life which is not otherwise includible in the Massachusetts gross estate under the first sentence of this subsection, notwithstanding the right of the executor of the decedent's estate to recover federal or Massachusetts estate taxes from such property.

SECTION 4. Chapter 65C of the General Laws is hereby amended by striking out Section 1(h), as appearing in the 2012 Official Edition, and inserting in place thereof the following section:-

(h) “Massachusetts taxable estate”, the Massachusetts gross estate less the exemption or the exclusions provided for within this section and deductions allowable under chapter 65C.

SECTION 5. Chapter 65C of the General Laws is hereby amended by striking out Section 1(j), as appearing in the 2012 Official Edition, and inserting in place thereof the following section:-

(j) “Applicable exclusion amount”, the sum of (i) the basic exclusion amount, and (ii) in the case of a surviving spouse, the deceased spousal unused exclusion amount.

SECTION 6. Chapter 65C of the General Laws is hereby amended by striking out Section 1(k), as appearing in the 2012 Official Edition, and inserting in place thereof the following section:-

(k) “Basic exclusion amount”, $2,750,000 which shall be annually adjusted for inflation based on the US Department of Labor’s Consumer Price Index (CPI) for All Urban Consumers. If the amount as adjusted under the preceding sentence is not a multiple of $10,000, such amount shall be rounded to the nearest multiple of $10,000.

SECTION 7. Chapter 65C of the General Laws is hereby amended by striking out Section 2 and Section 2A in their entirety, as appearing in the 2012 Official Edition, and inserting in place thereof the following section:-

Section 2. (a) A tax is hereby imposed upon the transfer of the estate of each person dying on or after January 1, 2022 who, at the time of death, was a resident of the commonwealth.  This subsection shall only apply to each person dying on or after January 1, 2022.  For the estate of decedents dying prior to January 1, 2022, they shall be subject to the provisions of chapter 65C of the general laws in effect upon the date of death of such decedent.

(b) A tax is hereby imposed upon the transfer of real property situated in this commonwealth and upon tangible personal property having an actual situs in this commonwealth of every person who at the time of his or her death was not a resident of this commonwealth.             

(c) Notwithstanding any other provision of law, the tax imposed by subsections (a) and (b) shall be computed upon the value of any property subject to a power of appointment which is includible in the federal gross estate, notwithstanding that a tax has been paid thereon pursuant to section 14 of chapter 65.

(d) For the purposes of computing the tax imposed by subsections (a) and (b) of this section the amount of the tax shall be computed with respect to the Massachusetts taxable estate in accordance with the following table:-

[TABLE 1]

(e) A tax is hereby imposed upon the transfer of real property situated in this commonwealth and upon tangible personal property having an actual situs in this commonwealth of every person who at the time of his death was not a resident of this commonwealth. The amount of this tax shall be computed with respect to the value of Massachusetts real and tangible personal property in accordance with the following table:-

[TABLE 2]

(f) The principal residence of a deceased person who, at the time of their death, was a resident of the commonwealth shall be excluded in such person’s Massachusetts gross estate subject to the exclusion requirements of section 121 of the Code,  provided that such residence has been owned and used by such person as his or her principal residence for periods aggregating two years or more during the five-year period ending on the date of such person’s death. Ownership shall include, but not be limited to, sole ownership, joint ownership, ownership via a funded revocable trust or nominee trust, or other such vehicles as determined by the Department of Revenue. The executor may elect to include the value of such deceased person’s residence in such person’s Massachusetts gross estate.  This election shall be made by the executor on the Massachusetts estate tax return filed within the time prescribed for filing such return, or any extension of such time granted by the commissioner. Such election, once made, shall be irrevocable.

(g) The maximum exclusion value of a person's principal residence allowed to be deducted from their Massachusetts net estate may not exceed the amount of the basic exclusion amount as defined in section 1. This deduction is separate and distinct from the basic exclusion amount and both may be deducted from the net estate to determine the taxable estate. 

(h) The basis of property, for Massachusetts estate tax purposes, acquired from the decedent shall be the basis computed pursuant to section 1014 of the Code.

(i) A person who, at the time of death, was a resident of the commonwealth and whose deceased spouse was a resident of the commonwealth may elect to apply the deceased spousal unused exclusion amount to the Massachusetts gross estate. This exclusion shall be made by the executor on the Massachusetts estate tax return filed within the time prescribed for filing such return, or any extension of such time granted by the commissioner. Such election, once made, shall be irrevocable.

(j) Notwithstanding any other provision of law, the tax imposed by subsections (b) and (c) shall be computed upon the value of any property subject to a power of appointment which is includible in the federal gross estate, notwithstanding that a tax has been paid thereon pursuant to section 14 of chapter 65.

(k) For the purposes of computing the tax imposed by subsections (b) and (c) of this section, the provisions of section 3 shall not apply.

(l) The commissioner of revenue may make determinations and shall prescribe such regulations as may be necessary or appropriate to carry out this subsection.

(m) For the estate of decedents dying on or after January 1, 2022 all references and provisions in subsection (b) to the Internal Revenue Code or Code, unless the context clearly indicates otherwise, shall be to the Code as in effect for the taxable year.

SECTION 8. Chapter 65C of the General Laws is hereby amended by adding the following section after Section 3(d), as appearing in the 2012 Official Edition:- (e) “Deceased spousal unused exclusion amount”, with respect to a surviving spouse of a deceased spouse dying on or after January 1, 2022 and subject to paragraph 5 of section 2010 of the Code, the lesser of (i) the basic exclusion amount or (ii) the excess of the applicable exclusion amount of the last such deceased spouse of such surviving spouse, over the amount with respect to which the Massachusetts estate tax is determined under subsection (b) of the estate of such deceased spouse.

SECTION 9. Chapter 65C of the General Laws is hereby amended by striking out in Section 3A(f), as appearing in the 2012 Official Edition, the line “Such election, once made, shall be irrevocable and shall be separate from and independent of any election made by the executor for federal estate tax purposes” and inserting in place thereof the following:- “If no Massachusetts estate tax return is timely filed, such election may be made on the first return filed by the executor after the due date. Such election, once made, shall be irrevocable. The executor is not required to have made the same qualified terminable interest property election for federal estate tax purposes in order to make the election for Massachusetts purposes.”

SECTION 10. Chapter 65C of the General Laws is hereby amended by striking out in Section 4(b), as appearing in the 2012 Official Edition, in its entirety.

SECTION 11. Chapter 65C of the General Laws is hereby amended by striking out in Section 4A, as appearing in the 2012 Official Edition, in its entirety.