SENATE BILL No. 1113

 

 

March 18, 2004, Introduced by Senators CLARKE, EMERSON and LELAND and referred to the Committee on Finance.

 

 

        

                                                                                

                                                                                

                                                                                

                                                                                

                                                                                

                                                                                

                                                                                

                                                                                

                                                                                

                                                                                

                                                                                

                                                                                

                                                                                

                                                                                

                                                                                

                                                                                

                                                                                

                                                                                

                                                                                

                                                                                

                                                                                

                                                                                

                                                                                

                                                                                 A bill to amend 1899 PA 188, entitled                                             

                                                                                

    "Michigan estate tax act,"                                                  

                                                                                

    by amending sections 32, 33, 52, and 56 (MCL 205.232, 205.233,              

                                                                                

    205.252, and 205.256), sections 32, 33, and 52 as added by 1993             

                                                                                

    PA 54 and section 56 as amended by 1998 PA 277, and by adding               

                                                                                

    section 32a.                                                                

                                                                                

                THE PEOPLE OF THE STATE OF MICHIGAN ENACT:                      

                                                                                

1       Sec. 32.  (1)  A  Except as otherwise provided in section                   

                                                                                

2   32a, a tax is imposed upon the transfer of the estate of every              

                                                                                

3   person who at the time of death was a resident of this state.               

                                                                                

4   The tax is equal to the maximum allowable federal credit under              

                                                                                

5   the internal revenue code for estate, inheritance, legacy, and              

                                                                                

6   succession taxes paid to the states.  This tax shall be reduced             

                                                                                

7   by the amount of all estate, inheritance, legacy, and succession            

                                                                                

8   taxes paid to states other than Michigan, which amount shall not            

                                                                                


                                                                                

1   exceed an amount equal to the proportional share of that maximum            

                                                                                

2   allowable federal credit that the gross value of all real and               

                                                                                

3   tangible personal property located in states other than this                

                                                                                

4   state bears to the gross value of all property included in the              

                                                                                

5   decedent's gross estate wherever located.                                   

                                                                                

6       (2)  A  Except as otherwise provided in section 32a, a tax is               

                                                                                

7   imposed upon the transfer of property located in this state of              

                                                                                

8   every person who at the time of death was not a resident of this            

                                                                                

9   state.  The tax is an amount equal to the proportional share of             

                                                                                

10  the maximum allowable federal credit under the internal revenue             

                                                                                

11  code for estate, inheritance, legacy, and succession taxes paid             

                                                                                

12  to the states, that the gross value of all real and tangible                

                                                                                

13  personal property located in this state bears to the gross value            

                                                                                

14  of all property included in the decedent's gross estate wherever            

                                                                                

15  located.                                                                    

                                                                                

16      (3) For purposes of this section, the maximum allowable                     

                                                                                

17  federal credit under the internal revenue code means the maximum            

                                                                                

18  allowable federal credit determined using the adjusted taxable              

                                                                                

19  estate determined under the internal revenue code less the value            

                                                                                

20  of all qualified family-owned business interests as defined in              

                                                                                

21  section 2057(e) of the internal revenue code to the extent those            

                                                                                

22  interests are included in the adjusted taxable estate.                      

                                                                                

23      Sec. 32a.  The taxes levied under this act shall not apply                  

                                                                                

24  to taxable estates, as defined in the internal revenue code, of             

                                                                                

25  less than $1,000,000.00 if the decedent's date of death is on or            

                                                                                

26  after July 1, 2004.                                                         

                                                                                

27      Sec. 33.  (1)  A  Except as otherwise provided in section                   


                                                                                

1   32a, a tax is imposed upon every generation-skipping transfer in            

                                                                                

2   which the original transferor is a resident of this state at the            

                                                                                

3   date of the transfer made by the original transferor.  The tax is           

                                                                                

4   equal to the maximum allowable federal credit under the internal            

                                                                                

5   revenue code for state generation-skipping transfer taxes paid to           

                                                                                

6   the states.  This tax shall be reduced by the amount of all                 

                                                                                

7   generation-skipping taxes paid to states other than this state,             

                                                                                

8   which amount shall not exceed an amount equal to the proportional           

                                                                                

9   share of that maximum allowable federal credit that the gross               

                                                                                

10  value of all transferred real and tangible personal property                

                                                                                

11  subject to generation-skipping transfer taxes located in states             

                                                                                

12  other than this state bears to the gross value of all transferred           

                                                                                

13  property subject to generation-skipping taxes wherever located.             

