WSR 02-12-122



[ Filed June 5, 2002, 9:26 a.m. ]

     Subject of Possible Rule Making: Chapter 458-57 WAC, Estate and Transfer Tax Act.

     Amendatory sections 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, 458-57-025 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 section WAC 458-57-017 Property subject to generation-skipping tax, how to calculate the tax, allocation of generation-skipping transfer exemption.

     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: Chapter 458-57 WAC clarifies the application of Washington's estate tax imposed by chapter 83.100 RCW. Chapter 83.100 RCW relies heavily on the federal estate and gift tax statutes and refers to several sections of the Internal Revenue Code (IRC). When last adopted, Washington's estate tax statutes reflected the current IRC.

     In June 2001, Congress amended the IRC making significant changes to the federal estate tax program. Significant changes include the reduction of the graduated state death tax credit by 25% per year starting in 2002 and different filing thresholds. The federal credit for state death taxes is eliminated for deaths occurring after December 31, 2004. Although the Washington's estate tax statutes have historically been updated to reflect the current IRC, they have not been revised to reflect the changes Congress made to the IRC in June 2001.

     The department is considering revising chapter 458-57 WAC to clarify:

•     When an estate tax return must be filed with Washington but not with the federal government;

•     The due date for a state tax return and under what conditions an extension of such due date is available when an estate is required to file a state estate return but not a federal estate return;

•     That under Washington law 100% of the state death tax credit is to be collected; and

•     What property is subject to the generation-skipping transfer tax and the calculation of the tax.

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

     Process for Developing New Rule: Modified negotiated rule making.

     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, e-mail, fax, or at the public meeting. Oral comments will be accepted at the public meeting. A preliminary discussion draft of a possible new or revised rule(s) is available upon request. Written comments on and/or requests for copies of the draft may be directed to Cindy Evans, Legislation and Policy, P.O. Box 47467, Olympia, WA 98504-7467, phone (360) 570-6134, e-mail, fax (360) 664-0693.

     Date and Location of Public Meeting: Capital Plaza Building, 4th Floor Large Conference Room, 1025 Union Avenue S.E., Olympia, WA, on July 11, 2002, at 9:30 a.m.

     Assistance for Persons with Disabilities: Contact Sandy Davis no later than ten days before the hearing date, TTY 1-800-451-7985, or (360) 570-6175.

June 4, 2002

Alan R. Lynn, Rules Coordinator

Legislation and Policy Division

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