WSR 05-20-058

PREPROPOSAL STATEMENT OF INQUIRY

DEPARTMENT OF REVENUE


[ Filed October 3, 2005, 11:06 a.m. ]

Subject of Possible Rule Making: Chapter 458-57 WAC, Estate and Transfer Act; amending WAC 458-57-005 Nature of estate tax, definitions, 458-57-015 Valuation of property, property subject to estate tax, how to calculate the tax, 458-57-017 Property subject to generation-skipping transfer tax, how to calculate the tax, allocation of generation-skipping transfer exemption, 458-57-025 Determining the tax liability of nonresidents, 458-57-035 Washington estate tax return to be filed -- Penalty for late filing -- Interest on late payments -- Waiver or cancellation of penalty -- Application of payment and 458-57-045 Administration of the tax -- Releases, amended returns, refunds, heirs of escheat estates; and new sections WAC 458-57-105 Nature of estate tax, definitions, 458-57-115 Valuation of property, property subject to estate tax, how to calculate the tax, 458-57-125 Apportionment of tax when there are out-of-state assets, 458-57-135 Washington estate tax return to be filed -- Penalty for late filing -- Interest on late payments -- Waiver or cancellation of penalty -- Application of payment, 458-57-145 Administration of the tax -- Releases, amended returns refunds, and statute of limitations, 458-57-155 Farm deduction, and 458-57-165 Escheat estates and absentee distributee (missing heir) property.

Statutes Authorizing the Agency to Adopt Rules on this Subject: RCW 83.100.200.

Reasons Why Rules on this Subject may be Needed and What They Might Accomplish: In February 2005, the Washington state supreme court ruled in Hemphill v. State of Washington, Dept. of Rev., 153 Wa.2d 544, 105 P.3d 391 (2005) that Washington's estate tax is a pickup tax based on current federal law. The current estate tax rules will be amended to reflect the Hemphill ruling. The rules will clarify that for deaths occurring on or before May 16, 2005, the estate tax due to Washington is the amount of state death tax credit available under the current Internal Revenue Code.

New estate tax rules are needed to implement the new Washington estate tax that became effective May 17, 2005. See chapters 516 and 514, Laws of 2005. The new rules clarify the nature of the new tax, property subject to the tax, the Washington qualified terminable interest property election, the new method of estate tax apportionment, filing dates, refunds, the new farm deduction, and escheat estates and absentee distributee property.

Other Federal and State Agencies that Regulate this Subject and the Process Coordinating the Rule with These Agencies: None.

Process for Developing New Rule: Parties interested in this rule making may contact the individual listed below. The public may also participate by providing written comments throughout this rule making or giving oral testimony at the public meeting or public hearing.

Interested parties can participate in the decision to adopt the new rule and formulation of the proposed rule before publication. Written comments may be submitted by mail, fax, or at the public meeting. Oral comments will be accepted at the public meeting. A preliminary draft of the proposed changes is available upon request. Written comments on and/or requests for copies of the rule may be directed to Cindy Evans, Special Programs Division/Estate Tax Section, P.O. Box 47477, Olympia, WA 98504-7477, e-mail cindyev@dor.wa.gov, phone (360) 570-5524, fax (360) 586-2163.

Public Meeting Location: Capital Plaza Building, 4th Floor L&P Large Conference Room, 1025 Union Avenue S.E., Olympia, WA, on November 9, 2005, at 1:30 p.m.

October 3, 2005

Alan R. Lynn

Rules Coordinator

Washington State Code Reviser's Office