                                                                                

14      (2)  A  Except as otherwise provided in section 32a, a tax is               

                                                                                

15  imposed upon every generation-skipping transfer in which the                

                                                                                

16  original transferor is not a resident of this state at the date             

                                                                                

17  of the transfer by the original transferor but in which the                 

                                                                                

18  property transferred includes real or tangible personal property            

                                                                                

19  located in this state.  The tax is an amount equal to the                   

                                                                                

20  proportional share of the maximum allowable federal credit under            

                                                                                

21  the internal revenue code for state generation-skipping transfer            

                                                                                

22  taxes paid to the states that the gross value of all transferred            

                                                                                

23  real and tangible personal property subject to                              

                                                                                

24  generation-skipping transfer taxes located in this state bears to           

                                                                                

25  the gross value of all transferred property subject to                      

                                                                                

26  generation-skipping transfer taxes wherever located.                        

                                                                                

27      (3) For purposes of this section, the maximum allowable                     


                                                                                

1   federal credit under the internal revenue code means the maximum            

                                                                                

2   allowable federal credit determined using the adjusted taxable              

                                                                                

3   estate determined under the internal revenue code less the value            

                                                                                

4   of all qualified family-owned business interests as defined in              

                                                                                

5   section 2057(e) of the internal revenue code, which meet the                

                                                                                

6   requirements of section 2057(B)(1)(D) of the internal revenue               

                                                                                

7   code and to the extent those interests are included in the                  

                                                                                

8   adjusted taxable estate.                                                    

                                                                                

9       Sec. 52.  (1)  All  Except as provided in subsection (2),                   

                                                                                

10  for fiscal years that begin before October 1, 2005, all taxes and           

                                                                                

11  fees levied and collected under this act shall be paid into the             

                                                                                

12  state treasury to the credit of the general fund.                           

                                                                                

13      (2) For the state 2004-2005 fiscal year only, all taxes                     

                                                                                

14  levied and collected in excess of $34,000,000.00 shall be                   

                                                                                

15  deposited in the medicaid benefits trust fund created under                 

                                                                                

16  section 5 of the Michigan trust fund act, 2000 PA 489, MCL                  

                                                                                

17  12.255.                                                                     

                                                                                

18      (3) For fiscal years beginning after September 30, 2005, all                

                                                                                

19  taxes levied and collected under this act shall be deposited in             

                                                                                

20  the medicaid benefits trust fund act created under section 5 of             

                                                                                

21  the Michigan trust fund act, 2000 PA 489, MCL 12.255.                       

                                                                                

22      Sec. 56.  As used in this act:                                              

                                                                                

23      (a) "Decedent" means a deceased person and includes, but is                 

                                                                                

24  not limited to, a testator, grantor, bargainor, vendor, donor, or           

                                                                                

25  person who dies intestate.                                                  

                                                                                

26      (b) "Department" means the bureau of revenue of the                         

                                                                                

27  department of treasury.                                                     


                                                                                

1       (c) "Federal generation-skipping transfer tax" means the tax                

                                                                                

2   imposed by chapter 13 of subtitle B of the internal revenue                 

                                                                                

3   code.                                                                       

                                                                                

4       (d) "Federal return" means any United States transfer tax                   

                                                                                

5   return including federal estate tax returns and                             

                                                                                

6   generation-skipping tax returns unless the context indicates a              

                                                                                

7   similar Michigan tax return.                                                

                                                                                

8       (e) "Generation-skipping transfer" means every transfer                     

                                                                                

9   subject to the federal generation-skipping transfer tax in which            

                                                                                

10  the original transferor is a resident of this state at the date             

                                                                                

11  of the transfer by the original transferor or the property                  

                                                                                

12  transferred is real or personal property situated in this state.            

                                                                                

13      (f) "Gross estate" means the gross estate determined under                  

                                                                                

14  the internal revenue code.                                                  

                                                                                

15      (g) "Internal revenue code" means the United States internal                

                                                                                

16  revenue code of 1986, in effect on January 1,  1998 or, at the              

                                                                                

17  option of the personal representative, in effect on the date of             

                                                                                

18  the decedent's death  2001.                                                 

                                                                                

19      (h) "Intangible personal property" means incorporeal personal               

                                                                                

20  property including, but not limited to, deposits in banks,                  

                                                                                

21  negotiable instruments, mortgages, debts, receivables, shares of            

                                                                                

22  stock, bonds, notes, credits, evidences of an interest in                   

                                                                                

23  property, evidences of debt, and choses in action generally.                

                                                                                

24      (i) "Nonresident" means an individual who is not a resident.                

                                                                                

25      (j) "Original transferor" means any grantor, donor, trustor,                

                                                                                

26  testator, or person who by grant, gift, trust, will, or                     

                                                                                

27  otherwise, makes a transfer of real or personal property that               


                                                                                

1   results in a federal generation-skipping transfer tax.                      

                                                                                

2       (k) "Person" means an individual, firm, partnership, joint                  

                                                                                

3   venture, association, corporation, limited liability company,               

                                                                                

4   company, estate, or any other group or combination acting as a              

                                                                                

5   unit.  Person does not include public corporations.                         

                                                                                

6                                                                                (l) "Personal representative" means the personal                                    

                                                                                

7   representative appointed by the probate court, including an                 

                                                                                

8   independent personal representative, or, if a personal                      

                                                                                

9   representative is not acting, then any person who is in the                 

                                                                                

10  actual or constructive possession of any property included in the           

                                                                                

11  gross estate of the decedent or any other person who is required            

                                                                                

12  to file a return or pay the taxes due under any provision of this           

                                                                                

13  act.  A safe and collateral deposit company, trust company,                 

                                                                                

14  corporation, bank, or other institution is not the personal                 

                                                                                

15  representative of property held in a safe deposit box or of money           

                                                                                

16  or property on deposit if the indicated ownership or registered             

                                                                                

17  title denotes ownership by right of survivorship.  A safe and               

                                                                                

18  collateral deposit company, trust company, corporation, bank, or            

                                                                                

19  other institution is the personal representative of property that           

                                                                                

20  it is holding if it is a court-appointed personal representative,           

                                                                                

21  including an independent personal representative, or, if a                  

                                                                                

22  personal representative is not acting, if it is holding property            

                                                                                

23  in a fiduciary capacity as a trustee or successor trustee.                  

                                                                                

24      (m) "Resident" means that term as defined in section 18 of                  

                                                                                

25  the income tax act of 1967, 1967 PA 281, MCL 206.18.  However,              

                                                                                

26  nothing in this act diminishes the settling of domiciles of                 

                                                                                

27  decedents under 1956 PA 173, MCL 205.601 to 205.607.                        


                                                                                

1       (n) "Tangible personal property" means corporeal personal                   

                                                                                

2   property.                                                                   

                                                                                

3       (o) "Transfer" means the passing of property or any interest                

                                                                                

4   in property, in possession or enjoyment, present or future, by              

                                                                                

5   inheritance, descent, devise, succession, bequest, grant, deed,             

                                                                                

6   bargain, sale, gift, or appointment.                                        

                                                                                

7       (p) "Transfer tax" includes an estate, generation-skipping,                 

                                                                                

8   inheritance, legacy, or succession tax for residents and                    

                                                                                

9   nonresidents, including aliens.                                             

                                                                                

10      (q) "United States" when used in a geographical sense                       

                                                                                

11  includes only the 50 states and the District of Columbia.